Melting moments for Cadbury’s reputation

Initially, BA looked the more serious of the crises which rocked, almost simultaneously, two of our bluest of blue chip brands. Now it’s less easy to be sure, as Cadbury’s reputation continues to melt away drip by drip.

That’s not to underestimate the gravity of BA’s situation. Virgin Atlantic seems to have played an astute game in tipping off the authorities about what it clearly saw as an inevitable US-inspired investigation into industry price-fixing. None of its leading executives have been suspended, as it smugly points out, and what’s more it has been able to announce record-breaking financial figures, oh so fortuitously, in the wake of a breaking scandal that has done so much to damage its principal cross-Atlantic competitor. Added to the humiliation from Virgin Atlantic, BA must endure the shock and demoralisation of seeing one of its most respected executives removed from the scene sine die (remember former ceo Rod Eddington emphasising how critical marketing had been to BA’s turnaround?). And then there are the shareholders. Dilatory official investigations tend to chronically depress the share price; witness the SEC investigation into Interpublic Group.

But at least BA has taken, or has been forced to take, drastic action in cauterising the crisis. The feeling is that further revelations are unlikely to make things much worse for BA.

We can have no such confidence in Cadbury. The interesting question is why. Viewed up close, and without the benefit of hindsight, Cadbury’s response to the salmonella outbreak might seem rational, if a little cynical given its Quaker background. Having promptly fixed the broken pipe, and duly satisfied itself it was jeopardising neither public health nor its legal position, the chocolate maker decided to stay stumm. You can almost hear the crisis management experts intoning: why make a drama out of a non-crisis?

Sadly, experts are often wrong; and among their faults is an inability to predict the future. Who was to know that months later the Health Protection Agency would discover that incidences of food poisoning resulting from the self-same very rare salmonella strain had jumped alarmingly? Not enough evidence to condemn Cadbury of course; but enough to call into serious doubt its corporate judgement, and by implication its good name.

Worst of all, there was the sniff of a cover-up – ultimate bad news for any company attempting to turn around a crisis. The facts so far disclosed suggest cock-up rather than conspiracy. But that will be small comfort to Cadbury, which now finds itself exposed to a stream of uncombatable speculation about its presumed incompetence. This week, for example, health experts have cast doubt on the reliability of Cadbury’s internal procedures, and gone so far as to suggest that the salmonella strain could have infected a great deal more than the seven product lines already withdrawn.

Health, particularly when it affects children, is a highly emotive issue. Much more than some arcane investigation into price-fixing. Already the strain is apparent at Cadbury, which shows no sign of restoring its Coronation Street idents and will be wrestling with the nightmare of a critical product launch. It badly needs to recover the initiative. How this can be done is anyone’s guess.