TIME Economy

Love K-Cups? You’re Killing the Coffee Business

<> on March 5, 2015 in Miami, Florida.
Joe Raedle—2015 Getty Images In this photo illustration, Keurig Green Mountain Inc. K-Cup coffee packs are seen on March 5, 2015 in Miami, Florida.

Less wasted coffee means fewer sales for roasters

Single-serve coffee can now legitimately be called “wildly popular,” with more than one in four Americans using the brewing machines initially popularized by Keurig Green Mountain’s K-Cups.

You might think that’s a boon to the coffee-roasting business, but it turns out to be just the opposite. Why? The machines are much more efficient. Just think about how often you make a pot of coffee in an automatic-drip maker, only to end up pouring some portion of it down the drain. The less coffee you waste, the less you buy.

On one hand, this is better for consumers who are saving money. Less waste is also better for the environment, especially in parched regions like California. But roasters are feeling the pinch. “The coffee market has lost its best consumer: the kitchen sink,” Hernando de la Roche, a senior vice president at financial services firm INTL FCStone Inc., told Bloomberg. “Roasters are telling us that single-cup coffee has been reducing demand.”

Reducing demand, reducing waste — the difference is academic when it comes to toting up revenues.

Meanwhile, coffee bean inventories are rising, putting pressure on commodity prices. That’s thanks in part to recent rains in Brazil — the world’s top coffee-producing country — that have reversed two sequential years of falling yields.

At the retail level, total coffee sales are falling lately, down about 1.5% over the past year. Single-serve pods represent the only category where sales have grown in supermarkets, drugstores, and other non-restaurant outlets. Whole-bean, ground, and jarred instant coffee sales are all flat or falling.

Americans still love their joe, of course: it’s the most popular beverage other than water. Still, consumption fell over the past year as measured by the number of Americans who drink coffee daily, down from 63% in 2013 to 59% in 2014, according to the National Coffee Association. Some of that drop is thanks to people — especially younger ones — switching to tea and other beverages perceived as being healthier.

TIME ipos

Why Adultery Website AshleyMadison Is Going Public Abroad

Getty Images

Even though most of its users are in America

There’s a perhaps-surprising reason that the owners of AshleyMadison.com, the Web site for people cheating on their spouses, decided to issue public stock for the first time in London rather than New York: Americans are too moral.

The Toronto-based Avid Life Media says it’s planning a London public stock offering sometime this year because “Europe is the only region where we have a real chance of doing an IPO,” Christoph Kraemer, the company’s head of international relations, told Bloomberg. “We’re no longer a niche, but it’s been difficult in North America to find the support to go public.” Europe, he said, is more tolerant of adultery.

And yet, while AshleyMadison operates in 46 countries, fully half of the cheaters on the site are in the United States. So maybe it’s more precise to say that Americans are too publicly moral, clutching our pearls until we’re alone in a room with our computers and smartphones, credit-cards out.

And not just a few credit cards. Somewhere around 18 million of AshleyMadison’s users are in the United States. The site has approximately 36 million users worldwide.

Avid Life, which also operates Cougarlife.com (which connects women of a certain age with their generally-younger admirers) and EstablishedMen.com, (a “sugar daddy” site), said Wednesday that it wants to raise up to $200 million to help it beef up to meet soaring demand for its services. You may cry now.

Avid Life claimed sales of $115 million last year, four times higher than in 2009, and says it’s worth about $1 billion. The site launched in 2001, and has been a target of moral outrage all along — to its own benefit. That’s the great thing about working in a business that is considered sleazy or marginal by just about everyone, including its own customers: when somebody calls you sleazy, that’s a good thing, at least from a marketing standpoint.

Avid Life says Asia is its next big market, and claims that more than half of its business will come from that continent by 2020 (a figure that would likely be much higher if the company could operate in China, but it’s hard to imagine the site, with its slogan “Life is Short. Have an Affair,” getting through that country’s government Internet filters).

