Mondelēz is killing Cadbury’s reputation. What should it do?

Cadbury is stuck in a media narrative from which it seems incapable of escaping. The story goes like this. A wonderful, British-controlled, Quaker-inspired, employee-loving chocolate maker was bought by money-grabbing corporate raiders from America. These evil Yanks have ruined the flavours of its products, sacked workers, moved a factory to Poland and generally ruined the company.

Cadbury, now part of Mondelēz, is getting a lousy press, even when it claims the criticism is unfounded. For example, it has been denounced for changing the flavour of Milk Tray, but it claims it has done no such thing.

It could learn a lot from studying Nestle. The Swiss food company bought Britain’s Rowntree Mackintosh in 1998. Just as with Cadbury, there were significant concerns about the foreign takeover. But, according to a 1993 Management Today article, the “Swiss multinational’s general sensitivity” was deployed “as it set about absorbing and refashioning what had, for over a century, been the dominant corporate enterprise in the ancient city of York”. It more than doubled Rowntree’s capital expenditure in York. It invested heavily in Rowntree’s research and development. The article says:

Some £14 million went into general-purpose cocoa-processing. Another £15 million replaced the 90-year-old building where Polo mints have been made since their 1948 launch, and expanded capacity to a nice round one million an hour. This year will see a new Aero line (£7 million) and an £18-million milk chocolate factory.

The head of the trade union was quoted approving of Nestle’s actions. And the article says that staff benefits actually increased:

The famous profit-sharing arrangement, which Joseph Rowntree introduced back in the 1920s, has not only been maintained but extended to embrace the whole of Nestle UK. Similarly the already generous company pension arrangements have been further improved under the new regime

Now Nestle is a money-making business just like Mondelēz, but there seems to be an important difference. Nestle has always been long-termist in its view. Anyone can make chocolate. You can make it in your kitchen. The value the Swiss food producer saw in Rowntree was the value of the Yorkshire company’s brands. And it is surely common sense that brand owners should protect their long-term value, rather than make a quick buck by annoying everyone.

Mondelēz’s ownership seems motivated by short-term thinking. The company (then known as Kraft Foods) pledged to keep open Cadbury’s factory in in Somerdale near Bristol before buying it, only to welsh on its promise weeks after the purchase was agreed. Of course, moving production to Poland saved the firm some money, but it was reckless approach to public relations. And given that Cadbury was making money, it was an unnecessary u-turn which reflected badly on the ethics of the buyer.

I won’t list all of the criticism that the British media have poured over Cadbury and its new owners, but only this week the company has been under fire for cancelling future Christmas presents (chocolate) to retired employees. From a PR point of view, the decision has been made at the wrong point.

I hate to sound like a Leftie, but cancelling presents looks mean and involves a relatively small amount of money. Given that the old Cadbury was always seen as a good employer, former staff members are probably enthusiasts for the brand and give away a lot of Cadbury’s chocolate at Christmas and Easter anyway. A more imaginative brand owner would work out ways to harness their enthusiasm for good use and to get some good publicity. Why not involve them in a major Christmas project to help feed those who are going hungry in the poorest countries?

Anyway, it strikes me that Mondelēz needs to make a number of striking announcements to reverse the deluge of bad publicity being inflicted on Cadbury. One would be to accredit all the chocolate the company produces with Fairtrade (Dairy Milk became Fairtrade prior to the takeover). Now, I’m a skeptic of the Fairtrade scheme, but I do see the PR benefits of using it. The decision would dramatically conflict with the media narrative that Cadbury is run by greedy capitalists.

And making announcements that strikingly conflict against the media narrative are the only the way Cadbury can get its reputation back. Now you may be saying that such striking announcements will cost some money. That is true. But public relations starts with action. No company can build and maintain a reputation using spin. The benefit is that a strong brand enables companies to charge more and make higher profits. And if Cadbury wants to have a strong brand in the future, it needs to start with actions that the public can support.