ACSI: price hikes sour consumers on food-beverage

Articles
October 21, 2014

ACSI: price hikes sour consumers on food-beverage

Cycle of shopper dissatisfaction appears to be underway.

If food companies could dress up for Halloween, they’d probably like to wear craft brewer costumes. Why not? Yet another study shows how much consumers adore small brewers.  

The American Customer Satisfaction Index, released today, notes a widespread deterioration of customer satisfaction across many food and beverage categories and brands. In the beer category, however, small breweries bucked this trend: they grew 3% to notch an aggregate 82 score in this consumer index, while big beer brands slid 2.5% to 79; Anheuser-Busch was down 5% to 77.  

These data points follow a recent article in Facts, Figures & The Future, our sister newsletter, detailing the impressive sales and share growth of craft brews.  Their wide array of tastes appeals to Millennials, and will spur an infusion of beer flavors soon into many supermarket categories, we predict.

Meanwhile, the ACSI research notes, “Customer satisfaction with grocery food (chocolate, baked goods, cereal, meat, cheese and frozen foods) slid 2.5% to an ACSI score of 79 on a 100-point scale.” ACSI blamed the dip on increasing prices, fueled in part by drought in the western U.S.  Food prices have risen 4.5% - more than twice the 1.9% rate of the Consumer Price Index.

“It’s never good news when customer satisfaction drops across the board,” said Claes Fornell, ACSI chairman and founder in a prepared statement. “Since most nondurables are repeat purchases, strong customer satisfaction is critical. When it weakens, consumers become more reluctant to buy and brand loyalty suffers. As a result, demand weakens overall. Companies typically respond by offering deals and price discounts, which lead to increased brand switching, lower margins, and more volatile revenue streams. This can further erode customer satisfaction as consumers eschew their favorite label for a discounted brand that then turns out to be less satisfactory.”

Some other notable points:

  • In chocolate, Mars (up 1% to an ACSI 85 score) and Nestle (up 2% to an ACSI 85 score) were the only food companies to improve in 2014, though both still trail Hershey, unchanged at 86.
  • A consumer preference shift toward healthier beverages prompted a 2.4% dip in satisfaction in the soft drink category, to an ACSI 82 score.
  • On the nonfoods side, customer satisfaction with shampoo, soap, toothpaste, detergents and cleaning products slid 1.2% to an ASCI 82 score.