Customer Satisfaction With Food Companies Dip

ANN ARBOR, Mich.Customer satisfaction with food companies dipped for the first time in three years, falling 2.4% to 81, according to third-quarter results from the University of Michigan's American Customer Satisfaction Index (ACSI). Key contributors to consumer dissatisfaction were rising food prices, high-profile recalls and slippage in quality.

After almost two years of stalling scores, the overall index fell 0.3% for the third quarter, to a 75.7 on a 0-100 point scale.

Heinz leads the industry, even though it fell 1% to 88. Quaker Oats and Hershey fell 1% to 86; and Mars fell 2% to 85 and Sara Lee remained unchanged at 85.

Fresh and frozen meat producer Tyson plunged -6% to 77an all-time low and well below other food companies. Kellogg also was down 5% to match the industry average at 81.

ConAgra alone improved, 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 ConAgras profit forecast has been reduced.

Periods of stalling ACSI growth have often been followed by weak, and sometimes negative, GDP growth," said 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."

ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year. The overall ACSI score for a given quarter factors in scores from about 225 companies in 45 industries and from government agencies over the previous four quarters.