Archive for the ‘food’ Category
Is the customer always right? Is it more important to protect consumers, or to give them options and let them choose? This is a real-life dilemma that was posed to me recently. I’ve changed the names and some other details in what follows, but the basic dilemma is real.
Abe and Ben are starting a coffee shop together. Situated in a trendy neighbourhood, the shop will feature high-quality, fair-trade, organic coffees and a range of gourmet pastries from a local bakery. They’re in the process now of deciding on their menu, and on smaller details like the condiments (sugar, cream, etc.) that will be available for patrons. It is this latter issue that has brought Abe and Ben into conflict.
Abe contends that the only condiments they should provide are cane sugar, organic milk, and soy milk. Abe wants no white sugar or artificial sweeteners. After all, he says, the health of our customers matters, and white sugar and artificial sweeteners are unhealthy.
Ben says, Look, the customer is king. Some will appreciate cane sugar, sure, but some want the white sugar they grew up with, and some diet-conscious folks will want zero-calorie artificial sweeteners, and we should give them what we want. Who are we to tell them what to do?
So who is right?
I would say choice is a good thing. To the best of my knowledge, the evidence is very weak that “other” condiments are bad for you (especially in the relevant, tiny quantities). For that matter, if Abe is that concerned about his customers’ health, he should argue for not serving sugar at all. There’s plenty of evidence that that is bad for you. As a scientist friend of mine puts it: there’s much more evidence that sugar is bad for you than there is that artificial sweetener is bad for you.
Of course, if Abe and Ben decide to make “100% natural,” or something like it, a part of their branding — as many companies do — then it makes sense to offer only condiments that are consistent with that ethos. But there’s no reason to think of that as a more ethical policy.
The issue of ethics in the food industry never really goes away, but there are times when it garners more than its usual share of headlines. About a month ago, the New York Times published a lengthy piece called “The Extraordinary Science of Addictive Junk Food,” by Michael Moss, author of “Salt Sugar Fat.” The piece is a riveting look at the often-cynical moves made within the food industry within recent decades to use our tastebuds against us, to use our love of salt and sugar and fat to persuade us to buy products that are making us more overweight and less healthy.
The next headline had to do with NYC Mayor Michael Bloomberg’s attempt to push back by banning supersized sugary drinks. The move had many fans. Not among those fans: Starbucks, which said it simply would not comply, the American Beverage Association, and New York State Court Judge Milton Tingling, who accepted the ABA’s request to block Bloomberg’s plan.
Most recently, and related to all of the above, the New York Times recently ran an opinion piece on the need to impose stricter regulations on food companies in order to slow the industry’s otherwise seemingly inexorable march toward ever more addictive, and less healthy, prepared foods. The piece was written by a guy named Michael Mudd, a former executive VP at Kraft, no less.
Mudd’s key point is essentially that if the food industry is going to be reined in, government is going to have to do it, since the industry shows little interest in restraining itself. In other words, to borrow Mudd’s words, government is going to have to “force ethics” on the industry.
There are at least two significant problems with framing the issue this way.
The first problem has to do with chalking it all up to a lack of ethics. This is entirely the wrong diagnosis. Or, to be precise, even if the food industry suffers from an ethics deficit, that deficit is not necessarily the root cause of the problem. The unfortunate truth is that there are some problems for which “more ethics” simply is not a viable solution. Ethics is about finding rules that make social living better, but it assumes some overlap of interests. In particular, ethics only works where we have a shared sense that our lives—or our businesses—would go better if we followed a few rules. Ethics isn’t fundamentally about self-sacrifice; it’s about mutual restraint for mutual benefit. That’s why ethics is generally important in business: harmony is good for business. But it’s still a competitive game, and at the end of the day all the competitors want to win. Unless you can show the food industry that its interests will somehow be promoted by playing by a different set of rules, then an ethical solution just isn’t in the cards.
There’s a second reason why ethics isn’t enough. Ethics involves restraint on self-interested (or profit-seeking) behaviour. But the notion of restraint presumes some understanding of where to draw lines. But consider the dilemma faced by any company that sells a fundamentally sugary or fatty food, like Coke or Twinkies or Doritos. These products are delicious, and harmless if consumed as most of us consume them, namely in moderation. When the Coca Cola Company sells me a can of coke, it does absolutely nothing remotely unethical. I’m a grownup, well-informed about the nutritional characteristics of Coke, and besides this one coke is meaningless, health-wise.
