Cadbury's Purple Reign E-Book

John Bradley

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 423

Veröffentlichungsjahr: 2011

Beschreibung

A unique expose of the Cadbury story, providing an unprecedented insight into the makings of an iconic brand. Cadbury's Puple Reign for the first time tells the in-depth story and definitive history of the Cadbury brand, and how it came to be the world's pre-eminent chocolate brand. It presents a no holds barred account of the rollercoaster ride the organization has experienced that has, ultimately, led to its success. It is a story of endurance, where, in the UK, Cadbury is a clear market leader. This fascinating journey that has been the history of Cadbury makes it an ideal example with which to illuminate the story of consumerism. The company was established even before there were a mass of consumers to sell to, and was at the forefront of many of the developments which facilitated the rise of mass markets: * Putting product quality at the heart of the brand. * Harnessing the miracles of the Industrial and Transportation Revolutions to drive explosive growth * Industry consolidation via mergers and acquisitions to cement critical mass * A radical approach to harnessing the potential of its workforce to create the most effectively run company in Britain * The virtuous circle of economies of scale which slashed prices and brought chocolate to the masses * Innovative marketing and selling approaches that put the Cadbury brand into not just the minds of consumers, but their hearts. Illustrated with fact, anecdote and beautiful images from previously archived material, this book provides the reader with an unprecedented insight into one of the world's most iconic brands. These insights will help any consumer business that aspire to build longevity for their brand with lessons on how to better endear itself to consumers, and how to turn that relationship into profitable sales. The book has the full backing from Cadbury and chairman Sir John Sunderland provides the foreword.

Leseprobe

Table of Contents

Title Page

Copyright Page

Foreword

Acknowledgements

Image credits

Part I - THE RISE TO PROMINENCE

Chapter 1 - GETTING ESTABLISHED: BACK FROM THE BRINK

Career Shift

To the Brink

Differentiate or Die

Defining the Market

Moving from Features to Benefits

Defining the Category

Chapter 2 - MARKET CHANGES: MOVING ON FROM COCOA ESSENCE

Chapter 3 - NEW CATEGORIES: EXTENDING THE CADBURY BRAND BEYOND COCOA

Raising the Bar

Milking the Idea

All Because the Lady Loves…

Taking the Biscuit

Chapter 4 - CREATING BUSINESS ADVANTAGE: ALIGNING INFRASTRUCTURE WITH STRATEGY

Bournville — The Ideal Base

African Gold — Ensuring Quality in the Supply Chain

Employee Engagement: Getting People to Give Their Best

Part 1 — Summary

Part II - MAKING CHOCOLATE A MASS MARKET

Chapter 5 - CREATING A MASS MARKET: THE FORD OF CHOCOLATE

Passing on the Costs

Mass Production

Efficiency rules

Chapter 6 - BUILDING THE CADBURY BRAND

People Come to Cadbury

Cadbury Comes to the People

The Product Portfolio

Recognising the Range

Advertising the Range

Making the Sale

Chapter 7 - A CHANGING U.K. MARKET: CADBURY’S COMPETITORS EVOLVE

Sleeping With the Enemy

A New Market Sector

The Man From Mars

Rowntree Strike Back

Chapter 8 - OVERSEAS EXPANSION: PAINTING THE BRITISH EMPIRE PURPLE

Australia

Canada

New Zealand

Ireland

PART II — Summary

Part III - DIFFICULT HEADWINDS

Chapter 9 - IMPACT OF THE WAR

Strategic Deep Freeze

United States

West Germany

India

Post Rationing U.K. Boom

Chapter 10 - SHIFTING SANDS: U.K. MARKET TRENDS GO AGAINST CADBURY

The 30-Second Marvel

Cadbury Moves Into Countlines

A Challenger to Dairy Milk

Changes in the Retail Trade

Handling the Products

The Silent Salesman

The Rise of the Grocer

Cadbury’s New Countline

Cadbury-Fry

Chapter 11 - OVERSEAS PROGRESS

Ireland

New Zealand

Australia

South Africa

India

PART III — Summary

Part IV - THE PATH TO GLOBAL LEADERSHIP

Chapter 12 - NEW CATEGORIES, NEW COUNTRIES: EXPANDING THE CADBURY BRAND FOOTPRINT

Confectionery Beyond Chocolate

Having Their Cake and Eating it

Grocery Products

Two Marvellous Smash Hits

Schhh. You Know who

Takes the Biscuit

Foods Overseas

Go West

Chapter 13 - THE U.K. TURNAROUND

Putting Marketing into the Heart

Focus on the bottom Line

Out With the Old, In With the New

Branding the Portfolio

Dairy Milk Languishes

The Yorkie Juggernaut

Tackling the Costs — Mk II

Turnaround

Chapter 14 - THE OVERSEAS BUSINESSES GO FROM STRENGTH TO STRENGTH

Ireland

North America

New Zealand

Australia

South Africa

India

Chapter 15 - EXTENDING THE GEOGRAPHIC AND CATEGORY FOOTPRINTS

Early Emerging Markets

The Acquisition Trail

Sugar

Middle East

The Americas

Eastern Europe

The Wild East

China

Cadbury’s Global Position

Chapter 16 - U.K. RESURGENCE: CONTEMPORISING THE CADBURY STRENGTHS

Back to the Core

The Purple Spine

Cadbury Means Chocolate

The Purple Envelope

Surrounding the Consumer with Cadbury

The Return of ‘Prestige’ Cadbury Advertising

Back on Top

Playing on Home Turf

The Final Pieces of the Jigsaw

A Broader Dairy Milk Brand

Part V - OVERVIEW

Chapter 17 - THE CADBURY BRAND: A PERSONAL VIEW

Market-Defining Brands: Cocoa Essence and Dairy Milk

Capacity for Evolution

Part of Consumers’ lives

Company Values and Business Strategy

The Future

Bibliography

Index

Published in 2008 by

John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England Telephone [phone]

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Copyright © 2008 John Bradley

Cadbury Trademarks being used with the permission of Cadbury UK Ltd.