AshleyMadison’s owners are often characterized as “unapologetic” (by polite news reporters) or as “shameless” (by less-polite critics). But like many companies that serve human vice, Avid Life has displayed a certain ambivalence about its business, at least in public statements. Kraemer told Bloomberg: “We’ve had stories from members that we’ve returned love to the marital bed and made others realize the grass is not greener on the other side.”

Which seems like an odd thing to say for a company that sells itself on the notion that the grass is so much greener on the other side that you want to leap the fence and roll around in it—and drain some money from your bank account for the privilege.

TIME Advertising

This Ad Is Making Italian Pizza Makers Very Mad

A stock photograph of pizza
Getty Images

Don't mess with the True Neapolitan Pizza Association

McDonald’s has besmirched the reputation of Neapolitan pizza, and Neapolitan pizza — as a whole — is fighting back. A TV commercial in Italy shows a young boy rejecting the gooey goodness of the traditional Italian grub in favor of a McDonald’s Happy Meal.

Amusing? Sure. But actionable? Maybe. The Associazione Verace Pizza Napoletana (AVPN) — or True Neapolitan Pizza Association — is threatening a lawsuit, calling the Italian-language TV spot a “dishonorable attack against one of the symbols of the Mediterranean Diet.”

That claim may also be problematic: the Mediterranean Diet (the caps are AVPN’s) is perhaps the most healthy in the world, but it’s a stretch to credit cheese pie with that distinction. A better symbol might be a fish, or a head of lettuce.

The commercial depicts the boy and his parents at a fancy pizzeria. The waiter asks the kid what kind of pizza he wants, and he yells, “Happy Meal!” The family, apparently powerless under the spell of the boy’s unsophisticated palate, is suddenly transported to a McDonald’s, and all is well because, as the commercial informs Italian parents: “Your child has no doubts.”

This amounts to the “American colossus” that is McDonald’s “discrediting” the whole Italian diet, AVPN explains. And although the campaign is already over, the group might yet file a lawsuit. One pizza chef in Naples told The Telegraph that the commercial amounted to “blasphemy.”

McDonald’s reportedly hasn’t heard directly from the AVPN.

Legal action seems like overkill, but that doesn’t mean McDonald’s didn’t err culturally. Imagine Taco Bell running a commercial in Baton Rouge declaring that its burritos are better than the local gumbo.

The backlash shouldn’t come as a surprise to McDonald’s. If it wasn’t already obvious, Italians, and especially Neapolitans, take their pizza very seriously, and the AVPN is serious about protecting its reputation. The group has created a “certification” program that requires any pizza anywhere in the world calling itself Neapolitan to adhere to a strict set of criteria.

TIME Advertising

These Super Creepy Rob Lowe Ads Are Causing a Major Problem

They're weird—and hilarious—which is part of the issue

Comcast has a problem with “Super Creepy Rob Lowe,” and the cable giant now has the backing of the Better Business Bureau in its fight against the impossibly handsome actor and all his alter egos, also including “Crazy Hairy Rob Lowe” and “Painfully Awkward Rob Lowe.”

The BBB’s National Advertising Division, acting on a complaint from Comcast, says that DirecTV’s commercials featuring Lowe and his mutant versions make misleading claims on DirecTV’s behalf in their commercial spots. The ads started appearing late last year and have caused a big splash—mainly because they’re really weird and most of them are hilarious.

But the NAD now says the ads must be changed. For instance, it says DirecTV’s claim that it offers picture quality of “up to 1080p” is misleading because only a few programs with such high resolution are available.

The polished, confident Lowe is meant to represent DirecTV in the spots, while his alter egos are meant to represent the company’s cable competitors. “Don’t be like this me,” the “real” Lowe tells viewers. “Get rid of cable and upgrade to DirecTV.”

Even that line, which seems like standard-issue puffery, was too much for Comcast and the NAD, which said it improperly implies that DirecTV is superior to cable and should be dropped from the spots.

In its statement, the NAD said: “Although humor can be an effective and creative way for advertisers to highlight the differences between their products and their competitors, humor and hyperbole do not relieve an advertiser of the obligation to support messages that their advertisements might reasonably convey.”

