Straight from the horse’s mouth

The UK is currently gripped by one of its periodic food scandals.

For once this isn’t about food safety – no one has been feeding animal parts to other animals and therefore exposing the food chain to lethal pathogens, well not as far as we know it – but like the others it’s a by product of the obsession we have with cutting food costs at all costs.

A couple of weeks ago or the Food Standards Agency found Horse DNA in a number of economy burger products and substantial quantities of horse in some, including those of the supermarket chain Tesco.

This week Findus (a frozen food brand owned by Private Equity group Lion, whose CEO hilariously loves nothing more than a game of polo) was exposed for producing beef lasagne with next to no beef in it – the principle ingredient being horse.

It’s not about food safety because unless equine drugs are found in the meat rendering it unfit for human consumption there is nothing wrong with eating horsemeat, lots of people like it – just no one in this country.

But it is a food labelling and quality issue. It is fine to bulk out cheap meat products with horse meat, it’s just you need to make this clear to the consumer and see what happens to your sales.

And here’s what interesting to me. Because one of the historic and still relevant roles of a brand is as a guarantee of quality. Classically brands were the signatures of the person that made the product and this signature acted as a guarantee that the sugar, detergent or breakfast cereal was consistently made of the right stuff and not cut with cheap contaminants. If Heinz or Kellogg’s are much loved and respected brands today it is partly for this very reason.

When Tesco was found to be unwittingly flogging horse burgers I suspect the long term brand damage was not significant. Tesco’s brand doesn’t act in this way – its not really a guarantee of quality its the own label expression of a big retailer that sells many other burgers and many other own label products. Its a mark of value more than quality. Nothing more than a ripple of jokes in the twittersphere ensued and I doubt anyone stopped shopping at Tesco.

That is not true for Findus. Its a classic, old school, FMCG brand that exists to act as a mark of quality and reassurance. While its no longer quite the family favourite it was in my childhood, for many families buying a Findus lasagne as opposed to a Tesco one is about buying something they feel is a cut above own label, something a little bit more special. And the problem for Findus is that when the brand that acts as a guarantee of quality is nothing of the sort the brand suffers and arguably suffers for a long time. It may not be quite time to lump Findus into the bag of brands that had to be renamed because of scandal or tragedy like the jewelers Ratners or the ferry operator Townsend Thoresen, but if the product contamination reaches more of their range or equine drugs are found in the lasagnes, the brand contamination will be fatal.

All of which does call into question the role of private equity. Now there are plenty of private equity firms that value and nurture the brands they own, often bringing much needed professionalism to floundering businesses. However, it is still the case that may use the time dis-honoured method of loading the business with debt and then slashing costs to make a quick buck when they sell after a few years. At its very worst this approach leads to a lack of expertise in the business’ leadership beyond managing the balance sheet, little continuity of care for a brand that is being fattened for sale and temptation to cut costs in ways that expose the brand to long term and potentially lethal damage.

Like stuffing your lasagnes with horse meat.