Unless otherwise indicated all photographs are reproduced with the permission of the Cadbury Schweppes plc Group of companies.

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ISBN 978-0-470-72524-5 (HB)

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Foreword

Surprisingly, for such a well-known and venerable brand as Cadbury, there have only been two books covering the history of our company. The first was produced in 1931 to recognise the centenary of the firm, and the second, a much shorter publication, came out in 1998. A full reappraisal of the Cadbury story is therefore a welcome development.

The remarkable journey from a shop in Birmingham to becoming the world’s largest confectionery company has been achieved through a unique combination of business purpose and human values. While many publications have, quite rightly, highlighted the Quaker origins of the company and the Cadburys’ contribution to the addressing of social injustices, these have perhaps overshadowed the business and the brand-building story that lies at the heart of our success.

The Cadbury name has been associated with chocolate and cocoa since the early 1830’s, a time when mass markets were only just emerging. Cadbury became the industry leader through harnessing the opportunities afforded by the rapid industrialisation of the United Kingdom and the emergence of a consuming class; a situation that bears many parallels with the changes occurring in India and China today.

The later stages of the Industrial Revolution, characterised by the emergence of mass produced consumer goods, was every bit as profound in its effect on industry as was the emergence of the information technology revolution towards the end of the 20th century. Cadbury rose to unparalleled heights in the way they grasped these changes and developed a business model perfectly in tune with the new consumer opportunities of the day.

We live in an era where strong brands are more important than ever. The internet is not the first new medium faced by Cadbury; popular newspapers, cinema, radio and commercial television were all as disruptive to the prevailing status quo in their day. Internationalism and global branding are challenges facing many businesses today, but are not new. There is much to be learnt from both our successes and our failures in taking the Cadbury brand beyond the British Isles.

Our history is much more to us than just a sequence of past events; it is an integral part of who we are and how we operate as a company. We have inherited a peerless set of brands and a guiding set of business principles, and it is our duty to continue to take them forward. One of the traditions of the company has been a willingness to share our past experiences for the future benefit of others. As Winston Churchill put it so succinctly, ‘The farther backward you can look, the farther forward you can see.’ I hope that Cadbury’s Purple Reign will be of interest as you face the challenges in your business today.

Sir John Sunderland

Acknowledgements

It would have been impossible to write this book without the generous help and assistance given by many people associated with the Cadbury brand. One of the most noticeable features of the Cadbury culture is a willingness to help one’s colleagues, even when snowed under with work. Although I had a slight advantage of being an ex-colleague of many of the people mentioned below, I was astounded that not once did anyone tell me they were too busy to help. This really has been a team effort.

First and foremost, this book would not have been possible without the support, contributions and encouragement from three Cadbury Schweppes chairmen, past and present: Sir John Sunderland, Sir Dominic Cadbury and Sir Adrian Cadbury. All were exceptionally generous with their time in sharing their perspectives with me. Norma Boultwood deserves a special mention, both for time spent in reading various drafts and also for facilitating some key meetings during the project’s genesis. I am also extremely grateful to an amazing group of PAs: Liz Atkins, Sue Li, Fern Graham, Paula Kearns, Paula Couto, Jacqueline Wheeler and Paula Grossman, who unfailingly arranged meetings to fit in with my rather inflexibly-timed research visits. In the management of the project, I benefited from an exceptional amount of support from Andrea Dawson-Shepherd, Tony Bilsborough and Chloe Haynes of the Cadbury Schweppes Corporate Communications Department, along with Mark Hodgin in the Legal Department.

In preparing the text itself, I owe an enormous debt of gratitude to Sarah Foden and Jackie Jones in the Cadbury Trebor Bassett Library and Information Services Department who very kindly tolerated my presence within their midst for weeks on end, and who also unfailingly responded to countless long-distance requests for information or photographs. In preparing the images for Cadbury’s Purple Reign, I am also extremely thankful for the help provided by Paul Healey and Alan Hickman of the Cadbury Schweppes Design Studio and Colin Pitt of Cadbury World.

There were many Cadbury managers, past and present, who generously shared their time to search their memory banks and attics, and also to read through many drafts of various sections of the book on my behalf. Special mention must go to Chris Morgan and Neil Fozard of the Cadbury Outside Staff Pensioners Association who kindly gave me free reign through their newsletters and Christmas lunch to access the collective wisdom of the massed ranks of retired Cadbury salesmen and women. Norman Hawkins, John Tweedale, Mike Denyard, David Swain, Jim Dunkley, Jim Hay, Brian Molley, John Dwyer, Josie King and Val Davies all stepped forward to provide invaluable assistance.