That’s not the easiest sentence in the world to parse, but it seems to suggest that every statement in an advertisement — even one that simply claims the advertised product is better than other products — needs “support.” If universally applied, such a standard could take every third commercial off the air.

DirecTV plans to appeal the ruling, which isn’t binding, but if ignored could lead to a referral to a government agency.

DirecTV said in a statement to the NAD that it “the various Rob Lowe advertisements are so outlandish and exaggerated that no reasonable consumer would believe that the statements being made by the alter-ego characters are comparative or need to be substantiated.”

Maybe DirecTV should make new spots casting the alter egos as horrifying cable customer-service agents. That would be easy enough to “support.”

TIME food industry

Justice Handed Down in Horsemeat Scandal

Lean finely textured beef, is displayed at the Beef Products Inc.'s plant in South Sioux City, Neb.
Nati Harnik—Reuters

Whoops, that horsemeat got in our beef products by mistake, protested the man responsible for a fraud perpetrated across Europe that led to the recall of thousands of tons of meat. But the “whoops” defense wasn’t convincing to a Dutch court that on Tuesday sentenced the man, Willy Selten, to two and a half years in prison.

Selten, who is now bankrupt, owned two wholesalers that together purchased and processed the horsemeat in 2011 and 2012. In 2013, genetic tests determined that hamburger sold in two British supermarkets, including the giant chain Tesco, contained traces of horsemeat. After that, products sold as beef but containing horsemeat were discovered and pulled from shelves in France and Holland.

Selten argued in court that the “mislabeling” of the products was inadvertent. “Mistakes were made in our bookkeeping,” which ended up with the wrong labels being affixed to the wrong products, he said at one point. But the court shot that excuse down by noting that the company had no records indicating it had ever purchased horsemeat at all. So, how could any horsemeat have gotten into beef products by mistake? Prosecutors presented evidence that Selten’s companies had purchased more than 300 tons of horsemeat and sold it to more than 500 European companies.

Selten was found guilty of committing fraud using forged invoices and forged labels.

Consumption of horsemeat is rare in the United States, and there are no horses slaughtered here for human consumption (though we do ship some horses for slaughter in Mexico and Canada). But there are enough horseeaters in Europe to sustain slaughterhouses there, even including in Britain, where very few people eat horse. Of course, even people who are OK with eating horse aren’t OK with buying what they think is beef, only to find out later that it’s horsemeat.

Through his actions, Selten “contributed to a negative image for the Dutch meat industry and damaged the sector’s interests,” the court ruled.

It would have been perfect if the judge had asked Willy Selten why he sold horsemeat, and he had answered “Because it’s there,” but there’s no indication that this happened.

TIME Television

These Are the TVs Netflix Wants You to Buy

Netflix Illustrations Ahead Of Earnings
Bloomberg—Getty Images The Netflix Inc. website and logo are displayed on laptop computers arranged for a photograph in Washington, D.C., U.S., on Tuesday, Jan. 21, 2014.

Netflix has announced the first of the Web-connected TV sets that qualify for its new “Netflix Recommended” program, which the company unveiled in January.

Many if not most of the hassles involved in trying to watch TV over the Internet have to do with network problems, something that neither TV manufacturers nor streamers like Netflix or Amazon can do much about. But Netflix has for years been working with makers of TVs and TV-connected devices to make streaming video more consistently easy to use.

The criteria for getting on the list are generally limited to the streaming experience. Most consumers presumably will weigh all the other usual factors: picture and sound quality, price, size, the remote layout, the installed interface, etc.

But as Internet video becomes ever-more popular, ease-of-streaming becomes ever-more important. Netflix judged the TVs on how quickly they launch the Netflix app, the loading time of streams, and how quickly users can get to both the Netflix app and its streams. Two of the requirements: whether the Netflix app is displayed prominently enough, and whether the remote has a dedicated Netflix button.

