Customer satisfaction drops significantly
Overall customer satisfaction with food manufacturers has dropped significantly, according to the University of Michigan's Q3 American Customer Satisfaction Index (ACSI). Food manufacturers dropped this quarter by 2.4 percent to a score of 81, the first time since 2005 that customer satisfaction with food companies has fallen. The drop is due mainly to rising costs, up 4.2 percent over the 12 month period ending in August, far surpassing the overall inflation rate of 2 percent, according to the Bureau of Labor Statistics. Although overall customer satisfaction with the food industry has dropped, there are a few bright spots. ACSI leader Heinz went up 3 percent to gain a score of 90 on ACSI's 100-point scale, the highest score for any company in any industry measured by ACSI. Heinz also accelerated its earnings growth in the past year by selling off non-core businesses to concentrate on what it has historically done best -- ketchup, sauces and snacks. The company also appears to have been successful at making its core products better, improving packaging, convenience, and variety such as its "picnic pack," offering ketchup, mustard, and relish packaged together, targeting the football tailgating market. Campbell Soup followed a similar strategy with similar results. It's ACSI score is up 4 percent to 83. Campbell's has been making its product line fit "wellness" in food consumption, shedding its "indulgence" brand, chocolate maker Godiva, and offering more health-conscious soup and broth alternatives that are flavored with sea salt to reduce sodium content. This is not to say that indulgence foods are less satisfying. On the contrary, chocolate manufacturers Hershey and Mars also show strong performance with scores of 87 and 86 respectively. On the other hand, The Sara Lee Corp.'s leaner look has not translated yet into higher customer satisfaction. Sara Lee dropped 4 percent to 82 after getting rid of about 40 percent of its business over the past year, including its apparel line, spun off as Hanesbrands and some parts of its food business in packaged meats and coffee brands. Sara Lee has apparently been slow at rolling out new products to appeal to consumers and stimulate investors. With myriad brands to choose from and switching costs low, manufacturers that lead the way in innovation tend to carry the upper hand with the customer.