In helping shape the non-Sales aspects of the U.K. part of the story, I am indebted to Robin Shaw, Stephen Ward, John Taylor, Graham Parker, Tim Cadbury, Richard Clapham, Peter Creighton, Alan Palmer and David Jones, who all spent much time in reading drafts and talking to me, helping me make sure I had got the story straight. George Dadd provided much help in making sure references to various new product recipes were correct, Bob Grundy with some terrific old brochures, and Tiphany Yokas kindly dug deep into the A.C.Nielsen data on my behalf. I am also grateful to Steve Greensted who provided a perspective from one of Cadbury’s advertising agencies of the 1970s. Many of my visits to Bournville were also made much more enjoyable thanks to Sharon Boyce, Sam Bucknall, Bruce Moore, Annie Dunseith and Bob Cudd giving up their evenings to remind me of key events.

I had the pleasure of visiting Cadbury Ireland in the process of completing Cadbury’s Purple Reign, so my thanks are due to Donal Byrne, Liam Marnane and Michael Smith for spending an inordinate amount of time, both meeting me in person and in reading drafts, and to Frank Dillon and Donna O’Herlihy for help with the illustrations. Equally hospitable and knowledgeable were the management team of Cadbury India, who also hosted a visit and read many drafts, so my thanks go to Yoginder Pal, Anand Kripalu, Ghirish Bhat, Burjor Icchaporia, Sanjay Purohit, Shawm Sengupta and the Cadbury India Marketing Department. I also received further insights from Bharat Puri and Kewel Kapoor, together with Walter Noronha, Hirol Gandhi and the team at Ogilvy & Mather in Mumbai.

My understanding of the early days of Cadbury in Australia was greatly aided by Ted Best and Frank Miller, and in more recent times by John Christophersen, Mark Smith, Peter Beales and Ian Johnston, who also gave me his perspectives on the commonalities of the Cadbury brand around the world. Robyn Newman performed miracles in getting images of the early MacRobertson brands and I am grateful to John Crawford for those from New Zealand. Bruce Creed, John Lawton and Brian Rogers were a great help in understanding the spread of the Cadbury brand globally, and I am also indebted to Vidyut Arte in China, Blair Sales in Malaysia, Andrew Baker in Africa, Jorge Stern in Argentina and Keith Sleight in Egypt, who all provided information and images from their Cadbury business units. Alan Palmer, John Christophersen, Simon Armstrong and Tim Stanford also provided much useful background on Cadbury in South East Asia, and I am grateful to Naomi Smith for patiently letting me examine her old files.

Cadbury’s Eastern European ventures were described to me by Simon Baldry, Peter Knauer, Lech Rogacki and Anka Brzozowska, and I am indebted to Arlene Sheppard for digging out relevant portions of the Wedel acquisition material. Amanda Manchia gave me many useful pointers on South Africa, as did Arthur Soler on the Cadbury experience in Canada. Linda Goddard and Ted Fullona also helped me find the Canadian images. Also from Canada, Paul Lott helped me interpret the 1962 balance sheet of Cadbury Bros. and provided some useful perspectives on the operating differences between Cadbury and Mars.

Outside of Cadbury Schweppes, I am grateful to Professor Niraj Dawar of the Richard Ivey School of Business and Professor Marcel Corstjens of INSEAD who both provided much help in the early stages of the development of Cadbury’s Purple Reign. Showing a terrific spirit of industry camaraderie, Kay Nicholls and Sue D’Arcy of Mars UK Ltd. were extremely helpful in the sourcing of images of the Mars brands; Hilary Parsons and Ann Poulter from Nestlé; Brandi Swedinovich from H.J. Heinz Company, L.P., and David Moore from the Leo Burnett Company. It has also been a pleasure to work with Claire Plimmer, Viv Wickham, Nick Mannion and Jo Golesworthy of John Wiley & Sons, and I am grateful to my agent, Robert Dudley, for his guidance through the entire process.

However, a special vote of thanks must be reserved for the team closest to me during the nearly two years from the inception of the idea for Cadbury’s Purple Reign and its publication — Team Bradley. With unfailing help, encouragement and patience, my wife Audrey and daughter Georgina — who have heard little else but chocolate-related matters throughout that time — must take much of the credit for the appearance of Cadbury’s Purple Reign. Also, much support from my parents John and Margaret, and my brother, Andrew. Thanks guys!

Image credits

All images supplied by Cadbury are reproduced with the permission of the Cadbury-Schweppes plc Group of Companies. The author would like to thank the picture libraries and companies below for kindly supplying and/or giving permission to use additional images for this book.

Advertising Archives for sourcing the following advertisements: Van Houten’s Cocoa (p21), Rowntree’s Elect Cocoa (p24), Baby Ruth (p115), Mars Bar (p118), Kit Kat Chocolate Crisp (p119), Rowntree’s Fruit Gums (p120), 6d Dairy Milk (p149), Hershey Bar (p155), Milk Tray (p169), Flake (p177), Cream Egg conundrum (p239), Yorkie lorry driver (p243), Spangles (p282), and Rowntree’s Fruit Pastilles (p283).

H.J. Heinz Company for the image of Heinz original clear glass horseradish bottle (p325). Reproduced by permission of H.J. Heinz, L.P.

Josephine King for the image of post-war demonstrators with Milk Tray samples (p170).

Leo Burnett Company (Canada) for the ‘Creamy because of the milk’ Dairy Milk advertisement (p324).