All very self-serving for Netflix, certainly, but also very handy for people who use the service a lot. The giant Netflix logo that will be affixed to the TVs on store displays will attract just those people.

Netflix announced the program last January during an LG media event, and several LG sets using the WebOS 2.0 platform are on the list.

Others use the Roku interface, which puts apps, including Netflix, at the center of the TV-viewing experience, right on the home screen. Those sets are from TCL, Insignia, and Hisense.

Also included are Sony’s coming Bravia sets, which will run on the Android TV platform, and offer similarly easy access to apps, and a remote button dedicated to Netflix—press it, and the TV turns on and Netflix instantly appears.

More than half of the sets aren’t available for purchase yet, but will be in the coming weeks and months. Netflix said it would continue adding sets to the list as it approves them. Expect entries from Sharp Electronics and Vizio, since Netflix mentioned both companies during its January announcement.

 

TIME consumer goods

This Is About to Become Your Favorite New Drink

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Chris Stein—Getty Images

Interest in premium brands is on the rise

Bacardi is jumping onto the bourbon bandwagon with its acquisition of a premium Kentucky distiller. But the bandwagon it has been riding since 1862 is picking up speed itself: Even as volume sales of rum are expected to decline, dollar sales are expected to grow, according to a new report, thanks mainly to rising interest in premium brands.

Bacardi on Monday announced it would acquire the maker of Angel’s Envy bourbon, giving the fourth-largest spirits maker its first foothold on the bourgeoning American bourbon market. The brand is owned by Angel’s Share Brands and Louisville Distilling Co. Its flagship port-finished bourbon is among the fastest-growing brands in a market that has seen eye-popping growth: total bourbon sales have increased 35% in the United States over the past five years, and 50% worldwide.

Bacardi is late to the party. It owns the staid, mainstream Dewar’s Scotch, and some whisky-based liqueurs, but until now has had no bourbon brands or any American whiskeys of any kind. But the bourbon trend doesn’t seem to be abating, and though Angel’s Envy is expected to move just 65,000 cases this year (not bad for a company launched in 2011), the company is building a new distillery in Louisville to be completed in 2016. That will take capacity to 800,000 cases.

Meanwhile, rum might be the new bourbon, as drinkers worldwide continue to seek out higher-end hooch. While total volume is expected to fall by about 1.7% between this year and 2014, most of that shrinkage will be at the low end of the market, according to a new report from just-drinks/IWSR Insights. Leaving the cheap stuff out of the equation, volumes will increase by more than 5.5 million cases, to 64.5 million, all of it premium priced.

Just as with premium and small-batch bourbons, “aspirational drinkers” are driving these trends. Rum has been somewhat late to the game because it has had to overcome its image as the booze of frat-boy party monsters and Jimmy Buffett fans. But the industry, most definitely including Bacardi itself, has been working to change that image through — and this is a word uttered entirely seriously by industry people — “premiumization.” Bacardi in 2013 vowed to “premiumitize” the whole rum category, with particular attention to premium brands as well as flavored varieties and spiced rums, all of which have seen sales take off over the past couple of years.

Not that rum will necessarily displace bourbon and other craft whiskeys in terms of cultural cachet. But drinkers are bolting for the high end across all categories. Still, rum has its work cut out for it. In 2014, Ed Pilkington, head of global marketing for Diageo’s vodka, rum, and gin brands, declared that rum had “lost its soul,” and had “fallen behind,” thanks to those aforementioned frat boys.

At the same time, rum was taking off in Europe, even as sales were slowing just about everywhere else. Those trends, according to the new report, are now spreading elsewhere, thanks in part to introductions of products like Bacardi’s high-end Gran Reserva Maestro de Ron, as well as flavored rum’s like its Bacardi Mango Fusion.

TIME

Pot Is Making California’s Epic Drought Worse

Pot growers are using more water than previously understood

Marijuana growers in Northern California are worsening local effects of the historic drought that has gripped the state for the past four years, according to a new study from the California Department of Fish and Wildlife.