But, yes yes, we all know that anyone drinking too much Coke is going to suffer ill effects, and a society that drinks too much Coke is going to suffer too. But how much is too much? No one can say. And simply imploring the Coca Cola Company to “be more ethical” is useless, here. True, we can implore them not to advertise in a way that targets kids, or not to promote ridiculously huge servings, but that leaves the fundamental paradox of their product untouched. Even a scrupulously ethical — indeed, saintly — Coca Cola Company would still find itself uncertain as to how to market its product. How would you sell a product that many people enjoy harmlessly, but that in the aggregate causes trouble?
Finally, the plea for “more ethics” in the food industry misses entirely the fact that that the food industry’s pattern of supplying us with excessive quantities of fat and sugar and salt constitutes a classic social dilemma, a situation in which each person’s (or company’s) behaviour is individually reasonable, but collectively disastrous. We’re poisoning ourselves with junk food for the same reason we’re burdening our atmosphere with giant quantities of carbon dioxide. Not because we’re stupid or unethical, but because my own efforts to reduce carbon emissions (or yours, or yours, or yours) are neither necessary nor sufficient to make a difference. Coke can’t solve the obesity problem. Nor can McDonalds. Nor Kraft. Nor… you get the picture.
So, yes, feel free to call for greater regulation of the food industry. But recognize that in doing so you’re not calling for more ethics. You’re admitting that even ethical companies can produce unwanted outcomes. A good understanding of the role of ethics in business must include some appreciation of the range of problems at hand, including the ones for which ethics is unnecessary, as well as the ones for which ethics simply is not enough.
Product labels are important, both practically and ethically. Reading the label is a key way to make sure the thing you’re buying meets your needs. Labels on products can help inform consumers about what they’re buying, reducing what economists call information asymmetries between buyer and seller. Where substantial information asymmetries exist, voluntary exchanges can fail to live up to the promise of mutual benefit, and society as a whole suffers from the resulting reduction in market efficiency.
Of course, not everything that could be said about a product could possibly be crammed onto a product’s label, so generally the information provided consists of what the maker of the product really wants to brag about, what consumers insist on knowing, and anything beyond that that regulators have seen fit to insist upon.
So precisely what gets labeled, and what form the labelling takes, matters a lot. Now while the moral significance of labels in general is not disputed, just what should be included on labels is hotly debated.
Take, for instance, the question of whether a food product has been genetically modified (GM). Or, more precisely, whether the ancestor of the organism from which a food product was derived was genetically modified by means of a particular set of laboratory procedures. It’s important to be precise, here, because there is virtually nothing that we eat today that hasn’t been ‘genetically modified’ by humans in some loose sense.
If you thought the question of GM labelling had gone away with the demise of California’s Proposition 37 this past November, think again. Washington State is apparently about to hold a vote on the issue, and there are reports that the anti-GM faction has been energized by the battle in California, and perhaps even galvanized by the massive sums of money that ‘big food’ and ‘big ag’ apparently spent to help defeat Prop 37. But as I’ve argued before, the demand for mandatory labelling of GM foods is misguided: the broad scientific consensus is that there’s no reason to worry about GM foods. Making such labelling mandatory, just because some people want to know if their food’s genes have been tweaked in certain ways, would be unjust.
Contrast this with the stunning report recently released by the ocean conservation group, Oceana. Nevermind subtle genetic modifications. Oceana found that a very high proportion of the fish sold in American retail outlets isn’t even from the species indicated on the label. So consumers are buying “snapper” that isn’t really snapper, and “tuna” that isn’t really tuna. Here, consumers are being lied to. Information isn’t just being omitted; the information being given is actually a lie, and so consumers are being cheated.
If the food companies of the world are going to expend money and effort to provide consumers with information, it’s pretty clear which kind of issue they should expend it on.
Should restaurants aim at serving smaller portions? Many are doing so, these days, and it’s easy to see why. Some of this is motivated by calorie-labelling requirements that are now in force in some jurisdictions. But there are other reasons, too.
