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October 18, 2016

Bernard Matthews’s reputational flaws

When turkey farmer Bernard Matthews passed away in 2010, the brand he left behind bearing his name was in crisis. In 2013 private equity firm Rutland Partners invested £25m into Bernard Matthews Farms and its German subsidiary was sold for £11.9m in the summer of 2016.

Accountancy firm Deloitte was brought in as an adviser earlier this year, earning £1.5m, and spending £3m on rebranding to Bernard Matthews Farms. But it seems that the losers may be Bernard Matthews’ employees as the company’s pension scheme has a deficit of £17.5m (and rising to £20m) yet its workers are set to receive nothing.

In September this year, Bernard Matthews’ assets – including farms, land and buildings – were sold for £87.5m to two property companies. This saved 2,000 jobs, but it seems that, as with BHS, pensions and unsecured creditors are expected to lose out.

Persistent problems

Problems have persisted for the brand continuously since the Turkey Twizzlers debacle of 2005. Prior to this, Bernard Matthews was one of the most popular meat brands, providing products (including their infamous Turkey Online reviewsTwizzlers) to schools across the UK. The brand came in for severe criticism from Jamie Oliver’s campaign for healthy
food in schools which led to the products being discontinued after social and political pressure for better nutrition for children.

Just a year later, two of Bernard Matthews’ workers were convicted of animal cruelty for playing ‘baseball’ with live turkeys which further damaged the company’s reputation.

Things got even worse for the firm in 2007, when one of the company’s farms suffered an outbreak of the H5N1 strain of avian influenza, known popularly as ‘bird flu’.

The rebrand from Bernard Matthews Foods to Bernard Matthews Farms in 2008 did little to improve the company’s reputation and, by 2010 when Matthews retired from his position as chairman and passed away later that year, the company was really struggling.

The outbreak of bird flu in 2013 further damaged the credibility and consumer confidence in the brand and now it seems that further criticism is heading in Bernard Matthews’s direction due to ongoing financial trouble.

Reputation recovery

The first thing that a company needs to do after a crisis is to learn from its mistakes. Some mistakes are inevitable, but consumer trust can be restored over time to help a brand recover.

The problem Bernard Matthews Farms has is that the problems continue to persist. Some of the bad situations have been unfortunate and out of Bernard Matthews’s control due to the nature of the food market. But others are down to incompetence, mismanagement and poor decision-making from the board downwards.

It is the workers and those at the bottom line who will inevitably struggle, and in this case it seems that they are the last of priorities for the company as it attempts to manage itself away from further crises.

The outcome of BHS’s £700m pension scheme liability is still undetermined, which could be rescued by the Pension Protection Fund (PPF), but employees may not receive the full amount they are entitled to.

Bernard Matthews must now ensure that an amicable solution is reached, and attempt to rebuild the brand from scratch and recover its ‘family favourite’ image which it has become so distant from in the past decade.

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