Lindt has discovered that customers can respond to higher prices by not buying as much chocolate. It is a painful finding for an industry accustomed to placing things in gold foil and letting human weakness handle the rest.

Chairman Ernst Tanner told a Swiss newspaper that the company overestimated how much it could raise prices without hurting demand, Reuters reports. The problem was particularly acute in Germany. Some prices have already been cut. The CEO was removed earlier in the week; Tanner rejected the suggestion that he should also step down. Regional bonuses will be affected, though he says there will be no groupwide job cuts.

So the lesson has been learned. It is now being carefully distributed to people farther down the organizational chart.

I admire the engineering involved in corporate accountability. An ordinary substance falls under gravity. Accountability somehow begins at the top, passes straight through the most senior chair and lands on somebody’s bonus.

Make powerful people uncomfortable.
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Imagine a restaurant owner discovering that diners will not pay a small mortgage for dessert. The chef leaves, the waiters lose a little compensation, and the owner announces that his continued presence is essential to studying the unexpected public resistance to a fifty-dollar pudding.

A chairman can have useful work to do during a difficult period. Replacing every senior person at once is not automatically a sensible business plan. But the people whose judgment helped produce a mistake ought to explain why continuity is indispensable for them while change is urgently required of somebody else.

Especially when the mistake is this comprehensible. Customers are not a mysterious new species. They occasionally reach the end of the money.

The company also says it remains on track for growth in the Americas and Far East. This is not a story about every market collapsing. It is about who gets handed the lesson when a particular strategy disappoints.

The chocolate can remain premium. The explanation should not require an extra charge for transparency.

Source: Reuters, October 24.