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28 Sep 2018 00:00
The Listeriosis crisis affected not only Tiger Brands, but the industry as a whole
The year’s biggest gain in reputation was garnered by the Mr Price Group, up by 9%, which contributed in turn to the overall success of the retail industry as the best-reputed sector in South Africa this year. Their success might be attributed to a number of factors: among them, the fact that South Africans tend to favour brands dealing in goods and services close to their person — food and clothing, it’s clear have a strong emotional attachment.
In a tough economic climate, Mr Price clearly articulates its “value” message, with its price strategy at the core of this, allowing for a small sales surge, even though this was later corrected by the inescapable economic downturn.
2018’s leading brands are a far more diverse group than those who have held the top spots in previous years. While in 2016 Woolworths, Clover and Coca-Cola between them swept all of the top honours across categories, with a similar situation involving Pick n Pay, Clover and Coca-Cola in 2017, 2018’s results saw the field opening up and a greater number of companies claiming various accolades. This year, Discovery holds two top spots for innovation and workplace, while Clover held onto products and services, Woolworths took top honours for citizenship, governance went to Mr Price, while leadership saw Unilever ranked highest and Coca-Cola took performance.
“In 2018, there are two significant movements: Mr Price had a significant rise, and Tiger Brands had a phenomenal drop. To zero in on Tiger Brands’ drop, you can see how problems of reputation in that one company — the listeriosis crisis, and what happened — pulled down the industry as a whole,” explains Moshopyadi Hannah Heil of Reputation House. “One company can have a decline that can contribute to the decline of the general industry.”
The greatest drop in reputation was that of Tiger Brands, almost certainly as a result of its handling of the listeriosis crisis earlier this year, which also led to losses in excess of R300-million for the group. Interestingly, this is a relatively common phenomenon: a significant drop in reputation for one corporation in an industry can lead to a knock-on effect in that sector, causing many brands to suffer some damage to their reputation as a result of a scandal or setback facing a competitor.
This seems at first to be surprising, but makes sense if one imagines the disgruntled consumer mumbling, “Wow, banks…” to a friend, or tweeting that “These networks want to steal our data!”. In all likelihood, the person making their statement has only had experience with one service provide, but has had their perception of the industry as a whole tainted by the interaction — just as the general public might come to distrust a certain service, product or group of professionals as the result of the actions of one.
Says Heil: “There are all sorts of repercussions when we don’t watch what our industry is doing. In fact, we would be better-served by making sure that we encourage our peers, even though they are competitors, to toe the line, to stick to corporate governance principles, to hold each other to account, and all the other things that governance principles require.”
Perhaps this isn’t quite fair for all those affected, but it’s a reality that stands in stark contrast to the cartoonish image of a tycoon rubbing his hands together with glee at his competitor’s failings. Instead, a setback for one company in an industry should be met by industry peers with a plan of action to sustain or regain consumer trust.
Says Heil: “As a small market, we have the responsibility to appreciate that when one company in South Africa ‘sneezes’, the effect and the ‘infection’ tends to be far more severe. It’s like if we’re in a kindergarden of children contained in one classroom — when one child sneezes, the chance of the rest of the children getting infected is that much higher than if that child were sitting on a bench in an open sports field.”
This is something that can be avoided, Heil makes clear. “This research tells us that it’s important to recognise that what you do as an organisation, as an individual in that organisation, as a leader in that organisation, ultimately does impact more than just the company that you’re working for. It’s a two-way street: just as the reputation of the country taints the reputation of the companies, equally, the reputations of the corporations that operate in a country also taint the reputation of that country. So, it’s vice versa, and ultimately what we need to realise is that all of us have got a stake in this and all of us do contribute, as we see in the case of the industries that have been hit.”
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