Creeks in Humboldt County, a major pot-growing region, are going dry during the May-September outdoor growing season, which also happens to be the driest period of the year, even when there is no drought.

The average marijuana plant consumes about six gallons of water a day. The report compares this to another Northern California plant: wine grapes, which take about 3.3 gallons per day (one-to-one comparisons of two totally different plants are a blunt measure, but still give a roughly useful basis for comparison).

Based on analyses of stream-flow data, aerial observation, and estimated demand, the researchers found that pot growers are in some cases using more water than local creeks can support, putting local wildlife — including the salmon and trout that use the streams — in danger. Young salmon spend their first year of life in those streams before heading to the ocean, spending two years there, and returning to spawn — that is, if there’s enough water. If there isn’t, they can die. This disrupts not only the fishing industry, but the whole food chain, since many local critters feed on fish.

Water diversion is “likely to have lethal or sub-lethal effects on state-and federally-listed salmon and steelhead trout and to cause further decline of sensitive amphibian species,” according to the Fich & Wildlife report.

The study indicates, as have earlier ones, that a majority of creeks studied in the area are at risk.

With other farming industries, such a problem could be tackled head-on. But marijuana’s murky legal status makes that next to impossible. Under state law, pot is legal in California for medical use. But, because it remains illegal for recreational use, and — especially — because it remains totally illegal under federal law — it’s very difficult to regulate. Pot growers in general try to keep as incognito as possible. They don’t apply for permits or create other records that would allow the government to amass data.

Generally, farmers are required to secure permits to redirect water from creeks or to release wastewater. That applies to pot growers, too, but the requirement hasn’t been strongly enforced. The California Water Resources Control Board has lately begun to step up enforcement efforts, but state laws are vague on the details of when permits are needed. That, combined with the reticence of pot growers, means addressing the problem will be a major challenge.

Meanwhile, the drought goes on, with no end in sight. The snowpack in the Sierra Nevada mountains, a major source of California’s water, is now at only 9% of normal levels. As this is happening, the pot industry is growing fast. The Fish & Wildlife report estimates that the amount of land devoted to marijuana cultivation nearly doubled between 2009 and 2012.

TIME

WHy People Are Falling in Love With “Ugly Food”

Would you eat an "ugly" cucumber?

The “ugly food movement” is taking off around the world, particularly in Europe and Australia, as an answer to the problem of food waste. So far, it has yet to firmly take hold in the United States, but given this country’s love of solution-driven food trends, it seems a good bet that ugly food might soon take its place beside local food, organic food, and environmentally conscious eating. “Ugly” foods are those that sellers and buyers often reject because of their appearance, like misshapen vegetables and bruised fruits. Farmers dump them. Supermarkets and restaurants reject them. Consumers historically have avoided them.

The problem of food waste is no joke. By some estimates, a third or more of the food produced globally goes uneaten. The costs are in the hundreds of billions of dollars. Marketing so-called “ugly” food is one answer to the problem. Until recently, the European Union had rules actually preventing the sale of oddly sized or misshapen produce. Some of the rules were hilariously granular: a spear of asparagus could not be sold unless at least 80% of its length was green. The curve of cucumbers was regulated down the millimeter.

As part of a massive effort to reduce waste (2014 was formally designated the “European Year Against Food Waste”), most of those rules were scrapped a few years ago. Now, grocers there are actively marketing such products, and apparently, people are buying them, though it’s hard to tell at this point how successful the efforts have been.

Despite the popular name of the movement, marketers generally aren’t using the word “ugly.” More artful terms are favored. A French supermarket chain is selling “inglorious” foods. The British chain ASDA uses “wonky” (which to American ears might sound as bad as “ugly.”) Canada’s Loblaws uses “naturally imperfect.” Celebrity chef Jamie Oliver, who has cast himself as a promoter of the “good food movement,” has signed on with some British chains to support their efforts.

Other chains are approaching warily. Tesco, the biggest British grocer, sells its wonky foods in parts of Europe, but so far hasn’t marketed them in its home country because, it says, British shoppers aren’t ready for them. But the company has called for a public-education campaign to get consumers on board.

