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IBM Survey Reveals Eroding Consumer Confidence in Packaged Goods Brands

Company Recommends Consumer Products Industry Reestablish Trust Through Increased Transparency

ARMONK, NY - 28 Jun 2007: In a new IBM (NYSE: IBM) survey, a majority of consumers revealed the level of information Consumer Products companies provide on the contents, origins and environmental impact of their products greatly impacts their level of trust in those companies.

Recent product contaminations and recalls coupled with confusion over marketing claims have contributed to an erosion of consumers' trust in Consumer Product manufacturers, according to the IBM survey of 1,676 consumers in the United States and United Kingdom. Nearly 70 percent of consumers expressed a low overall level of trust in the claims 'branded food products' make about their environmental impact and health and wellness benefits.(1) Almost half of consumers are more concerned about safety, and nearly two of every five consumers said they buy different brands today because of these concerns.(2)

Nearly 60 percent of respondents also said they have more knowledge about the contents of the food they buy now versus two years ago(2), but despite this increased awareness, 72 percent now want even more information about the source, the production methods and the contents of the packaged food products they buy.(3)

In a complementary IBM study, released today in conjunction with the survey results, the company identifies a new breed of consumer that is driving this shift. The study, titled "Establishing Trust through Traceability," calls this new catalyst group the "Omni Consumer." These consumers are concerned, empowered and more connected than ever -- with sophisticated technologies at their fingertips.

According to this study, the Omni Consumer is also purchasing a wider range of products and is actively and frequently tuning in and out of unwanted marketing messages. "Clearly the factors influencing consumer purchasing behaviors have changed dramatically over the past five years," said Bill Gilmour, Global Consumer Products Lead, IBM Global Business Services. "While product, packaging and branding are still key, their significance has been topped by a number of other factors. The Omni Consumer wants products that deliver incremental health and wellness benefits coupled with an understanding of the impact of these products on individuals, society and the environment."

IBM suggests in the new study that companies align a roadmap to "Full Value Traceability" with their brand vision to set themselves apart from the pack. These new systems can both safeguard the food supply and enable the trust and transparency necessary to instill consumer confidence and, in turn, protect and empower individual companies' brands. The linkage of the physical and information supply chain coupled with engaging all the relevant stakeholders, is an imperative in building a "Full Value Traceability" system.

"To date, most traceability investments have been driven by regulation," said Tom Peterson, General Manager, IBM Consumer Products Industry. "We're recommending our clients expand these initiatives beyond a defensive posture and leverage them for brand empowerment. This enables them to better protect their brands against contaminations, counterfeits and recalls. At the same time, it builds a platform to restore consumer confidence and aggressively enter new high-value segments like functional foods and organics. The era of the Omni Consumer is requiring a deeper commitment to transparency, and the companies who deliver on this will be the clear winners."

IBM has deep experience in the Consumer Products industry and expertise around the management of global supply chains and procurement systems. The company offers a comprehensive portfolio of software, hardware and services which effectively link the physical and informational supply chains. IBM also works directly with industry bodies such as GS1 and GCI to support the definition, adoption and implementation of global data standards.

IBM Global Business Services consultants can provide an analysis and plan for implementing a Full Value Traceability system and solutions like the IBM Food Safety Manager. The company is also a leader in deploying technologies like Service Oriented Architectures, 2D Barcodes and innovations around Radio Frequency Identification, which can be key components in delivering transparency to consumers.

As part of its ongoing consumer research efforts, IBM is making the full study on "Enabling Trust through Transparency" available for free download at: www.ibm.com/consumerproducts.

IBM Survey Methodology

This survey was conducted online by Harris Interactive on behalf of IBM between February 13 and 21, 2007, among 1,064 U.S. adults and 612 U.K. adults, ages 18 and over. Qualified respondents were classified as grocery decision makers, based on their purchase responsibility for groceries within their household. U.S. figures for age/sex, race, region, education, and income, and U.K. figures for age/sex, region, education, and Internet usage, were weighted where necessary to bring them into line with their actual proportions in the United States and United Kingdom populations. Propensity score weighting was also used to adjust for respondents' propensity to be online.

With a pure probability sample of 1,064 and 612, one could say with a ninety-five percent probability that the overall results would have a sampling error of +/- 3.1 and +/- 4.0 percentage points, respectively. Sampling error for data based on sub-samples would be higher and would vary. However, that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.

About the IBM Institute for Business Value

The IBM Institute for Business Value provides strategic insights and recommendations that address critical business challenges to help clients capitalize on new opportunities. The Institute is comprised of consultants around the world who conduct research and analysis in 17 industries and across five functional disciplines, including human capital management, financial management, corporate strategy, supply chain management and customer relationship management. For more information visit: www.ibm.com/iibv

About IBM

For more information on IBM and further details on the IBM study, please access the company's online Press Kit at www.ibm.com/press/traceability.

Contact(s) information

Michael Rowinski
IBM Media Relations
917-472-3324
rowinski@us.ibm.com

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1 (1) Based on a bottom 2 rating of 1 or 2 on a 5 point scale

2 (2) Based on a top 2 rating of 4 or 5 on a 5 point scale

3 (3) Rating of 3, 4, or 5 on a 5-point agreement scale

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