Crisis communication, reputation and business continuity: the Ferrero case

ferrero-communication-crisis

On Friday 11 April 2022, the Afsca, the Belgian Federal Agency for the Safety of the Food Chain, ordered the closure of the Ferrero production plant in Arlon, Belgium. This is a major blow for the company, which is seeing its activities interrupted on the eve of Easter. The reason for the closure is that the company has been producing contaminated chocolates and confectionery for months without properly warning its customers or the authorities.

Ferrero’s communication was very late and “clearly leaves much to be desired[1] to quote the press. The Italian confectionery giant gives the feeling they had not prepared any crisis communication and this is reflected in the messages addressed to the public and to the authorities, which are missing the mark. People and customers are angry – loss of trust – and Afsca shut down the company in Arlon.

Several media and communication experts have already underlined the importance of crisis communication for the preservation of the reputation of the brand but also of the food sector in general.

I will therefore not go back over the negative impact of this crisis on Ferrero’s reputation. An effective crisis communication process would indeed have limited this impact.

In this blog post, I’m going to focus on the place of reputation as a crisis communication challenge.  Is this challenge really central, especially in this Ferrero crisis? Is the main challenge of crisis communication really to safeguard reputation?

Is reputation a major challenge in crisis communication?

Many describe crisis communication as “protecting the organisation’s reputation”. This approach has some limits. The main one is that it puts the organisation’s self-interest at the centre of the communication strategy. In other words, the success and achievements of the organisation are the main focus of the strategy. The risk is to miss the real expectations of the public and stakeholders (internal or external).

In Ferrero’s communication of 8 April 2022, this is felt when the brand speaks of “internal failures, causing delays in the recovery and sharing of information within the required timeframe“.[2] Barely two lines to evoke in half-tone the responsibility of the company after a silence of several months since December 2021 – when the first problems of contamination would have been known. This very brief communication gives the feeling that the brand is trying to minimise the problem in a bid to preserve (more or less effectively) its reputation. This feeling is all the stronger as Ferrero does not even address a word of apology to its consumers in its message, which is still online at the time of writing.

Indeed, reputation management and crisis communication are different fields with different objectives and challenges.

Crisis communication puts stakeholders and target audiences at the centre. The challenge is to reduce uncertainty among your stakeholders and give them perspective. The aim is to maintain a trustful relationship. The reputational issue is not relevant. Nevertheless, crisis communication allows you to preserve, restore or even increase your reputation, but reputational communication does not make crisis communication.

The crisis challenges

Most of the time, organisations in crisis situations like Ferrero have to deal with three issues.

  1. Disruption, shutdown or decline of business continuity.
  2. Significant loss of sympathy capital among stakeholders
  3. The questioning of the licence to operate.

The first and second point can lead to the third point. This last, in particular is the worst possible outcome for organisational leaders. This loss of a business licence to operate may result in a bankruptcy filing, or hostile takeover – by a competitor – due to a loss of value of shares for example. But it can also be ordered by a regulator or government agency that suspends the licence to operate because of too many incidents. The other two issues can intensify this threat.

In the context of the Ferrero issue, we can see that this threat of loss of the operating licence is real, especially for the Arlon factory in Belgium (which is itself an organisation). The closure of the factory by the Afsca disrupts the continuity of the brand’s activities on the eve of the Easter holidays. Moreover, this closure is the result of a lack of confidence from the Belgian food authorities in Ferrero’s handling of the contamination[3] . In addition, we observed a significant distrust of Ferrero products on social networks. These facts are consequences of the brand’s diminishing sympathy capital with the authorities and consumers.

If such situations were to be repeated or worsen, the Arlon factory (or the group, although this is extremely unlikely) could lose its licence to operate definitively, for the reasons mentioned above. Indeed, the Afsca can, in the event of a problem, force the Arlon factory to close by “withdrawing its approval or its production authorisation“.[4]

The protection of the licence to operate, a major challenge in crisis communication.

What about crisis communication? Protecting this licence to operate is one of the major challenges of crisis communication because its role is precisely to reduce the uncertainties of stakeholders, such as the Afsca in the case of Ferrero, and to provide perspective. It is really a question of maintaining or (re)building a relationship of trust with the various internal or external stakeholders. You do that by putting general interest first in your communications strategy. Self Interest has no priority In the communications strategy.