Mars UK Limited for the original Milky Way wrapper (p116), Mars Bar (p118), and Spangles (p282) advertisements. Reproduced by permission of Mars UK Limited. ®Milky Way, Mars Bar and Spangles are registered trademarks. © Mars UK Limited.

Mary Evans Picture Library for Victorian print of cocoa plant (p8), image of conching machine (p33), advertisement for Nestlé Milk Chocolate (p34), and French chocolate boxes (p40). Reproduced by permission of Mary Evans Picture Library.

Nestlé UK for Rowntree’s Elect Cocoa (p24), Nestlé Milk Chocolate (p34), Kit Kat Chocolate Crisp (p119), Rowntree’s Fruit Gums (p120), Yorkie lorry driver (p243), and Rowntree’s Fruit Pastilles (p283). The names and images of all the Nestlé and Rowntree brands mentioned and shown are reproduced with the kind permission of Société des Produits Nestlé S.A.

Part I

THE RISE TO PROMINENCE

Chapter 1

GETTING ESTABLISHED: BACK FROM THE BRINK

In 1831, John Cadbury, a retailer of tea and coffee with a small sideline in cocoa, took a momentous step; one which would eventually lead to the creation of a global brand with sales counted in the billions. He switched to being a manufacturer of cocoa products.

Career Shift

This was not an obvious move for him to make. Cocoa was not in the same league as tea and coffee in terms of sales potential because it was many times more expensive. The Government had slapped on a hefty tax of 2 shillings and three pence duty per pound so, as a consequence, the UK market for cocoa remained miniscule with little more than 100 tons per annum of cocoa beans being imported. Cocoa was not a drink for the masses, but the wealthy elite, of whom Birmingham had more than its fair share.

In the early 19th-century, Birmingham was booming and John’s customer base consisted largely of successful men of industry — James Watt, son of the famous inventor, was a customer — people who thought big and acted bigger. John Cadbury cannot have failed to notice that being in the business of making rather than selling had its advantages. Being in retail meant remaining local and small whereas the potential in manufacturing seemed limitless. His confidence in making the switch was bolstered by his success in retailing his own cocoa products, painstakingly ground in a mortar and pestle, versus those bought in from the likes of Fry. Even in his first year, before he had a chance to establish much of a reputation, well over half of the cocoa takings came from the sale of his own cocoa nibs; not a bad start against the more established players.

However, the challenges of being an early manufacturer were daunting, and very different to those in retailing. As a retailer, John would have known most, if not all of his customers personally, where his rhetorical skills would have made many a sale. He was also something of a showman. To get his shop off the ground, an investment in Birmingham’s first plate glass window had drawn crowds from miles around — Birmingham’s boom had clearly not yet encompassed much in the line of entertainment options. When John employed a Chinaman to serve behind the counter, it must have seemed like Barnum & Bailey had rolled into town. But as a manufacturer, he was in the business of selling to remote customers at the end of what could be a long and convoluted supply chain. He would need more than plate glass windows and an oriental greeter if he was to succeed.

John was to have a major stroke of luck almost immediately when, in 1832, the Government slashed import duties on cocoa. This allowed products to be priced at levels more attainable to the wage-earning classes. As a consequence, the national market was to grow more than five-fold in the next eight years, a growth that John Cadbury was much more able to tap into as a manufacturer than if he had remained a simple shopkeeper. Within another fifteen years the duty would be down to a penny a pound, further fuelling the market and John Cadbury’s sales.

Perhaps the buoyant market seduced John into believing that being in the manufacturing business was a walk in the park. In truth, there was little to distinguish his goods from those of many other firms, not to mention the massive Fry company. His earlier price lists consisted mainly of generically named items such as Spanish Chocolate, Rock Cocoa, Trinidad Cocoa and the like, all of which could be expected to appear on the price lists of any reputable cocoa firm. But his product quality was ahead of the rest, which was recognised on February 4th, 1854, when he was awarded Queen Victoria’s royal warrant, ahead of any other cocoa manufacturer. He wasted little time in exploiting the opportunity it offered, quickly rolling out a new line called ‘Queen’s Own chocolate’ which complimented his existing ‘British Chocolate’, featuring the likenesses of Queen Victoria and Prince Albert.

But royal warrants and undifferentiated products were not enough to compete in a crowded marketplace where one company, Fry, had all the benefits of longevity, scale, retailer trust and consumer awareness. When Cadbury first opened an office in London in 1853, Fry already had men calling on the fifty largest cities and towns in the country. It was an unequal struggle. Compounded by John Cadbury having been struck two grievous blows with the death of his second wife, followed by a severe bout of rheumatic fever, the business went into decline. Without his firm hand on the tiller, product quality suffered and sales fell away. Staff levels by 1859 were half those of seven years previously, and the business had sunk into making a loss. In 1861, John handed over the reins to his sons, Richard and George, and it seemed only a matter of time before the business would be wound up.

To the Brink

Richard and George Cadbury certainly had their work cut out. Such had been the decline in the Cadbury cocoa business that three-quarters of the company turnover was coming from tea and coffee dealing, of which they had little experience. Of the thirty other cocoa manufacturers that the brothers were aware of, Cadbury Bros. was the smallest. They could see others of the thirty already closing their doors, and there was a huge rate of attrition in the retail trade, with many of Cadbury’s customers going bust, leaving bills unpaid. Their diminishing numbers of workers could see unsold cocoa stocks piled up in the warehouse, and were expecting to hear the worst any day.

