Above: the Wolfsburg Plant in Germany, one of Volkswagen’s major production plants
Volkswagen is a familiar household name
But in what category would you put its best-selling product?
You might say transport, or vehicles.
Or perhaps heavy industry.
It’s probably unlikely that you would say food. Yet that’s a more accurate description.
No, the Golfs, Polos and Foxes the company produces have not suddenly become edible.
In fact, the company produces more sausages than automobiles each year.
Above: Typical “Currywurst” sausage, served sliced with ketchup and curry powder
The ‘Currywurst’ that its employees love are produced in-house (along with a ketchup to compliment the sausage).
The company then sells its own-brand sausages – those that were originally designed in-house – a to supermarkets and other outlets. (The first ones were made and consumed in 1973).
In-house catering had certain advantages. With the sheer size of Volkswagen’s plant – and hence the firm’s towering revenues – the equipment needed to make tons of sausages is a worthwhile investment, given the economies of scale and greater efficiency of labour that can be reached with such automation.
(And yes, it’s tons: the annual ketchup production alone has surpassed 600 metric tonnes).
Volkswagen’s case shows an interesting take on the recurring question: what should a company do/make in-house, and what should it outsource?
For the plant of most companies, it’s the better deal that sausages are best bought from an outside provider (even if they’re cooked onsite). Making the sausages themselves just wouldn’t be worth the time and labour it would take.
But there’s another interesting takeaway here.
Perhaps, that the facts we assume in business might not be what they seem.
Sales of Volkswagen sausages have consistently beat their vehicle sales in recent years.
Does that mean the company end up making more money from meat products than automobiles?
That sounds unlikely.
Volkswagen would more likely be better off building on its industry knowledge to capitalise on Electric Vehicle sales or automation technology than sell sausages.
But there can be value in opening the mind to new ideas.
Sometimes a radical change in the market brings with it the need for a radical change in what a company sells. The famous example of how Kodak failed to adapt from selling film to selling digital photography products comes to mind. From the company’s invention of the digital camera in 1975 to its bankruptcy filing in 2012, it is a story of where an immense change was needed – but not met with.
Microsoft is an example of a company adapting to change. The company saw a (relative) decline in its share of the worldwide Operating Systems market with the launch of Apple’s IoS (2007) and Google’s Android (2008); after all, the early leads that the OS’s of Apple and Google were so great that Microsoft’s own Windows Phone OS (2010) simply couldn’t catch up with them. (A higher and higher percentage of the OS market got eaten up by cellphones and other mobile devices.)
Nevertheless, Microsoft did capitalize on the trust in many of its long-serving brands – such as Office, which it sold more subscriptions of – and adapted its business model considerably, thus remaining a strong player in the computing market.
So there are some lessons of change. And indeed, whilst it would be odd if a car producer with decades of automobile heritage switched entirely to selling pork and condiments, there can be lessons in change learned from the strangest of circumstances.
“The only thing constant in life is change “ – Heraclitus, Greek philosopher
Sources:
Volkswagen sold more sausages than cars in 2015 | The Independent | The Independent
How Kodak Failed – Forbes
Chapter 6, Tech Executives – “The Art of Fairness”, David Bodanis, The Bridge Street Press, 2020
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