Dive Brief:
- Only a handful of large food and beverage companies made progress on the American Customer Satisfaction Index (ACSI) report on nondurable products released Tuesday. Overall, packaged food fell 2.4% — to an 81 score out of 100. The waning satisfaction is the result of a growing demand for higher-quality, fresh, natural and organic products, according to a ACSI press release.
- Hershey, Quaker and Conagra rose in this latest customer satisfaction ranking of food companies. Coca-Cola, PepsiCo and Molson Coors also posted gains in the beverage sector. Losing ground were Kraft Heinz, Dole, General Mills, Mars, Nestle, Tyson Foods and Dr Pepper Snapple.
- This ACSI report was based on 5,677 customer surveys collected between Oct. 17, 2016, and Sept. 16, 2017.
Dive Insight:
As American consumers turn away from processed foods and toward healthier choices, they're becoming less satisfied with CPG companies and the products they offer. Yet there are exceptions, as this index reveals. Manufacturers who innovate and pay attention to customer preferences do better than those that resist input, are slow to change, or struggle to shed an image that has long been associated with the company.
For example, Hersey gained 2% to take the No. 1 spot in this index with a score of 86, outpacing Mars and Nestle, which both dropped 2% to 82 points. According to ACSI, the Pennsylvania-based company "registers strong sales growth, successfully adapting to consumer preferences by launching new products, removing artificial ingredients, and making nutritional information more available."
Hershey has the nation's second-largest share of the snacking market, at 7.5%. During a recent investor presentation, CEO Michele Buck expressed her intention to transform the company into "an innovative snacking powerhouse." The company also moved into the meat snacks category by acquiring Krave, which is experiencing strong growth. Hershey also recently announced a new popcorn snack, Popwell "half-popped" popcorn. In addition, Hershey announced in 2015 that it will use simpler ingredients in many of its candies, beginning with its popular chocolate bars and Kisses before moving on to other products in its portfolio.
Quaker and Conagra also did well, with the former posting a 1% gain to a score of 84 and the latter gaining 2% for an 82 score. Quaker's showing was credited to the continuing popularity of its main ingredient — oats — and its social media presence, while Conagra's strengths came from revamped frozen meals, discontinuation of slower-selling items and innovative new products focused on nutritional value.
Dropping the most in this customer satisfaction index was Dole, which lost 5% and fell from first place. This was blamed on the company's $1.3 billion debt, moving California strawberry operations out of California and selling its headquarters. The decline was not related to the company's fruits, vegetable and juice products.
Kraft Heinz fell 1% to 82 points despite its popular ketchup and macaroni and cheese brands. But as the index noted, consumers "seem less receptive to the reinvention of nostalgic products" and it may be tough to convince people focused on healthier options that their old favorites fill the bill. Kraft announced last year it switched to natural ingredients in its mac & cheese products — months after making these changes.
On the beverage side, Coke's 5% climb took it from last place to first in the index and on par with Pepsi, which nudged up 1% to 85. ACSI noted that Coca-Cola Zero Sugar came out in August and boosted the company's customer satisfaction rating "to a level it hasn't exceeded since 2000." The beverage giant said Wednesday that its Coca-Cola Zero Sugar, which launched in the U.S. in August, posted double-digit growth during the quarter compared to a year ago.
Dr Pepper Snapple was on the other end of the spectrum. It fell 5% in the index and went from the top of the heap to the bottom. ACSI gave no specific reason for this slide, but the company has been struggling to integrate Bai Brands, the maker of juices, waters and ready-to-drink teas, which it bought last year.
CPG companies are trying hard to reposition themselves in a demanding climate, and this index report is another indication of the challenges they face. Some have been diversifying by buying up smaller firms, including Dr Pepper Snapple purchasing Bai and Hershey acquiring Krave. Other companies are using venture capital arms to invest in promising startups, like General Mills' 301 INC, and reformulating their products, such as Nestle and Pepsi.
It may be that these manufacturers are moving too slowly in some areas to suit consumers. However, as the results of this index show, many do pay attention and companies can be rewarded for their efforts. Still, it's evident that even those that have made progress can't afford to ease up as consumers continue to demand more better-for-you products.