The trend is growing in Australia, too, thanks in part to Oliver’s efforts, though several chains there have been somewhat hesitant as well.

While the movement is unquestionably gaining ground, getting the mainstream on board remains a serious challenge. Consumers in developed countries have been conditioned over decades to expect perfect-looking produce (generally, “perfect” means “uniform,” and free of blemishes — “ugly” foods are just as tasty and nutritious as their prettier counterparts). It might take a long time to move people off those expectations. After all, the organic-food movement began in earnest more than 40 years ago, but only in recent years has it started affecting the food business in a big way. “Ugly” food has a big advantage over organic food, though: it’s generally cheaper than mainstream fare, rather than more expensive. That doesn’t hurt farmers or sellers one bit, though, since this is all food that would have ended up in the scrap bin: the revenues represent almost pure profit. And in fact, costs are actually reduced, since the foods that once were rejected had to be shipped back to their source.

The U.S., perhaps not surprisingly, has been slower than Europe to take up the trend, but there are some early indications that it might take off here. Bon Appetit Management, a big food-service company owned by the gigantic Compass Group USA, last year launched Imperfectly Delicious Produce, a program to divert ugly foods from the waste stream to the restaurants and cafeterias the company serves.

But such efforts are rare in the United States so far. Until recently, most “ugly” food that wasn’t simply thrown away has been given to needy people, though efforts like the Food Recovery Network (which Bon Appetit works with) and the Environmental Protection Agency’s Food Recovery Challenge. And such efforts of course do help. But if the private sector can be moved to make “ugly” food not only salable, but commercially popular, that would go a long way toward reducing the shocking amount of food we waste.

 

 

TIME Food Safety

Here’s the Terrifying Truth About Metal Shards in Your Food

Inexpensive food from an industrialized food system has its downsides

Kraft Foods is recalling 242,000 cases of its Macaroni & Cheese product because “metal shards” have been found in some boxes. The recall is getting lots of attention both because of the size of the recall and because the product is so popular. But contamination of food with foreign objects, and metal pieces in particular, happens more often than you might think.

In January, Unibright Foods recalled about 50,000 pounds of prepared meat products that were shipped to seven U.S. states after it was discovered that packages might contain what the Department of Agriculture called “extraneous metal materials.” A restaurant in Illinois discovered a piece of stainless steel wire in one of the sukiyaki beef products.

Last June, Wegmans recalled 6,000 bags of ice sold in its stores across the northeast over a period of more than five months that contained metal pieces from a broken machine part. In that case, contaminated bags of ice were discovered by the company itself, and no shards were found in ice that was actually sold.

In 2012, metal pieces in private-label products made by Bay Valley Foods, resulted in a recall of 74,000 cases of boxed pasta mix products, including macaroni and cheese.

That same year, Kellogg recalled 2.8 million boxes of Bite Size Frosted and Unfrosted Mini-Wheats when “due to the possible presence of fragments of flexible metal mesh from a faulty manufacturing part.” The boxes were distributed across the country.

And those are just a few of the cases of metal contamination over the past few years. Nobody knows exactly how often that particular problem occurs. But while food recalls involving disease-causing agents like E. coli and salmonella get the most attention, recalls due to the contamination of foreign objects are far from rare.

It’s perhaps not so surprising that metal pieces end up in food products, given our industrialized food system. When a piece of machinery breaks off in an electronics factory or an automotive plant, that’s a problem. When it happens in the food chain, that’s downright dangerous, though apparently few deaths or serious injuries have been reported from such contamination.

Some companies are taking steps to reduce the problem, including some highly sophisticated ones like ultrasound and nuclear magnetic resonance techniques. Production lines have been reconfigured and redesigned to minimize the number of parts that have metal moving against metal. |

But as long as we want a the wide variety of inexpensive food we get from our industrialized food system, the hazards of metal and other foreign objects making their way into our food supply will remain.

Read next: How Kraft’s Mac and Cheese Recall Will Affect Its Stock Price

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