To be thrust into such a dire situation was a severe test for two young men — Richard being twenty-five and George twenty-two. But while business was grim, the brothers had a lifeline. They had each received legacies on the passing of their mother of 5,000 each – a major fortune in those days, being together worth over 600,000 at today’s prices. The brothers resolved to invest 4,000 each to see if they could weather the storm, insisting that they would not seek to borrow beyond that sum from their father or anyone else. Sales in 1860 had amounted to 27,800, so the brothers must have been reasonably confident that their combined 8,000 would provide a decent safety net for any losses.

But any possible feelings of complacency were soon swept away as a disastrous year’s trading in 1861 made a severe hole in their capital, and 1862 was even worse. Every penny of expense, both business and personal, was scrutinised. George Cadbury stopped his morning paper, and then even went without coffee and tea, despite having a warehouse full of the stuff. Fourteen hour workdays were the norm. Richard declared that if the business ever made a profit of a thousand pounds a year, he would retire a happy man.

In the meantime though, things were kept going by the brothers rapidly expanding their range with a host of new products, hoping that one would find a way through the competitive minefield. The slew of innovations helped to stem the losses. The 1863 deficit had been reduced to one tenth of the previous year, and by 1865 the business was back in profit and growing, albeit not dramatically. But it had been a close run matter. Of the brothers’ original investments of 4,000, Richard was down to his last 450, while George had managed to hold onto 1,500. George attributed the difference to his not having yet married, which perhaps infers that Richard’s wife had not been subject to the same spending constraints that the brothers’ had endured in the workplace.

Differentiate or Die

With the crisis averted at least for the time being, contingency career plans of George decamping to the Himalayas to grow tea and Richard become a draughtsman were put on hold. But, while financial implosion seemed to have been staved off, it was clear that the underlying business problem confronting them had not yet been addressed. They had no product sufficiently different to, or better than, those of the competition. The mighty Fry firm were still outselling Cadbury many times over.

Cocoa at the time was sold to be drunk: mixed with boiling water or on special occasions, milk. The basic problem was that the cocoa bean, once removed of its hard shell, consists of slightly over 50% fat. Notwithstanding the fact that fat doesn’t mix well with water or milk, the absolute quantity of fat could cause gastric distress to all but the hardiest of digestive systems. Manufacturers had recognised this brake on demand, and had tried to mitigate it by mixing the cocoa with a range of substances to absorb the fat and/or mask its flavour. As a result, the only real point of difference in the products became who mixed in the least obnoxious ingredients. While Cadbury avoided the worst excesses of the adulterers — brick dust and even red lead were not uncommon additions —

Cadbury’s range of cocoas left a lot to be desired. Consisting of only one part in five of cocoa, the rest being potato flour, sago and treacle, it was not something to excite the taste buds.

The breakthrough would not come from an earth-shattering innovation, but from what would become a long-term Cadbury habit of being proud and quick to borrow ideas. George Cadbury in particular was not afraid to latch onto a good idea when he saw one,

‘I never looked at the small people, or people who had failed. I fixed my eye on those who had won the greatest success. It was no use studying failure. I wanted to know how men succeeded, and it was their methods I examined and, if I thought them good, applied.’

George didn’t fix his eye on Fry as his role model. Although the market leader, they were also keen product adulterers and their cocoa was nothing to write home about. If the Cadbury firm was to thrive, it had to outflank Fry, not emulate them. Looking further afield, George heard about a successful cocoa brand in Europe: van Houten’s.

Coenraad Johannes van Houten had opened his first cocoa factory in Amsterdam as early as 1815, and from the start had been experimenting with ways of reducing cocoa’s high fat content. Not content with the practice of boiling, skimming and adding fillers, he leveraged the burgeoning engineering knowledge of the Industrial Revolution to invent a hand-operated hydraulic press, which he patented in 1828. The vast pressures generated in the press squeezed out half of the cocoa fat, reducing the fat content from around 53% down to 27%. This dramatically improved the drinking characteristics of the mixed final product and removed the need to add anything to make the drink more digestible.

George travelled to Holland and did a deal for a press, despite having only sign language and a dictionary with which to negotiate. This was the last throw of the dice for Cadbury Bros., even though their business was now making a small profit. The press was expensive, and would have consumed most of George’s remaining capital. It also required mass production to be of benefit, so the need would be to create a level of sustained demand far above any of their existing products. No British manufacturer, including the dominant Fry firm, had gone down this route. There was no tangible evidence that there would be any market at all for such a product. If it failed, Cadbury would have gone under.

The risk of merely substituting sales of a new cocoa for existing products was high. Even worse, what if sales of Cadbury’s own adulterated products collapsed and there was no market for a cocoa that would be much more expensive per ounce, as it would not include cheap fillers? There was little evidence in those days that consumers would switch to a more expensive product purely on the grounds of quality when there were far greater risks to life and limb than a cup of cocoa. But George and Richard had no doubt about it being the way forwards, and with the press installed in their Bridge Street factory in 1866, their next new product was to be the salvation of the company and the creation of an empire.

Defining the Market

Cadbury’s Cocoa Essence was launched in 1866, but was not an instant success; in fact it was something of a slow seller in its first year, which tested the resolve of the brothers to breaking point. The immediate problem was one of value perception. A product range (along with everyone else’s) that contained fourfifths cheap fillers had created a value for money expectation for cocoa. Because the new Cocoa Essence contained none of the additives, all of which were cheaper than raw cocoa, it was much more expensive per ounce than anything else on the market.

