Category Archives: Business

Junk Food is 21st Century Imperialism

From door-to-door deliveries to influencing politics, companies like Nestlé, PepsiCo, and McDonald’s spend big bucks to enmesh themselves in third world markets, and their processed, packaged foods bring obesity and health problems with them.

In the first in a The New York Times series about global obesity, Andrew Jacobs and Matt Richtel report from Brazil, where low-income, isolated residents who once suffered from hunger now suffer from diabetes and heart disease. To impoverished people, the allure of packaged Western food is obvious: it’s inexpensive and more readily available. Although access means more people are getting fed, this sweet, fatty, salty food is not only destroying traditional foodways and changing local agriculture, it’s harming those who subsist on it. One nutrition professor describes the situation in Brazil as “a war between two food systems,” but it’s a war where “one food system has disproportionately more power than the other.” Just as religious missionaries replace indigenous culture with European culture, now we have Western corporations replacing local culture and regional identity with a homogeneous global identity of Coke and Kit-Kit and pudding. To me, the loss of regional identity is as tragic as the increase in obesity. 

Dr. Gibney, the nutritionist and Nestlé consultant, said the company deserved credit for reformulating healthier products.

But of the 800 products that Nestlé says are available through its vendors, Mrs. da Silva says her customers are mostly interested in only about two dozen of them, virtually all sugar-sweetened items like Kit-Kats; Nestlé Greek Red Berry, a 3.5-ounce cup of yogurt with 17 grams of sugar; and Chandelle Pacoca, a peanut-flavored pudding in a container the same size as the yogurt that has 20 grams of sugar — nearly the entire World Health Organization’s recommended daily limit.

Until recently, Nestlé sponsored a river barge that delivered tens of thousands of cartons of milk powder, yogurt, chocolate pudding, cookies and candy to isolated communities in the Amazon basin. Since the barge was taken out of service in July, private boat owners have stepped in to meet the demand.

“On one hand, Nestlé is a global leader in water and infant formula and a lot of dairy products,” said Barry Popkin, professor of nutrition at the University of North Carolina. “On the other hand, they are going into the backwoods of Brazil and selling their candy.”

Dr. Popkin finds the door-to-door marketing emblematic of an insidious new era in which companies seek to reach every doorstep in an effort to grow and become central to communities in the developing world. “They’re not leaving an inch of country left aside,” he said.

Read the story

On the Internet, Nobody Knows You’re a Cartoonist Hustling for Money

A successful media model is often a quiet one, gathering up money from the unglamorous corners of the market, cutting checks for its writers and artists in small but regular amounts. When Bob Mankoff retired from the New Yorker this year after twenty years as the Cartoon Editor, he left behind one of most successful new media models of the era: The Cartoon Bank. It was a database he founded in 1992 and ran from an apartment in Yonkers, and it helped cartoonists license their work for thousands of dollars a month. But when Condé Nast bought the Bank from Mankoff in 1997, the money began to dry up and the model began to fail.

Paste magazine recounts the rise and fall of the Cartoon Bank, which was begun by Mankoff with an $1,800 Apple computer and a $745 scanner, and built into a database with over 20,000 images from 50 cartoonists, categorized by subject: “The market was individual consumers as well as businesses; if you ran a dental association, for instance, you could easily find dental-themed cartoons for your monthly newsletter. Early customers included Bloomberg Financial Markets, which delivered a cartoon to 41,000 subscribers each morning,”

With fees ranging from $100 to $1000 for a single image, cartoonists could start to rely on checks coming in from the Bank, and some cartoonists were receiving residiuals of $30,000 to $40,000 a year. But when Condé Nast took over, things began to break and cartoonists saw a reliable income dwindle to nothing.

Read more…

A Bakery Death Reveals the Vulnerable Lives of Temporary Workers

Twenty-three year old refugee Amina Diaby died in Fiera Foods’ Ontario factory while making croissant dough. She was a low-wage temp worker, one of thousands in Ontario, and her hijab got stuck in a machine. For The Toronto Star, reporter Sara Mojtehedzadeh worked undercover on Fiera Foods’ production line in order to document the dangers of Canada’s growing temp economy works. Fiera’s system is stacked in businesses’ favor, with poorly trained temp workers risking their lives and health for low pay, no job stability, no benefits and few legal protections in return.

