Ferrero lifestyle image

Source: Ferrero

Successful businesses are often those built on a passion for quality that permeates throughout the organisational culture

Consumer goods companies are right to embrace trends such as health, indulgence and convenience that currently underpin product development in food and drink. But being topical doesn’t mean you’re always doing the right thing.

Instead, consider taste. ‘Does it taste good?’ is a simple enough question with a simple yes or no answer for a given segment of consumers. All too often, however, it’s the one consumers remember, and food and drink brands forget.

In some cases, it’s because the internal focus is on easier-to-measure metrics. Sales growth, profit margins and market share are important indicators and likely top of mind for senior teams comprised of leaders from a financial, sales or marketing background.

Perceptions of quality, on the other hand, are more of a challenge to track yet fundamental to why people choose to consume a product again and again. The real expertise and passion that drives product quality usually sits within technical teams, who are less likely to be in charge of running the business.

The side effects are that financial metrics can crowd out product quality measures and the voice representing quality and taste has no seat at the leadership table. 

In our experience, one of the contributing factors for many struggling brands is that product quality has been watered down over time. In contrast, successful businesses are those built on a passion for quality that permeates the organisational culture. That passion often comes from individuals who have worked in the business for a long time and who have extensive and specific knowledge of the product type.

This poses several questions for a consumer goods company: who in the business has the expertise needed to deliver great quality and improve it? Do they have a voice at the senior level when decisions are made? And how can you institutionalise a passion for quality?

Italian manufacturer Ferrero is a good example of an organisation that is obsessive about product quality. The focus runs throughout from how it delivers a consistent product and taste experience globally to how it approaches new launches. There is an interesting link between quality and the strong voice of a private owner committed to the long-term future of the business.

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It’s rare to see such a tight connection to product quality at the top – it helps that Ferrero is privately owned by the founding family – but it shows that passion is not solely the preserve of small startups.

In multi-category businesses, the disconnect between quality and product can be particularly pronounced. Teams move around from category to category and can easily be drawn into seeing a P&L as their prime responsibility, rather than product.

Such a lack of focus on quality in a branded business risks gradually eroding consumer loyalty and, eventually, sales. By the time financial metrics reveal what’s happening, it could be too late. For private label producers, the danger is that a loss of quality will lead to the loss of important retail contracts.

It is possible for that passion for quality to work its way into large organisations, however, regardless of their ownership structure.

Take UK-based, publicly listed Cranswick for example. Cranswick’s long-term outperformance is driven through product quality. The producer of gourmet pork, poultry and pastry products is a quality organisation in every sense. It has invested well in factories and up-to-date technology as well as its people.

When it comes to product, Cranswick actively explores the market for best-quality artisan examples and then figures out how to replicate that at scale in an industrial setting. Ultimately, product is at the heart of the business and it understands what drives consumers’ perception of quality and the economics of achieving that as a producer.

As a consumer goods company, it’s a sweet spot that is easy to lose sight of, but it makes a huge difference to consumers’ choices. It’s well worth considering how to make passion for quality your ingredient for success.