Cadbury’s early advertising for Cocoa Essence focused on trying to head off negative value perceptions as much as it did selling the benefits of the new process,

‘Cadbury Cocoa Essence (Registered) is three times the strength of the best Homeopathic cocoas ordinarily sold; consequently it is cheaper to use. Having no farinaceous substance or sugar added it does not thicken in the cup. It is guaranteed to consist solely of the extract of the cocoa nut, with the excess of fatty matter removed.’

But little headway was being made. They had yet to find a compelling benefit that would realise the sales potential of a unique and differentiated product.

Moving from Features to Benefits

The answer was to lie in making an issue of the idea of product purity. Having bombarded doctors’ offices and the medical press with free samples, Cadbury were able to roll out an advertising campaign in 1867 based on the enduring technique of the medical testimonial,

‘Genuine; easily prepared; economical; about three times the strength of the best cocoas ordinarily sold; free from the excess of fatty matter, and recommended by medical men as the most wholesome breakfast beverage.’

“We have carefully examined the samples brought under our notice, and find that they are genuine, and that the Essence of cocoa is just what it is declared to be by Messrs. CADBURY Brothers.”

— Lancet.

“Cocoa treated thus will, we expect, prove to be one of the most nutritious, digestible and restorative of drinks.”

— British MedicalJournal.

This message, in a variety of forms, would assail the consumer at every turn, and within another year Cadbury had ceased advertising any other of its cocoas. The farm was being bet on Cocoa Essence.

Competitively, it was far from clear that George and Richard Cadbury had not just knocked the final nail into their own coffins. From the perspective of Fry, this looked like the desperate move from a company that had nothing to lose. Even after a few years, there was no compelling case to follow suit. The market for adulterated cocoas did not immediately collapse; in fact, it kept growing. Most of the growth in the market was still coming from adulterated cocoa, driven by the continuing explosion in both population and incomes. In the 1870’s, the already large sales of Fry’s adulterated cocoas increased by 85%, which would hardly have rung many alarm bells in their Bristol headquarters. They had been market leaders for nearly a century and would have lost no sleep had they known that Cadbury’s sales, driven by Cocoa Essence, were to increase by 114% over the same period.

But Fry would soon be jolted from their reverie when Cadbury forced a sea-change in the government’s attitude to the adulteration of cocoa. Although The Lancet had announced the creation of a health commission for the analysis of foods way back in 1850, the subject had not really gripped the nation, even after the passing of the British Food and Drug Act in 1860. This act was designed to prevent manufacturers using harmful additives, so did nothing to change opinions or practice on the uses of sago and flour, which could hardly be considered life-threatening. However, the poor administration of that Act led to much more comprehensive measures in 1872 and then 1875 with the Adulteration of Food Acts.

George Cadbury had long been lobbying for more government action on the issue, leading the case for the ‘extractors’ while being opposed by most of the rest of the industry who could be categorised as the ‘mixers’. George’s argument was that the addition of flour and starch, while not necessarily harmful, tended to make the prepared cocoa more indigestible. The plausible-sounding counterargument of the ‘mixers’ was that the extraction of the cocoa fat — known as cocoa butter – robbed the cocoa of its nourishment. The Government found George Cadbury’s argument to be the more compelling, with ‘mixed’ cocoas falling under the remit of the new Act.

It was not an obvious move for George to have lobbied so hard on the issue. Cadbury had a unique and meaningfully differentiated product, so it would seem that the longer everyone else continued to make inferior products, the better it would be for Cadbury. But the new Acts would demand the stating on the label of any and all adulterants used, harmful or not. This would give the maximum awareness to Cadbury’s selling point, and is a powerful mechanism even today. Be it calories, Recommended Daily Allowances, Genetically Modified ingredients, or allergens, changes in labelling requirements have been shown time and time again to be enormously powerful drivers of changes in consumer behaviours.

Defining the Category

The Act, and George Cadbury’s role in its development, generated acres of free publicity for Cadbury’s Cocoa Essence, and also prompted a flood of advertisements from Cadbury’s competitors, protesting that they only mixed cocoa with the most wholesome of ingredients. But they were now on the back foot; a situation that would get much worse for them when hit by Cadbury’s next move, which was the progressive cancelling of their range of adulterated cocoas, even though most were still selling well. In 1878 Cadbury’s Homeopathic, Pearl and Breakfast Cocoas were cancelled, soon to be followed by the rest of the range. Such was the initial hit to the Cadbury sales line that the company was prompted to make special payments to their travellers in recompense for the substantial commissions that would be lost.

But the lost sales and extra commissions would soon be repaid many times over. This move by Cadbury to purge their product range of any adulterated lines was to become hugely significant. They did not have to do it; it was not against the law to add wholesome foodstuffs to raw cocoa, as long as they were declared on the label. Nor was there an immediate business case for doing so; they were giving up profitable volume, in fact were handing it straight over to their competitors. Cadbury could easily have kept advertising Cocoa Essence as ‘Absolutely Pure, therefore Best’ while still promoting the cheaper cocoas to the lower end of the market. But to have done so would have missed out on the huge benefit that was to come from the move: the building of the Cadbury brand reputation and that it would define how consumers should view the cocoa category.