It’s a system that’s on the rise, and consumers should check their foods’ labels and research chain restaurants’ sources. The foods we buy from Costco and Dunkin’ Donuts might have been processed by newly arrived immigrants just trying to survive while they pursue the same dream of upward mobility that we do.

Temp agency employees are some of the most “vulnerable and precariously employed of all workers,” a 420-page report recently compiled by two independent experts for the Ontario government says.

Temps can be terminated at a moment’s notice, the report notes. Companies who use them are liable along with their temp agency for unpaid wages, including overtime and vacation pay, but not for most other workplace rights. Temps are often paid less than permanent counterparts doing the same job, and sometimes work for long periods of time in supposedly “temporary” positions. Agencies are not required to disclose the markups they charge on workers’ wages. New provincial legislation, which goes to second reading this month, seeks to tackle some of those issues.

Research conducted for the Toronto-based Institute for Work and Health also suggests that companies contract out risky work to temps. When a temp gets hurt, the company is not fully responsible because the temp agency assumes liability at the worker’s compensation board — saving their clients money on insurance premiums. This is a crucial financial incentive to use them.

Read the story

When Is an Internet Company Evil?

In the aftermath of Donald Trump’s election, Facebook founder Mark Zuckerberg spoke publicly about the role Russian trolls and fake news on Facebook played in shaping public perception and influencing the presidential election. The company has since changed its mission statement from “making the world more open and connected” to “give people the power to build community and bring the world closer together.” The timing is no coincidence. The slogan’s also hogwash. Facebook is concerned with its brand, and with two billion monthly users (there’s 7.4 billion people on earth) and an 18% growth rate, Zuckerberg does not want bad publicity to disrupt the lucrative company’s continued expansion, which is based on the acquisition of free content from users, which it then uses to target users with advertising. Calling Facebook users ‘users’ is fitting, since it was always the public that was being used.

At the London Review of Books, John Lanchester examines three actual books to look closely at what Facebook really is on the inside and how it goes about its data-collecting business. It’s essentially an advertising business, which means, in Lanchester’s words, “Facebook is in the surveillance business.”

Facebook, in fact, is the biggest surveillance-based enterprise in the history of mankind. It knows far, far more about you than the most intrusive government has ever known about its citizens. It’s amazing that people haven’t really understood this about the company. I’ve spent time thinking about Facebook, and the thing I keep coming back to is that its users don’t realise what it is the company does. What Facebook does is watch you, and then use what it knows about you and your behaviour to sell ads. I’m not sure there has ever been a more complete disconnect between what a company says it does – ‘connect’, ‘build communities’ – and the commercial reality. Note that the company’s knowledge about its users isn’t used merely to target ads but to shape the flow of news to them. Since there is so much content posted on the site, the algorithms used to filter and direct that content are the thing that determines what you see: people think their news feed is largely to do with their friends and interests, and it sort of is, with the crucial proviso that it is their friends and interests as mediated by the commercial interests of Facebook. Your eyes are directed towards the place where they are most valuable for Facebook.

Now that the public knows how Facebook’s fake election stories have created more reader engagement than top New York Times stories, Zuckerberg has a social responsibility to use his powerful platform in a way that doesn’t further erode its users’ society. Instead of factoring in the social costs of social media, though, Facebook remains committed solely to growth and monetization. Google’s public maxim is “Don’t be evil.” Even if you doubt that maxim’s veracity, as consumers, we have to ask ourselves: when a company cares more about monetizing users’ data than about protecting users from a Russian misinformation campaign, why should anyone use their service? In Capitalist America, too many people see it as un-American to say that businesses have a social responsibility. But when it comes to capitalism, we consumers ultimately wield the most power: we can choose not to spend our money or time on businesses who ignore the social costs of their operations. If you’ve been on the verge of deactivating Facebook, now is a good time.