Regardless of regulations, smaller portions are appealing proposition, in many ways. Other things being equal, smaller portions mean fewer calories, which is good for customers’ waistlines. And, other things being equal, smaller portions means less money spent on ingredients, which is good for restaurants’ profits. Looked at that way, smaller portions look like a win-win.
But obviously there are limits to that argument. Some customers may appreciate smaller portions, just as some will choose ‘lite’ beer, child-size portions, and salad with dressing on the side. But plenty of other customers still appreciate bigger helpings, with extra cheese, please. So while offering choices in terms of serving size may be a no-brainer, smaller portions generally can’t be assumed to be a crowd-pleaser at all.
An argument could be made that there’s a social obligation here. Regardless of what individual customers want, it’s pretty clear that, as a society, we could all stand to eat less. North American waistlines keep expanding, and the effects that is having on our health and our healthcare costs are by now pretty familiar. Do restaurants have an obligation to help stem the tide of the obesity epidemic? Do they have such an obligation even if smaller portions drive customers to the restaurant down the street, the one that’s more than willing to supersize it?
This is a question that pits social obligation against a company’s interest in making a profit. But note, of course, that “profit” here is a misleading term; if it is to be used at all, we need to understand it broadly. Not all restaurants are mega-chains like McDonalds and Subway, and not everyone who benefits from restaurant profits is a stereotypical wealthy shareholder. For your average restaurant or even small chain, “profit” might really just mean “staying in business.” For a small business, staying in business can itself be an obligation; staying in business means fulfilling obligations to investors, to employees, to suppliers, and to creditors.
Add to that the limited impact of unilateral action. Few if any restaurants or even chains have the ability to make a dent in the obesity epidemic. Your typical restaurant owner is faced with the fact that downsizing portions just isn’t going to have any real effect. Only a collective effort can do that, and that can only really happen through regulation.
The other interesting, and perhaps counter-intuitive, route, is for restaurants to get creative. They can look for ways to reduce portion sizes — and hence calories — in ways that aren’t going to be noticed and resented by those customers who are accustomed to judging restaurant servings according to a ‘bigger is better’ mentality. I’m not suggesting anything deceptive here. But if there are differences in composition or process or plating that can leave customers feeling well-fed without dumping excess calories into their systems, that seems to be a good thing.
One last note. If you’re running a restaurant and the best way you can think of to bring in customers is to serve gut-busting portions, then shame on you. You’re just not as good at your job as you should be. The very best restaurants typically have very small — but incredibly satisfying — servings. Clearly there’s more than one way to make customers happy. So while it’s hard to defend an obligation to promote social welfare in a way that risks profits, it’s much easier to say that restaurants have obligation not to take the easy way out. After all, innovation, efficiency, and creativity are core market values, aren’t they?
Is labelling foods as “organic” a positive thing or not? The Environmental Working Group certainly thinks so. To support this notion, the EWG has just released its annual “dirty dozen” list, consisting of fruits and veggies that are especially high in pesticide residue.
But check out this recent study, which suggests that seeing and thinking about organic foods can make people less ethical. The researchers report that test subjects asked to look at and rank (basically, to focus on) either a bunch of organic-labelled foods or to look at and rank either comfort foods (e.g., ice cream) or a more neutral food (e.g., mustard). Following this, the test subjects were given tests to evaluate a) their willingness to help a needy stranger, and b) the harshness of their evaluation of various apparent moral transgressions. The result: people exposed to organic foods were both less likely to help others, and more likely to be harshly moralistic.
This is an interesting result in its own right, but it has particular implications for marketing. Very roughly, the study suggests that marketing produce as organic can have negative effects on consumers’ attitudes and behaviour. That is, the study says nothing negative about organic food itself, or about consuming it. The implication is specifically for labelling it and promoting it as organic.
Of course, we can’t immediately condemn such marketing based on this kind of evidence. It may well be that the net effect of selling lots of organic food outweighs the effect such marketing has on people’s attitudes and behaviour. But at very least, this should make us stop and think.
Now, it’s highly unlikely that this effect is specific to organic foods. Presumably, labelling food as organic here is relevant because for many people that label implies something virtuous. So the implication is that promoting foods (or presumably other products) in terms of virtue could be a mistake.
