Cadbury health scare: A bad taste in the mouth
Food companies hold a special position of trust with consumers – it’s why brands are so important in the grocery sector. We buy brands because we expect certain things from them. We know how they taste and what they look like, and they rarely let us down. So as an iconic brand which has been in British cupboards for more than 200 years, Cadbury should be at the top of the tree.
Indeed, 2004 saw Cadbury Schweppes named as Britain’s most admired company, prompting CEO Todd Stitzer to say: “Cadbury Schweppes is a company built on a foundation of strong values. It has been nurtured by generations of principled leaders passionate about performance and stewardship in the broadest sense.”
But those values and principled leaders were sorely tested in January 2006 when a leaky pipe led to a strain of salmonella being detected at Cadbury’s Marlbrook plant in Herefordshire. The company chose to keep quiet – for six whole months. Presumably, the thought of a recall notice or the words ‘salmonella’ and ‘Cadbury’ together in any statement sent shivers down its corporate spine.
It was a mistake which would cost the company dearly. Now, more than a year and a massively publicised £30million recall later, Cadbury finds itself in court, prosecuted by Birmingham City Council for failing to alert authorities over the potential contamination. The fine which could be imposed on the company has no limits.
Cadbury is also in the middle of gutting the business – 11 factory closures, 8000 job cuts and a re-organisation bill of £450m – in order to emerge a leaner, more efficient company. The private equity companies are hovering, and Cadbury’s drinks business is up for sale as the food giant plans to cut its brand stable and concentrate on a smaller number of diverse products.
How much this fall can be attributed to the salmonella scare is debatable. Although a share price plunge in the wake of the scare put management under massive pressure from investors to make changes, Cadbury clearly mismanaged the issue and has admitted as much, describing its behaviour as “unacceptable”.
A consultant who has worked with the firm recently told The Guardian: “When a project is suggested, Stitzer and his team want to examine every aspect before they decide to go ahead. In the six months it takes them to do that, the market moves on and the opportunity is lost.”
It’s hard not to assume that the salmonella issue was handled in the same painstaking way, breaking the first rule of crisis management in a situation like this: “Be honest, be quick.”
For every second that Cadbury delayed, more chocolate left the factory, hitting the shelves and tempting trusting consumers – 37 of whom allegedly became ill, blowing the hush-hush approach and forcing Cadbury to recall more than a million bars.
Cadbury’s excuse for keeping quiet was that the company “did not believe there was any threat to health”. In the food sector there doesn’t need to be. All you need is a perceived threat to health to cause a media frenzy and a consumer backlash – that is why companies increasingly make precautionary product recalls. So what were Cadbury’s immediate options?
Option one was to keep quiet – always a bad idea. The only thing worse than admitting you have a health scare is someone else telling the world you have one. It magnifies the issue, excites the media and erodes consumer trust. What else aren’t they telling us?
Option two was owning up, full and fast – admitting you’ve found salmonella at your factory, immediately halted production and recalled a few thousand bars of chocolate as a precaution while you sort everything out. The story focuses on your action rather than inaction.
Of course, there are still costs associated with option two. The brand takes a bit of a hit when it’s as big as Cadbury and there will still be salmonella headlines, but they won’t contain the words ‘covered up’ and ‘scandal’.
When Cadbury did eventually recall product, after some consumers had fallen ill, a company statement read: “We’ve been making chocolate for over 100 years and quality has always come first. We have taken this precautionary step because our consumers are our highest priority. We apologise for any inconvenience caused.”
Issued six months earlier, that statement would have sat well as the words of a trusted brand. Even under heavy media scrutiny, Cadbury could have argued it was doing the right thing and maintained the high ground. Six months later, when the consumers you care about so much are already blowing chocolate chunks, litigation is looming and the Food Standards Agency is all over you, the words seem a little hollow.
The company has chosen to communicate its change of management strategy in advance of the salmonella court case. It is clearly trying to give out the message that the company which kept things quiet no longer exists.
In fact, it is ambitiously hanging the fabric of the entire company. It has achieved success with a non-Cadbury fronted brand in recent months, breaking into the chewing gum market with its Trident product. Such diversification is clearly a strategic move towards protecting the business in a sector under fire from the health police.
And with the acquisition of ‘healthier’ brands such as the organic icon Green & Black’s and the announcement of a lower calorie version of Bassett’s Allsorts, Cadbury is attempting to tap into new markets and innovate with its strong brand portfolio. Putting the salmonella court case behind it will help, but it’s likely to be no coincidence that the products which are currently the focus of the company’s marketing might don’t fall under the Cadbury brand.
Paul Smith is media director at Citypress, a leading PR consultancy which handles crisis management for a number of major brands, including many in the food and drink sector. Visit www.citypress.co.uk.