The fact is that fraudulent content, and stolen content, are rife on Facebook, and the company doesn’t really mind, because it isn’t in its interest to mind. Much of the video content on the site is stolen from the people who created it. An illuminating YouTube video from Kurzgesagt, a German outfit that makes high-quality short explanatory films, notes that in 2015, 725 of Facebook’s top one thousand most viewed videos were stolen. This is another area where Facebook’s interests contradict society’s. We may collectively have an interest in sustaining creative and imaginative work in many different forms and on many platforms. Facebook doesn’t. It has two priorities, as Martínez explains in Chaos Monkeys: growth and monetisation. It simply doesn’t care where the content comes from. It is only now starting to care about the perception that much of the content is fraudulent, because if that perception were to become general, it might affect the amount of trust and therefore the amount of time people give to the site.

Zuckerberg himself has spoken up on this issue, in a Facebook post addressing the question of ‘Facebook and the election’. After a certain amount of boilerplate bullshit (‘Our goal is to give every person a voice. We believe deeply in people’), he gets to the nub of it. ‘Of all the content on Facebook, more than 99 per cent of what people see is authentic. Only a very small amount is fake news and hoaxes.’ More than one Facebook user pointed out that in their own news feed, Zuckerberg’s post about authenticity ran next to fake news. In one case, the fake story pretended to be from the TV sports channel ESPN. When it was clicked on, it took users to an ad selling a diet supplement. As the writer Doc Searls pointed out, it’s a double fraud, ‘outright lies from a forged source’, which is quite something to have right slap next to the head of Facebook boasting about the absence of fraud. Evan Williams, co-founder of Twitter and founder of the long-read specialist Medium, found the same post by Zuckerberg next to a different fake ESPN story and another piece of fake news purporting to be from CNN, announcing that Congress had disqualified Trump from office. When clicked-through, that turned out to be from a company offering a 12-week programme to strengthen toes. (That’s right: strengthen toes.) Still, we now know that Zuck believes in people. That’s the main thing.

Read the story

Breaking Into China’s Counterfeit Supply Chains

When tourists buy Gucci purses in Manhattan’s Chinatown, most of them understand that the bags are fakes. That’s why they shop in Chinatown; all the prestige of the brand at a fraction of the price. But scores of other counterfeit items make it into the world economy without any of us consumers knowing it: phones, pharmaceuticals, clothes, car parts, circuit breakers. The bulk of these come from China.

For California Sunday Magazine, reporter Joshua Hunt shadows one of the private detectives that Western corporations pay to protect their intellectual property by cracking down on Chinese counterfeiters. In China, knockoffs are a $400 billion dollar industry. The black- and gray-markets fill domestic stores with fake wine and fake food, and detectives have to be able to distinguish the quality fakes from the cheap ones to do their job well. This detective can, because he used to make his living in the underground market.

On a hot afternoon last summer, Azim led me through the vast under­ground market beneath Shang­hai’s Science and Technology Mu­se­um. His boss, Angelo Krizmanic, joined us, posing as a foreign businessman interested in some luggage for his girlfriend. “Most of these stores cater to Western tourists who come here specifically to buy knock­offs,” Angelo told me. “Tourists don’t know how to spot a quality fake, so the stuff on the shelves in these shops is garbage. But if you know the difference between a shit knockoff and a really shit knockoff, you can get yourself invited into a shop’s backroom. That’s where the real business goes down.”

We approached an upscale shop selling luxury handbags that Angelo visited, undercover, semiregularly. A salesman in shorts and a navy T-shirt named Kevin bounded toward us, gold chains bouncing off his chest. He spoke to Angelo like an old friend. Kevin led us into the store and pushed against a part of the wall that gave way to reveal a hidden room, roughly 8 feet by 10 feet, with deep shelves that overflowed with counterfeit Dolce & Gabbana, Gucci, and Louis Vuitton luggage, purses, and wallets.

Kevin said the market gets raided weekly, but he isn’t concerned. “I pay every month, so no trouble.” He used to be able to bribe police with counterfeit Louis Vuitton, but since China’s president, Xi Jinping, intensified anti-corruption measures in 2012, bribes are increasingly cash only.

