By Bill Coletti, CEO, Kith
Critical Takeaways:
- If your company makes a promise, it must be able to deliver
- When brand promises fail to match customer expectations, risk soars and critical moments escalate
- The top 6 critical moments of 2016—from Chipotle’s crisis to increased food recalls—illustrate the increasing reputational threat of corporate silos and the critical importance of aligning communications and operations departments
Two fundamentals define a company—what you say (the responsibility of communications and marketing departments), and what you do (the responsibility of the operations department).
If these two pillars aren’t aligned, things can crash fast. Just take look at some of the critical moments that defined the food and agriculture industry in 2016–from the Chipotle crisis to increased food recalls—where fundamental business misalignments created huge risks for companies, which ended up causing a significant amount of reputational damage to at least two major brands.
In today’s landscape of 24-7 access to information, increased consumer demands and more government oversight, companies can no longer afford these types of divides.
Here’s a look at the top six critical moments of 2016 that flared up out of various forms of operational misalignment, and the key lessons we can from them:
1.) Failed promises at Chipotle. Chipotle’s brand promised high-quality, healthy, sustainably-sourced fast food. Unfortunately, hundreds of customers nationwide contracted food-borne illness after eating at Chipotle restaurants in the summer of 2015. The issue resurfaced in 2016. While Chipotle worked with organic farms near its facilities, some of these farms didn’t have adequate food safety protocols. Also, not all of Chipotle’s employees were following the proper food safety procedures. The reputational damage and financial fallout from this critical moment has continued to plague Chipotle through 2016.
- Lessons learned: Stating a marketing promise doesn’t make it true. If marketing isn’t realistic about the risks being created, the denial can trigger serious consequences. Get real by understanding operations’ protocols as much as possible. Also, be aware of any potential food safety issues—either internally or externally–that could impact your company. This knowledge will help you tell your company’s story effectively and accurately while building trust and strengthening customer loyalty.
2.) Antibiotic use. Consumers, regulators, investors and non-governmental agencies (NGOs) are asking more questions about antibiotics. How are they being used? Are antibiotics in our food? Restaurant chains like McDonalds, Panera Bread and Subway are starting to source antibiotic-free meat. Major U.S. meat processing companies are also responding. One announced a net reduction of antibiotics in their red meat. Another company promotes no antibiotic use in more than half of its poultry flocks and has a goal to eliminate antibiotics from all its operations. Alternatively, one of the largest chicken producers in America has taken the opposite stance, vigorously defending its use of antibiotics. The company has launched a marketing campaign to help people understand its philosophy.
- Lessons learned: Be prepared to answer where your company stands on antibiotic use. Also, make sure the communications team is aligned with the operations team on what you’re doing, and what you say you’re doing. Then be ready to defend your company’s stance, whether you’re opting to use antibiotics or not.
3.) Big Ag buying small brands. Two high-profile examples of Big Ag buying smaller, niche brands include ConAgra Foods’ purchase of FronteraFoods, the Chicago-based gourmet Mexican food company founded by chef Rick Bayless, and Hormel’s purchase of Applegate Farms, a leading brand of natural and organic prepared meats. The large companies are trying to move away from the commodities business and capture a higher end market by broadening their value proposition for the entire company. Buying these niche brands is complicated, though. Demands for transparency can be challenging for bigger organizations. Also, when a small company is merged into the big company’s operations, brand integrity (and hence its value) is often destroyed.
- Lessons learned: Staying true to a niche brand’s values can be challenging. Communicators must respect the messages that made the niche brand successful. Communicators must also maintain consumers’ trust when the small company is integrated into the larger organization. Look for ways to protect brand integrity and grow market share by highlighting the strengths of both the niche brand and the larger company. Also, show skeptical consumers that you’re sticking with the principles embraced by smaller company’s founders.
4.) Food recalls. It seems like no ready-to-eat food is safe from the deadly listeria contamination. Massive recalls from vegetables to Blue Bell ice cream have impacted consumers across all 50 states and Canada this past year. Blue Bell, for example, issued yet another ice cream recall in 2016 after a third-party supplier raised alarms about possible Listeria contamination in the company’s eggless cookie dough. Around that same time, consumers in nine states were impacted when a Texas company decided to recall 30,000 cases of fresh-cut vegetable products from eight retail chains — including Wal-Mart, QuikTrip and Publix — after a random sample tested positive for Listeria monocytogenes. Communicators at these companies were backed into a corner because operations didn’t do what they were supposed to, and communicators weren’t prepared for it. The cost of the disconnect was huge.
- Lessons learned: Food safety isn’t a marketing strategy; it’s an essential business practice. Create a crisis framework that identifies food safety threats and preventable issues. Also, partner with operations to develop a crisis management training program and refine your crisis communications plan as circumstances dictate.
5.) Global food imports. The way American consumers consume meat is changing, due to new trade agreements worldwide which will allow meat to be shipped from overseas countries into the U.S. Importing meat can make good business sense, but many activist groups are ready to pounce on this issue. While consumers have a great deal of confidence in American food products, there’s much less confidence in imported foods.
- Lessons learned: Address consumers’ concerns about food imports by explaining the value, affordability and safety of food imports. Assure consumers that all of your company’s products are safe and nutritious, just as your brand promises. Also, ensure that you know what operations is doing, and emphasize how much oversight will be required for the company’s overseas operations.
6.) Sustainability to accountability. Some companies have made sustainability a marketing tactic. However, activist groups throughout the supply chain are holding companies accountable for social and environmental practices. Many are even keeping score. This accountability is driving increased online conversations and setting the bar higher for companies around sustainability. Many companies are responding with more transparent access to information while some are even turning to third-party auditing groups to enhance their company’s quality management system.
- Lessons learned: It’s critical that companies walk the talk. Instead of discussing sustainability in a press release or annual report, proactively share data or success stories on your website and in your corporate communications that demonstrate how your company is moving from sustainability to accountability. These specific examples can position your company as an industry leader and help create a competitive marketing advantage.
Summary—living your brand = success
Best-in-class food and agriculture businesses will embrace the key lessons of 2016’s critical moments, which highlight the acute need for communications and operations departments to be firmly aligned.
Check out other critical moment insights for smart people in our blog archive.