In general, labels that indicate a product’s characteristics help consumers get what they’re looking for. This is especially important with regard to characteristics that can’t be seen with the naked eye, including key characteristics of most so-called ethical products. You can’t tell by looking at an apple, for instance, whether it’s been sprayed with pesticides — unless, of course, you see the “Certified Organic” label on it. Labels of various kinds help people get what they value, and in that way help achieve the promise of a free market.
The alternative to using labels to help people find products that match their own values is to rely on government regulation and industry “best practices.” If there were widespread agreement that organic foods really were better, ethically, they there would be some justification for having government use legislation to drive non-organic foods from the market. We rely on labels and third-party certifications precisely because there isn’t sufficient consensus to warrant a general standard. But the study described above highlights one of the costs of the path we’ve chosen. By moralizing the marketplace we may, ironically enough, be encouraging immoral behaviour.
Thanks to Andrew Potter for pointing me to the study discussed here.
So-called “ethical” products are in the news again. This time, the controversy is over whether the fairtrade movement should expand to include certification of large farms.
A controversy like this serves to highlight the complexity of the notion of an “ethical” product. After all, any product has many different characteristics, and hence many different dimensions of ethical concern. Just for starters, two food products of the same kind (say, two different brands of coffee) might vary in terms of whether they are FairTrade certified or not, whether they are organic or not, whether they are from countries with bad human-rights records, and so on. So the choice we face isn’t just between the ethical brand and the “other” brand; it might well be between two brands with different combinations of more, or less, ethical characteristics.
So here’s a thought experiment. Imagine a world in which mass customization technology make it possible for you, by purchasing online, to hyper-customize the products you buy, according to various ethical characteristics. Imagine you could choose, with a click of your mouse, any or all of a range of characteristics. And to make things more interesting (and likely more realistic) let’s say that each additional characteristic you ask for implies some additional cost. After all, some “ethical” production processes are costly, and some certification schemes are costly. So let’s imagine, say, that each additional ethical characteristic you opt for results in a modest 2% increase in the price of the product.
Given the opportunity to buy such customized products, which ethical characteristics would you choose to pay for?
Consider, for example, what you would choose faced with a website that let you order coffee and gave you the following options:
Or again, imagine being offered the following choice with regard to the cotton from which your newly-tailored shirt is to be made:
This thought experiment raises several questions. For you, the consumer, it raises the question of which combination of ethical values you really want — and would be willing to pay for — in your purchases. For purveyors of “ethical” consumer products, it first raises doubts about the term itself, and about how confident companies can be that they’ve already identified “the” characteristics that make up an ethical product. Consider the light this sheds on the case of so-called “ethical veal,” as discussed in a recent story from the Guardian. Sure, the veal referred to in that story is ethically better in at least one way. But have the people selling it cognizant of the range of characteristics that different people regard as essential to making a food product truly ethical?
Of course, the shopping scenario imagined above is science fiction for now. You can buy customized shoes online, and customized chocolate bars, but as far as I know foods customized ethically are not yet on sale. If they were, would that make the choice faced by ethical consumers easier, or harder?
The makers of POM Wonderful want you to use your heart, not your brain.
At least, that’s the distinct impression we get from the company’s recent battle with the US Federal Trade Commission. Last week, an administrative law judge for the FTC found that at least some of POM’s ads made “false and misleading” claims about the health benefits of the trendy, branded pomegranate juice. And the company is fighting back with a series of ads that, by quoting the judge out of context, makes it look like he actually looked favourably upon their product.
The tagline for these ads: “FTC v. POM: You be the judge”.
So POM wants you to be the judge. On the surface, that sounds like they want you to think for yourself. And who could complain about that? But context matters. So when the company is pushing back against the FTC’s assertion (and the court’s finding) that the health claims made on behalf of its juice just don’t stand up to scientific scrutiny, the implied message is that yes, you the consumer should decide, but you shouldn’t use your head in doing so. After all, if you used your head and thought it through rationally, you would want to look at the evidence. And, well, the evidence doesn’t look so good for POM. But the makers of POM, it seems, would rather you look inward instead of looking at the evidence. C’mon, you’ve tasted it. It’s delicious. It must be good for you. And you, dear customer, are smart enough to know that, right? Forget what the science says.