Read the story

Why Oil-Loving Louisiana Should Embrace America’s Coming Offshore Wind Boom

Justin Nobel | Longreads | August 2017 | 8 minutes (2,051 words)

The United States is on the verge of an energy transformation. This spring the nation’s first offshore wind farm officially began powering homes and businesses on Block Island, in Rhode Island. Bureau of Ocean Energy Management maps show 12 areas that have been leased for potential offshore wind development along the East Coast, from the Outer Banks of North Carolina to Cape Cod, and a thirteenth will be leased later this year. In December 2016, Statoil Wind US, part of the Norwegian oil and gas giant, bid $42.5 million to lease, for offshore wind development, a tract of ocean that begins about 15 nautical miles southeast of New York City.

“Since Block Island came online interest in offshore wind along the East Coast has gone through the roof,” says Lorry Wagner, an engineer whose company, Lake Erie Energy Development Corporation is pushing for a wind farm off Cleveland, in Lake Erie. “Every major developer in the world wants to get into the United States and get a project.”

In my first column we journeyed across toxic Louisiana, learning that many of the state’s most terrifying environmental problems are connected to the petrochemical industry. But is there another way to provide jobs for people in south Louisiana oil country? The answer appears to be yes. Read more…

Avast, Ye Mateys: There’s Insurance Fraud Ahead

Bloomberg’s Kit Chellel and Matthew Campbell have done yeoman’s work uncovering the details of the (alleged) hijacking of the commercial shipping vessel Brillante Virtuoso off the coast of Yemen in 2011. There are enormous, multi-million dollar ships. Pirates. Murder. Email hacking. Tug boats. Rally racers. Veiled courtroom threats. There is little that is not fascinating in the convoluted, dangerous story, not least this peek into the byzantine machinations of Lloyd’s of London’s risk insurance.

Anytime a commercial vessel is lost, the incident is recorded with a quill pen in a leatherbound book at Lloyd’s, a London institution that blends age-old ritual with modern finance. Contrary to common belief, Lloyd’s isn’t an insurer, or even a company in the usual sense of the word. Since its origins in a 17th century coffeehouse popular with traders who funded sea voyages, Lloyd’s has evolved into something like a stock exchange for risk, where actual insurers come to buy and sell exposure. These companies form syndicates and get insurance of their own from even larger re-insurers, who are re-re-insured in turn. These layers constitute one of the world’s most essential and least understood markets, where premiums alone generate about $40 billion a year. Anything that might be lost or cause a loss, from Bruce Springsteen’s voice to a Virgin Galactic spacecraft, can be insured via Lloyd’s, but shipping remains at its core. Some 80 to 100 major vessels are lost each year, and the Brillante was one of the largest of 2011.

Read the story

How Patagonia Continues to Operate As a Model of Responsible Capitalism

How serious are you about saving the planet? Many marketing types say that activism is the new hot advertising strategy, but some businesses actually believe in the philosophies they espouse, like Patagonia. Founded in 1973, the California-based company has always aimed to balance responsible production with environmental activism, by funding environmental causes, refining its business model and manufacturing practices, and empowering like-minds. With the Trump administration’s move to dismantle environmental protections on public land and climate change, Patagonia’s staff believes that too many companies in the outdoor industry have been too passive for too long, and the time has come to spend more company profits fighting the political forces that not only threaten America, but humanity’s future. At OutsideAbe Streep examines the ways Patagonia reaches consumers, manages its factories, thinks of its role in a revolution, and urges other businesses to step up. With power and influence comes great responsibility, which puts brands in the position to influence social good. Interestingly, this socially responsible model has quadrupled Patagonia’s profits during the last ­seven years. The question is: are those other companies committed to long-term political activism?

For decades, Patagonia sought to demonstrate that profitability and environmentalism can go hand in hand—to show a better way by, for example, encouraging fair-trade practices in foreign factories. The company advised Walmart, helping the retail behemoth clean up its supply chain, and worked with Nike to create the Textile Exchange, a nonprofit that encourages more sustainable practices in the apparel industry. Chouinard now believes that he was mistaken in trying to influence publicly traded companies. “I was pretty naive thinking you could do that,” he told me.

