Where’s the beef? The cost of quality at the expense of value

Following the recent revelations regarding beef products, Jon Weeks Director in Ipsos Marketing explores quality and value.

Food scandals are nothing new, particularly when more costly ingredients are substituted for another cheaper alternative.  In 1858 more than 200 people were poisoned and 20 died when sugar was partially substituted for a bulking agent, which was unfortunately replaced by arsenic.

More recent scandals have included the Melamine milk scandal in China during 2006, fake eggs (2012) and even exploding watermelons (2011, and more comedy than health risk).  Whilst we can be simultaneously repulsed by the unscrupulousness and marvel at man’s ability to ingenious fakery it was perhaps only a matter of time before a new scandal surfaced during recessionary times.

At present the gory details are still playing out across media channels, with large volumes of products being tested and subsequently withdrawn from sale.  What really lies at the heart of this crisis is the relationship between quality and value.

Now, more than ever, post-2008 consumers are seeking greater value when shopping.  Seeking bargains, hunting for the best price online, or in some cases stepping down one rung in their perceived hierarchy of supermarket retailers.  Certain staples such as milk, bread, and meat have been put under further strain as grain and soya bean prices soar from weaker harvests that push up prices and influence animal feed pricing.

Even in the midst of price battles across retailers, consumers expect quality.  It’s human nature to want the most you can get from the resources at your disposal, and at the very least consumers trust that when a pack claims “100% beef” it is just that.

So, where are the weak links in the chain?  Has too much pressure been put on procurement teams, perhaps charged with driving value rather than quality?  Has the supply chain just become too complex – a mass of individual negotiations, with no possibility of gaining any kind of overview?  Certainly it is taking some time to get to grips with exactly what is going on, and who is (or is not) responsible for making sure the “right things” happen.

We have seen this week on a study examining meat snack ideas that consumer concerns are very real, and play out when consumers are asked to express what they think in their own words – even though the products are not beef, provenance and concerns around it are coming through for those interviewed in the UK.    Quality is a corporate responsibility, and a consumer’s expectation – from the food that they buy, the cleanliness of the train they travel on, or the healthcare they receive.

In 2012 65% of British adults thought it is “more important for companies to take responsibility in difficult economic times” [Base: 1,055 GB adults 16-64, 7-12 September 2012] and only one in three (36%) of the online public across 24 markets worldwide agree with the statement that “CEOs of large companies can generally be trusted to tell the truth when they make statements about their company or industry” [Source: Ipsos Global Advisor 2011, Base: 18,746 online citizens].

Delivery and cost are key supply chain metrics, but greater focus on Quality will need to be communicated to consumers within FMCG, certainly on meat products, to give reassurance and to rebuild trust with consumers.  Some brands could be irreparably damaged, when consumers shift to alternatives and never look back.

Is this the catalyst for a resurgence of consumers using independent butchers?  Short-term is likely, but the quest for convenience will return, and ‘one-shop fits all’ will likely overcome this.  Morrisons’ butchers have reported a rise in sales of 18% at their fresh meat counters since the horse meat crisis took hold – the Market Street style of their stores providing the reassuring human touch for shoppers.

Challenging times ahead across Europe to reconcile, and reputations are at stake.  But even the Romans had a grasp on this – Caveat Emptor – buyer beware.

Jon Weeks is Director in Ipsos Marketing. Follow me on Twitter: @weeks_jon