ACSI Customer Report Card for Food Manufacturers

After almost two years of stalling scores, the overall American Customer Satisfaction Index (ACSI) falls 0.3% for the third quarter, which brings the Index to a score of 75.7 on a 0-100 point scale. Accordingly, it will be difficult for the U.S. economy to look to strengthened consumer demand for a boost.

“Periods of stalling ACSI growth have often been followed by weak, and sometimes negative, GDP growth,” said Professor Claes Fornell, founder of the ACSI and author of The Satisfied Customer. “Consumer spending is unlikely to exhibit much of an increase unless bond buying by the Federal Reserve leads to more employment, inflation, consumer confidence and higher stock prices. With the drop in ACSI, consumer spending for the final quarter of 2010 does not look like it will improve enough to spur much economic growth.”

Food: Heinz Rules, but Higher Grocery Prices Contribute to Industry Decline
Customer satisfaction with food companies dips for the first time in three years, falling 2.4% to an ACSI score of 81. Rising food prices seem to be the culprit, but some slippage in quality is also to blame as satisfaction with 9 of the 13 largest manufacturers declines. Heinz falls 1% to 88 but nevertheless leads the industry as it has for the past decade, with cereal maker Quaker Oats and confectioner Hershey (both -1% to 86) close behind and Mars (-2%) and Sara Lee (unchanged) next at 85.

Fresh and frozen meat producer Tyson plunges the most (-6% to 77) to the bottom of the industry, an all-time low and well below other food companies. Customers are complaining about quality and a recall of deli meats probably hasn’t helped either. Kellogg also faces a big drop, down 5% to match the industry average at 81.

At the other end of the spectrum, ConAgra alone improves, surging 6% to nearly offset a steep drop in 2009. Discounts on many frozen food lines and the introduction of new products created better value for money and higher quality, but not without a cost. The lower prices are eating into earnings and ConAgra’s profit forecast has been reduced.