Marcario presented an alternative: grow Patagonia into a much bigger brand so that everything it did would have greater impact. She was uniquely qualified to make this argument. In her youth, she was an outspoken progressive activist, arrested during protests on issues like LGBT rights, AIDS, and women’s health. “She understands the need for revolution,” Chouinard has said. But she also understands business. Upon taking the CFO job, she streamlined distribution and shipping, installed industry-standard software, and focused on improving e-commerce. “Doing things that, you know, like, retailers do,” she laughs. During her first year, in 2008, the global economy crashed, but Patagonia—and much of the outdoor industry—didn’t: the company experienced growth in the high single digits. Casey Sheahan, Patagonia’s CEO at the time, told me that this was due to people “aligning themselves tribally” at a time of strife. It was a hint of the opportunity that would come with the rise of Trump.

Sheahan also told me that, at the time he left Patagonia, more than 50 percent of the revenue came from direct-to-­consumer business via Patagonia’s stores and e-­commerce. He suspects that the percentage is bigger today. (The company wouldn’t confirm or deny this.) Selling directly to a consumer, rather than through a third-party retailer like Backcountry.com or REI, ­increases both revenue and influence. According to Joe Flannery, a veteran outdoor-industry marketer and senior VP of technical apparel for Newell Brands, which owns Marmot and Coleman, Patagonia’s direct-to-consumer sales “represents one of the most powerful mechanisms of any brand. When you have that direct interaction, that means the consumer is digesting what you’re saying.”

Read the story

“Beef and cheese are the most important ingredients… But really, cheese.”

The U.S.’s reputation in the world might be in a state of… flux, let’s say. But there’s one thing we can still boast about: the 1.3 billion pounds of surplus cheese we have in cold storage. In Bloomberg Businessweek, Clint Rainey introduces us to government-sponsored Dairy Management Inc., which is charged with packing as much dairy into food as is possible, sometimes by embedding food scientists like Lisa McClintock into companies like Pizza Hut and Taco Bell to help engineer maximum cheese delivery. You can thank them for Pizza Hut’s cheese-stuffed crust and for Taco Bell’s latest hit, the Quesalupa.

“If you tried using something like cheddar, you’d get too much oiling off,” McClintock says. “It’s a fattier cheese—it’s not going to hold up well in terms of cheese pull.” She also quickly nixed mozzarella. “Great stretch, but you expect something bold from Taco Bell,” she says. “Pepper jack gave us the extra kick from the jalapeños.” Crucially, it’s also a high-moisture cheese, which means fewer casein connections and therefore a more reliable melt. She toyed with the idea of inserting a cheese “puck” into the tortilla pocket to see if that melted more uniformly, but grated cheese proved the most even. McClintock and Gomez recall intense competitions in the lab where they’d fry up a bunch of Quesalupas and tear them apart to see who could get the longest cheese pull. Winners sometimes stretched theirs a full arm span.

(More exciting advances in cheese science are on the horizon, as Taco Bell’s R&D department is hard at work on Quesalupa 2.0 which, rumor has is, will come in “Volcano and Bacon Club” flavors. If you’re wondering where the Doritos Quesalupa Crunch is, don’t worry: they started testing it this spring.)

Read the story

In a League of His Own: One Man’s Mission to Make Moviegoing Fun Again

Launched in Austin 20 years ago by Tim League, the Alamo Drafthouse chain of cinemas has spread to 27 locations and 20 cities, serving up League’s fun, eclectic blend of film, food, and entertainment: a Vin Diesel trivia contest before the screening of The Fast and the Furious. A DeLorean displayed during a run of Back to the Future. Food and drink menus curated for the films. Super-fans dressed in costumes.

But as more people stream movies on their TVs and tablets at home than ever before, traditional theaters face an uncertain future. And League, as Dan Solomon writes in Texas Monthly, believes he can bring us back into theaters — and make moviegoing great again.

In recent years, box office receipts have been high—2015 shattered the previous record, nudging past $11 billion—but much of that profit is based on people paying higher prices. The average cost of a movie ticket has spiked by more than $2.50 since 2004; it is now $8.84. But the number of tickets sold—the number of people going to the movies—has been declining. Except at certain theaters, like the Alamo, which are consistently selling out.

All of which highlights what Tim League and the Alamo Drafthouse are really selling. You can see a movie anywhere, but anyone who’s had to buy tickets weeks or months in advance for the opening night of a movie at the Drafthouse, a movie that will also be playing at every theater in town, knows that, like Marcus Loew, League doesn’t sell tickets to movies, he sells tickets to theaters—to an experience.

Read the story