This kind of thing is arguably part of a larger social trend. See this recent essay by Joseph Heath and Andrew Potter, on the way politicians, in particular over the last decade, have found new ways to play fast-and-loose with the truth. Heath and Potter point out the new popularity of the trick of using stubborn repetition as means of bullying your way past awkward facts. A lie can be convincing, in particular when it feels right, when the claim being made fits with your world view or how you want the world to be. And who wouldn’t like to believe that a tasty serving of fruit juice could prevent heart disease or cancer?
The makers of POM are certainly not unique among advertisers wanting you to use your heart, rather than your brain. But they are unusually bold about it, going on the offensive and thumbing their noses at the people whose job it is to do the fact-checking. So consumers beware: when a company wants you not to take a hard look at the facts, it’s usually time to do just that.
Meat has recently taken on the role of the culinary bad boy, the gustatory rebel without a cause. Meat is the leather-wearing trouble-maker that scoffs at moral authority, making some people tsk-tsk and making others swoon.
Witness the fact that, couple of weeks ago, the New York Times announced a contest, asking entrants to provide their best argument as to why eating meat is ethical. In other words, the idea is to provide a rebuttal to what is by now nearly the default position, which is that meat is ethically problematic. And it’s not hard to see why. Even if you aren’t convinced that contributing to vast animal suffering is unethical, there are the very significant environmental impacts to consider. And when meat is thought of as a product that you either sell to consumers or feed to your children, health impact certainly becomes part of the ethical equation: how much beef you consume is between you and your colon, but how much you foist on others is open to scrutiny. So if meat If meat isn’t outright unethical, it’s certainly not the most socially-responsible product I can think of.
So, given the current ethical presumption against meat, do food companies that see themselves as socially responsible have a responsibility to minimize, or at least reduce, the amount of meat they sell?
In that regard, see this interesting report about how one company — Sodexo — worked to reduce the amount of meat eaten by its customers. The company runs cafeterias at hospitals and government buildings and so on, and serves over 9 million meals each day. And about a year ago, Sodexo announced that it would participate in the “Meatless Monday” program, urging customers to eliminate or reduce the amount of meat consumed just one relatively painless day each week.
The result is an absolutely perfect case study in the debate over corporate social responsibility.
The Sodexo experiment starts off as nothing less than a best-case scenario of CSR. Sodexo, in introducing Meatless Monday in its cafeterias, was arguably pursuing a win-win strategy. Serving less meat is good for the environment, good for consumers’ health, and (since meat is an expensive ingredient) maybe good for the bottom line. As an experiment, at least, it’s not crazy from a business point of view. So Meatless Monday presented the possibility of social benefit without pain: the holy grail of CSR.
Notice also the lack of sanctimony here. There’s nothing preachy about Meatless Monday: it’s just a way of saying hey, there are some really simple, painless steps that all of us can take to make the world a slightly better place.
But wait: it’s too soon to celebrate. It turns out that among Sodexo’s participating cafeterias, almost a third saw a drop in sales, and some saw a drop in customer satisfaction ratings. So much for the win-win! In the face of a significant drop in sales, a corporation’s managers face a true ethical dilemma, torn between social responsibility and responsibility to vulnerable shareholders. Should the company’s managers stick with Meatless Monday — ostensibly the socially responsible choice — or give it up and bring sales back to their previous level? Which matters more, social benefit or profits? Or, more precisely, how much would sales have to drop in order plausibly to say that the company was taking social responsibility too far?
A case like this strikes me as a pretty good litmus test with regard to divergent views on corporate social responsibility. It’s easy to be in favour of the win-win stuff. If a company can boost profits while doing some good in the world, who could complain? And if you can help others (or society) at no cost to yourself, maybe you’re even obligated to. But fewer people, I suspect, are willing to argue for a corporate obligation to engage in socially beneficial behaviours that not only hurt profits but also reduce customer satisfaction.
The next step in the litmus test, of course, is to adjust the ethical inputs, namely the strength of the ethical ethical arguments against meat. If you’re generally supportive of Sodexo’s move, how much weaker would the arguments against meat have to be in order to change your mind? And if instead you think Sodexo’s experiment is unjustified, how much stronger would the case against meat have to be to convince you that a company is justified in at least attempting to pursue socially-good objectives through its business practices? Answering such questions is a crucial step towards understanding your own point of view, and hence to being better prepared to engage in thoughtful discussion of corporate social responsibility.