The outcome of Cadbury’s move to cancel their adulterated cocoas was to give a meaning to the Cadbury name. They were saying that the ideals of product purity were so important, they would not sell anything that was anything less than pure. While the Cocoa Essence product brand stood for purity, the Cadbury name would stand for quality, integrity and trust. At the time, very few, if any, manufacturer names stood for anything at all beyond a basic level of quality. In the cocoa category, the name of the market leader, Fry, didn’t even stand for that. Driven by an advertising campaign, the scale of which dwarfed those of the competition, Cadbury turned the screw.

With a punch-line that summed everything up succinctly: ‘Absolutely Pure, therefore Best’, it was to be a thirty year advertising campaign that would drum into consumers that the cocoa market was all about purity. We have seen in more recent times the benefits that can come by raising the importance in consumers’ minds of one’s own brand feature into a category-defining benefit. Volkswagen a generation ago almost single-handedly redefined the American car market with their ‘Think Small’ campaign. More recently, Volvo triumphed by raising the importance of safety in carbuying decision-making.

Now Cadbury had shifted the debate to the issue of purity, both Fry and Rowntree were forced to launch their own versions, although both waited far too long before doing so. It was not until 1880 that Rowntree brought out Elect Cocoa, but it soon struggled as it could not match the Cadbury product. While Joseph Rowntree searched the continent for a suitable supplier of pressing machinery, in 1883 Fry brought out Fry’s Pure Concentrated Cocoa, the recipe for which had been supervised by Albert Fry himself.

Fry finally realised they had a competitor on their hands and replicated every one of the sales tools that Cadbury had used so effectively over the last half-century. Cadbury’s royal warrant from Queen Victoria had been matched by an identical one for Fry, and then decisively trumped as Fry signed up every Head of State they could lay their hands on. In addition to their star signing, the Prince of Wales, Fry could boast royalty from Emperor Napoleon III to the King of Siam and most points in between.

Cadbury’s by now ancient Lancet quote was matched by one from Fry’s own tame medic, a Dr. Andrew Wilson,

‘I have had Fry’s Pure Concentrated Cocoa again analysed, and as a result I find no flaw or weakness in my constant claim for it, that it represents an ABSOLUTELY PURE AND PERFECT FOOD.’

In other ads they were soon adding the claim that,

‘The MEDICAL PRESS, including the “LANCET,” “BRITISH MEDICAL JOURNAL,” and “MEDICAL ANNUAL, ” testifies to its ABSOLUTE PURITY.’

Fry were also playing at every turn their many quality awards gained from various exhibitions and fairs across Europe and America; a practice that Cadbury had ignored. As time went by, the number of medals being trumpeted was to eventually exceed 300.

Over in York, Rowntree had eventually launched their own brand of pressed cocoa in 1886, calling it once again ‘Elect.’ But by the end of the century, having been constrained from being able to compete effectively with Cadbury’s Cocoa due to Joseph Rowntree’s antipathy to the concept of advertising, they were having to fight by other means. This involved buying business for the Elect brand by offering discounts to customers well outside the limits fixed between the main manufacturers in their collusive agreements. In eschewing the single biggest driver of mass markets — advertising — Rowntree had been forced to adopt a ‘push’ model.

But neither Fry nor Rowntree made much headway against Cocoa Essence with which Cadbury had had eighteen years head start. Both the Fry’s Pure Concentrated Cocoa and the improved Rowntree Elect Cocoa were at best parity products, so there was no danger that they would damage sales of the much better known Cadbury’s Cocoa Essence. Sales of Cadbury’s Cocoa Essence had trebled during the 1880’s and were to double again in the 1890’s.

Cadbury’s investment in van Houten’s hydraulic press had been a bold move, but one driven by the company’s failure to make headway by offering products little different to the multitude already available. Although affordability was still an effective path to growth for the industry as a whole, there was little point in Cadbury being just another also-ran trailing in the wake of Fry. Cadbury, through their cancellation of their adulterated cheaper cocoas, had given their name a brand platform which provided them with insurance against some unforeseen market shift sidelining the Cocoa Essence brand. This distinction was to pay huge dividends when a potentially fatal threat to the Cadbury’s Cocoa Essence brand did in fact arise. And it was to be another output of Coenraad’s van Houten’s inventive mind that was to precipitate the crisis: alkalised cocoa.

Chapter 2

MARKET CHANGES: MOVING ON FROM COCOA ESSENCE

Built on the success of Cocoa Essence, the Cadbury business came on leaps and bounds in the late 19th-century. By 1895, the dozen employees inherited by George and Richard had turned into a small army of over 1,800. Cocoa Essence had been the company’s driving force for thirty years and was still increasing at a rate of 15% a year. Weekly outputs were now up to around half the level of Fry’s and it became an obsession to overtake them. But it was beginning to look like Cocoa Essence would not be up to that task.

While the absolutely pure cocoa powder emerging from the Van Houten press was a lot easier on the stomach than had been the previous full-fat versions, it was by no means fully optimised. Firstly, the drink was coarse and grainy, as the granules did not fully dissolve, but were held in suspension in the hot water or milk. Secondly, the fermentation process undergone by all cocoa beans raised their acidity level, such that the resulting product had quite a strong bitter taste. While Cocoa Essence suffered from these two drawbacks, they had in fact already been solved in one stroke.

Van Houten had discovered that the acid taste of the cocoa nibs (the de-shelled cocoa bean) could be neutralised by adding an alkali – carbonate of potash – prior to the roasting process. To his surprise, not only did the bitter taste disappear, but the powder became more miscible, in that it dispersed in the milk or water to create a more homogenous solution. Not only that, but the colour was darkened, the mixed drink frothed up better, and also tasted milder – what we would describe today as more ‘chocolatey.’

