February 17, 2015--Have It Our Way

Two major food companies last week released financial statements about earnings for the fourth quarter of 2014. Kellogg and McDonalds.

Both failed to meet expectations, with McDonalds reporting a significant and on-going decline in "customer visits," earnings, and profits. Speculation about both--for the most part confirmed by the companies as they scramble to turn things around--is that they are losing customers because people are seeking healthier food. And there are healthier fast-food alternatives to Mickey D's at places such as Chipolte, Chick-fil-A, and, if you must have a burger, Shake Shack.

McDonalds saw customer visits during the quarter decline by 1.7% and, more ominous, earnings decline by 21%. The third quarter was even worse with visits down 3.3%.

In response, they are launching an ad campaign, featuring a new slogan--"I'm Lovin' It." And employees are being made to wear new, lighter-feeling uniforms. Reportedly, they hate both. Especially the "lovin'" part.

Recognizing that much of this decline is the result of Americans becoming health conscious, McDonalds is experimenting with "custom burgers" (in other words, "Have it your way")  and eliminating some items, including quarter-pounders with cheese. A cholesterol nightmare.

For my money, they could get rid of the quarter-pounder altogether. The burger itself may start out weighing a quarter of a pound, but during the cooking, after all the fat runs out, it looks more like the sliver of a burger one gets at White Castle. If you want something resembling a burger that weights a quarter pound, head for Shake Shack. Though, as a guilty treat, McDonalds still does make some mean fries.

Meanwhile, over at Kellogg, the world's largest supplier of cereal, the picture isn't much brighter. There sales too have been plummeting. Fourth-quarter earnings were down an astonishing $293 million. Even after adjusting for currency fluctuations and accounting maneuvers, the company self-reports great concern. Like McDonalds, they too are scrambling to make modifications in their product lines. And for some of the same reasons.

CEO John Bryant cited weakness in sales of even Kellogg's "healthy" cereals, including  in the Special K line. He observed that consumers are shifting away from products that claim to be "diet" foods and are opting more and more for what executives in the industry call "functional foods." Those with fewer, simpler ingredients that do not include genetically-modified grains. So Kellogg accordingly is moving quickly to modify its breakfast cereals, Kashi brand, and snack foods.

As counter evidence that Americans are adjusting their diets for reasons other than health, Coca Cola continues to lose market share with bottled water, energy drinks, and coffee becoming beverages of choice for younger consumers. (The average age of Coke drinkers is 56.) It is obviously good to be moving away from drinks that are loaded with corn syrup, but becoming addicted to caffeine is not the ideal alternative.

December 26, 2014--Best of Behind: TMI

Something literally light spirited from December 20, 2006--

I'm not all that big a fan of Census data.

I do not need to know about what and how much "average" Americans eat and drink in a year (no surprise—too much); how many square feet their apartments have (twice as many as mine); or, for that matter, how much they weigh (also too much). 

I always thought that the Census was carried out every ten years, as required by the Constitution, to see how many of us there are so that congressional districts could be apportioned among the states based on the size of their populations. To accomplish this, Census Bureau folks used to send out forms to every household and, to follow that up, they would hire canvasers who would visit every household to see if you were hiding anyone up in the attic.

So how did they get from that into counting how many gallons of bottled water we drink each year (23) or how tall we are (24 percent of Americans over 70 years of age are shorter than 5-foot-6)?

It's enough to make a small-government, strict constructionist out of me--someone who, like Supreme Court Justice Anton Scalia, wants the Constitution to be taken literally: just count the noses but stay out of my medicine cabinet, or bedroom. For example, do we have to know that 11.2 percent of women admit to having had same-sex "contacts” but only 6 percent of men were willing to fess up?

I’m most fascinated by the statistic that reveals how much more bottled water we have been drinking in recent years. Ten times more than in 1980. Has the quality of municipal water declined so precipitously? Or is it that we are going to the gym more and are taking bottled water along with us to keep us hydrated or looking cool? Or is it because of all the Wall Street bonuses, splurging on a $7.00 a bottle of Evian or Pellegrino makes a better impression than drinking plain-old New York City Tap?

Which brings me to another point—I’m getting a little worried, from a national security perspective, about our growing dependence on foreign bottled water. With the price of these, gallon-to-gallon, actually higher than the cost of imported gasoline, aren’t we putting ourselves in danger of being held hostage by our enemies, including and especially the French?

What would happen, for example, if France and Italy and Poland (Poland Springs, no?) were to form OWPEC—the Organization of Water Exporting Countries—and imposed a bottled-water embargo?

Now I’m beginning to understand why President Bush just announced that he’s going to increase the size of the army—not for deployment in Iraq but to mobilize when we have to preemptively invade Perrier.