Is it ethically OK for a manufacturer to reduce the amount of product in a package, but to keep charging the same for it?
Here’s an interesting example. The image shown here shows three varieties of Kraft Peanut Butter — Smooth, Extra Creamy, and Whipped. Notice that all three varieties are in jars of the same size, and all three cost the same. The ingredients are also virtually the same. But notice also that the one on the right — the Whipped peanut butter — includes one special ingredient not listed on the label. That ingredient also happens to be one that is free to the manufacturer, and that takes up a lot of space in the jar. That ingredient is air.
Yes, whipping peanut butter (like whipping cream or anything other liquid or paste) adds air to it. It fluffs it up. So if you look closely you’ll see that the label on the jar of Smooth peanut butter indicates that its contents weigh 1 kilogram (1000 grams). But the label on the jar of Whipped peanut butter indicates that its contents weigh just three quarters of a kilo, or 750 grams. The result is that when you buy a jar of whipped peanut butter, you’re getting 25% less peanut butter, or a jar that is effectively 1/4 full of air.
From a manufacturer’s point of view, this is wonderful. Being able to charge just as much while reducing the amount, and cost, of ingredients by a quarter is something of a coup.
Is it fair to the consumer? Or is the consumer being ripped off, getting less peanut butter for the same price? Is the consumer getting less value?
Well, no, I don’t think the consumer is being ripped off, though I suspect some will disagree with me. The 750g jar of Whipped peanut butter contains no less value than the 1000g jar of Smooth peanut butter precisely because there’s nothing to say that 750g of the one is less valuable than 1000g of the other. They’re different products, despite having the same ingredients. The value of a thing is absolutely not determined by its ingredients; all that its ingredients (or rather their cost) determines is the lowest level at which the product could be sold without the seller suffering a loss. A thing’s ingredients no more determine its value than does the amount of labour that went into it.
Or rather, no one can say that 750g of one thing is worth less than 1000g of the other, other than the customer. What matters is how the customer values those two things. If the customer finds 750g of Whipped PB to be as useful to them as 1000g of Creamy, then charging the same price seems perfectly fair. Consumers who disagree are naturally free to object — that is, to refuse to make a purchase. But that, I’m afraid, would be akin to cutting off their noses to spite their faces.
McDonald’s has been taking some heat over its continuing sponsorship of the Olympics. The fast-food chain recently announced that it would remain a top sponsor of the Olympic games through 2020.
The main charge here seems to be some form of hypocrisy. Critics suppose that there’s some sort of contradiction involved in a sporting event being sponsored by a fast-food chain. But there is, of course, no contradiction at all — at least not for those of use who take both our sports and our junk food in moderation. True, a diet that includes frequent trips to McDonald’s (or Burger King or Wendy’s, etc. etc.) seems inconsistent with a lifestyle aimed at maximal athletic output. There’s a real conflict there. But few of us are aiming at elite sporting status, and relatively few of us (thankfully) make Big Macs a staple. Most of us enjoy both sport and junk food in moderation. For us, the occasional serving of greasy fries does absolutely no harm at all to our athletic aspirations. There’s no contradiction in loving, say, both a Quarter Pounder With Cheese and training for a Half Marathon. So there’s no inherent contradiction involved in McD’s sponsoring the Olympics.
And really, if anyone is to blame, it’s not McDonald’s but the International Olympic Committee, and/or whatever subcommittees or functionaries are assigned the task of signing sponsors. After all, it’s their supposed values, not the fast-food chain’s, that this sponsorship deal presumably violates.
But supposed value-conflicts aside: what about the effect of such the McDonalds/Olympics alliance on, for example, kids? Well, note to start that kids don’t watch the olympics much. As for the rest of us, well we need to come to grips with the fact that our economic system features certain warts. And one of those warts is that the freedom to buy-and-sell means the freedom to sell things the over-consumption of which is harmful. And the freedom to sell such things implies the freedom to advertise them. Is affiliation with McDonald’s jeopardizing the positive impact of the Olympics? So be it. Our system of free commerce is a system that brings with it enormous benefits, far more benefits than will ever be derived from one hypertrophied sporting event.