By keeping the process to himself, Coenraad Van Houten could put out onto the market a product that was a superior drinking experience along just about every dimension that mattered. He managed to keep the secret until the end of the 19th-century, when the seemingly inexorable success of Van Houten Cocoa in the British marketplace alerted local manufacturers that something had to be done. In addition to discovering how to improve cocoa, Van Houten had also discovered the vast consumer market that was the British Isles. The Industrial Revolution had created the largest concentrated consumer market the world had ever known, which had become a magnet for every European manufacturer. For the next twenty years, all the new competitive threats to Cadbury’s growing business would come from the innovative and aggressive European firms.

George Cadbury had long been aware that Van Houten was using chemicals to alter the product, and he had made unsuccessful efforts to have alkalisation declared a harmful adulterant. As early as 1888, Cadbury were already feeling the pressure, altering their famous slogan to say ‘Absolutely Pure and Soluble’ in an attempt to pre-emptively own solubility, despite the fact that their product clearly failed to deliver. The next tactic was to launch an allout assault on alkalis, warning the public to increase their vigilance,

Cadburys caution the Public against adulterated Cocoas sold as pure Cocoa, to which about 4 per cent of Alkali and other agents are added, to give apparent strength to the liquor, by making it a dark colour. This addition may be detected by the scent when a tin is freshly opened. No Cocoa can be stronger than Cadbury’s which is guaranteed absolutely pure.

Cadbury were also not shy in pointing out to the public who the culprits were,

Improvements effected in recent years in the manufacture of Cocoa have been brought about “without any admixture of alkalies, starch, sugar or sago, but simply as the result of more scientific treatment.” The cocoa that perfectly answers this description is Cadbury’s Cocoa, which is guaranteed absolutely pure; among the Cocoas that do not answer this description are those of foreign make, notably the Dutch, in which alkalies and other injurious colouring matters are introduced.

Cadbury in their advertisements also focused in on the apparent dangers of potash,

Mr. T. Eustace Hill, M.B., Analyst, Birmingham, certifies that in the foreign cocoas there is a large excess of potash salts over that contained in the nibs of Cadbury’s Cocoa Essence. The excess of alkali, he adds, must be undesirable from a dietetic point of view.

Fearing that a local food analyst might not carry enough gravitas, the reliable tactic of signing up doctors made a re-appearance,

Dr. A.J.H. Crespi says: “Perfectly pure brands, like Cadbury’s Cocoa Essence, never thicken on the application of heat, nor do they, like foreign Cocoas, contain dangerous and objectionable alkaline salts.”

But these efforts failed to have much impact. By 1892, Cadbury ads had, in a typeface bigger than the ‘Absolutely Pure….’ slogan, the crystal-clear message, ‘NO CHEMICALS USED.’

There are two interesting points about this turn of events. Firstly, Cadbury in its advertising had by now dropped most references to the name Cocoa Essence, and was promoting it simply as Cadbury’s Cocoa, even though the Cocoa Essence brand name on the packaging remained unchanged. As the non-pure cocoas had been cancelled, Cocoa Essence was the only Cadbury line of cocoa, so could be boldly promoted as such. However, as a result, the battle with alkalisation was not just an issue of one product versus another, such as VHS versus Betamax, it was the Cadbury name and reputation that was going in to bat. The Cadbury brand itself was making this stand.

Secondly, Cadbury had failed to realise that the benefit of purity was now past its sellby date. While it had been a terrific selling point in the days of rampant adulteration, the Food Adulteration Act of 1872 had forced all manufacturers to clean up their acts, so consumers no longer saw purity as the major benefit it had been when sawdust and sago could make up 4/5ths of the product. Van Houten was convincing the cocoa-buying public that the next big benefits in the category were taste and solubility. While companies can become too attached to brands, recipes, factories and the like, Cadbury had become too attached to a market positioning. They were making a stand on an issue that in reality had been overtaken by events, for which there was an accumulating body of evidence

The strong sales growth of Cocoa Essence in the 1890’s, while seemingly providing evidence that the brand was in rude health had, in fact, been driven more by market expansion than by continuing competitive advantage. Although measurement of these things was not possible in those days, the anecdotal evidence coming back from the sharp end indicated that Cadbury was losing market share.

But companies don’t take market share to the bank. What really focused the minds at Cadbury Bros. was the fact that the first few years of the 20thcentury saw sales for Cocoa Essence grinding to a standstill, and then going backwards. A 5% decline in 1903 got worse in 1904 when sales fell by a further 8%. Cadbury sales declined in every one of their most important 21 towns and cities. Cocoa Essence and its peerless advertising campaign, ‘Absolutely Pure, therefore Best’ had been the dominant force in the company for a generation, and had not only saved the business, but created a very successful and large enterprise.

So what were Cadbury to do? That Cocoa Essence might have run its course was a thought that had to be taken on board. More difficult to accept was that purity itself might no longer be as potent a selling point. Cadbury stood unequivocally for purity, and thirty years of increasingly massive advertising budgets had been sunk into this one thought. A volte-face on this issue was unthinkable, but it could not be argued that the communication strategy that had put purity at the top of the decision tree was being found wanting in trying to convince the public that Van Houten’s superiortasting product was in fact inferior.