In general, crisis communication should have a crucial place at the strategic level of any organisation. Especially, at the crisis governance level. Board and executive team should organise their companies with crisis in mind. Having a validated crisis communication process In place on all levels of the organisation (broader system) would have helped – not only the people at Arlon – but also other communicators throughout Ferrero.

For an effective communication strategy, some basics are needed.

  • First, you need to have a good overview of the impact of the crisis on the organisation and the context in which you are operating. What are the disruptions? What is the extent of the disruption? At what level?
  • Map the perception and sentiments of the people perceived as the biggest victims. Check their information needs and the needs from the broader audiences (internal and external) with the most uncertainty regarding the event and the situation.
  • Develop the organisation’s position on the events that led to the disruption (& situation) and formulate a set of substantiated objectives aimed at eliminating these uncertainties with the support of management / the Board. Finally, translate these positions into concrete communication products (holding statement, interview, webcare, Q&A, press release etc.)  wich the crisiscomms team can execute and follow up autonomously.

Note that communication is not an exact science. Crisis communication is a very demanding process that requires knowledge and expertise to relate as broadly and as closely as possible to the different stakeholder perceptions that may exist during a crisis. Crisis communication cannot be improvised, it has to be prepared. “What we rarely do, we rarely do well. “

Often crisis communication is entrusted to the head of public relations or marketing or communication. People who have been given the task of highlighting everything that is positive and attractive about their organisation. A lot of work is sometimes reduced to ashes in a crisis situation. In this context, how do you disconnect emotionally to develop an empathy-based crisis communication strategy?

Conclusion

Beyond protecting its reputation, if Ferrero had put in place an effective crisis communication strategy, it would have been able to respond quickly to the uncertainties expressed by the public but especially by stakeholders such as the food authorities. In this way, we can assume that the Italian brand would have been able to preserve its trust relationship and not be forced to close the Arlon factory with the consequences that this implies for the activities. A day’s closure is a loss of earnings for Ferrero and a blow to the staff in Arlon, who are uncertain whether they will be able to resume their activities.

Of course, it didn’t help that Ferrero was slow to communicate about the contaminations when they had apparently been known for months.

Had the Piedmontese brand communicated as soon as it became aware of the contamination, its reputation would have been damaged, but it could have protected its relationship of trust with its stakeholders.

This relationship of trust is absolutely essential in order to avoid a challenge to its license to operate. This is therefore a fundamental issue of crisis communication at the strategic level.

Nevertheless, it would be interesting to understand why Ferrero did not communicate when it had the opportunity and why crisis communication seems to have been neglected in this respect. Nevertheless, this crisis is an opportunity for the Italian brand to learn from its mistakes in order to better react in the next crisis. “Never waste a good crisis“.



[1] M,-L.M "Ferrero : l'entreprise alimentaire n'avait pas prévu de communication de crise et cela s'est ressenti", press article, RTBF.be, 09/04/2022, accessed online on 22/04/2022 : https://www.rtbf.be/article/ferrero-lentreprise-alimentaire-navait-pas-prevu-de-communication-de-crise-et-cela-sest-ressenti-10971978

[2] "Temporary suspension of activities in Arlon: recall of kinder products manufactured in the same factory is extended", press release, Ferrero, 08/04/2022, accessed online on 22/04/2022: https://www.ferrero.be/fc-4036?newsRVP=2196

[3] Bosseler, J., Buggraff, E., "Affaire Kinder : pourquoi l'Asca a fermé l'Usine Ferrero d'Arlon", Press article, Le Soir, 08/04/2022 , accessed online on 22/04/2022 : https://www.lesoir.be/435173/article/2022-04-08/affaire-kinder-pourquoi-lafsca-ferme-lusine-ferrero-darlon

[4] Bosseler, J.," Asca: des milliers de Contrôles, une centaine de mise à l'arrêt ", Article de presse, Le Soir, 08/04/2022, consulted online on 22/04/2022 : https://www.lesoir.be/435173/article/2022-04-08/affaire-kinder-pourquoi-lafsca-ferme-lusine-ferrero-darlon


Domain: Crisis Communication
Type: Blogpost
Language: English
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