Comfort in chocolate, but not in frozen dinners
After a surge in the second quarter, aggregate customer satisfaction as measured by the Ann Arbor, Mich.-based University of Michigan American Customer Satisfaction Index (ACSI) stalls. A national economic indicator of customer evaluations of the quality of products and services available to household consumers in the U.S., the ACSI loses 0.1 percent for the third quarter, which brings the Index to a score of 76.0 on a 100-point scale. Still, the Index has improved since the depths of the recession and stands 1.4 percent higher than it was a year ago. Despite the slight drop in ACSI, many companies are improving their customer relationships: gainers lead decliners 45 percent to 39 percent, with 16 percent unchanged.
Customer satisfaction with food manufacturers was unchanged with an ACSI score of 83. Heinz remains at the top with a score of 89, a spot Heinz has held for each of the past 10 years. Buyer satisfaction with Heinz ketchup and the many other food products the company manufactures ties luxury automakers Lexus and Cadillac for the highest score across all categories covered by ACSI.
Cereal maker Quaker follows closely with a score of 87, joined by the two chocolate companies, Hershey and Mars. Hershey improved by 2 percent and Mars by 1 percent to 87, while Nestlé also improved (+2 percent to 85). The average of the three candy makers stands at 86, an all-time high. The same thing happened in 2001 in the midst of the previous recession and also in 2004 when concern over the Iraq war and rising fuel prices appeared to be reflected in higher satisfaction with comfort foods.
Among food companies, Conagra Foods moves sharply in the wrong direction: Customer satisfaction matches the greatest one-year fall of any company ever for food companies - its ACSI score drops by 7 percent to 78, an all-time low and well below all industry competitors, the nearest being Campbell's and Tyson at 82. It is very unusual for food manufacturers to have large swings in customer satisfaction, because products usually do not change much over 12 months. However, price increases and elimination of certain offerings can certainly have a negative impact. The Banquet frozen dinners product line, which has traditionally been associated with discount pricing was among those affected. On average, price increased by 25 percent contributing to a decline in sales that led to cost-cutting in other areas. Certain product varieties were eliminated (e. g. barbecued chicken and country-fried pork), the number of sizes reduced (mostly smaller portion sizes), and in some cases cheaper ingredients used (substituting mashed potatoes for brownies). Although the changes have had a positive short term-effect on earnings, it is usually difficult to counteract the negative effects of falling customer satisfaction over time.
Beer drinker satisfaction has soared to an all-time high in ACSI. It too seems to follow the pattern of chocolate and sweets, but perhaps a bit less pronounced. The industry improved 1 percent to an ACSI score of 84, led by a 4 percent climb for Anheuser-Busch to a score of 85. Just a year after it was acquired by the Belgian-Brazilian conglomerate InBev, Anheuser-Busch matched its biggest ever single-year gain to reach its highest level ever. InBev has made a number of changes in business strategy - it sold the ten theme parks owned by Anheuser-Busch to reduce debt and focus on core business, cut over 1,000 employees, and overhauled management. The company has seen increased sales of lower-priced brands such as Natural Light and Busch and of newer products such as Bud Light Lime and Golden Wheat varieties.Results for Miller and Coors brands, which market under a joint operating agreement, were mixed. Miller improved slightly, up 1 percent to 83, while Coors dropped 2 percent to 81, falling to the bottom of the industry. The Coors brand portfolio is composed of a higher proportion of high-end entities and more high-priced brands compared with Anheuser-Busch. In the midst of an economic downturn, customers typically look more to value for money. Coors drinkers report a sharp decline in value for money.