MONEY groceries

Here’s How Much You’d Save by Dumping K-Cups for Traditional Brewed Coffee

150305_EM_KCup_1
Shutterstock / Rob Hainer

The inventor of K-Cups says he regrets coming up with the idea and doesn't even own a K-Cup machine.

This week, the Atlantic ran a story in which John Sylvan, inventor of the K-Cup—the single-serve coffee pods that are increasingly taking over home and office counter space—dropped a bombshell. “I don’t have one. They’re kind of expensive to use,” Sylvan said of the K-Cup system he created. “Plus it’s not like drip coffee is tough to make.”

This isn’t exactly like Henry Ford saying that he prefers bicycles to cars, or Steve Jobs praising the cost-effectiveness of a rotary phone over an iPhone, but it’s sorta in the same ballpark.

Sylvan acknowledged that he feels “bad sometimes” about creating the K-Cup, which he likened to “a cigarette for coffee, a single-serve delivery mechanism for an addictive substance.” Also, the proliferation of coffee pods—which are mostly unrecyclable, and which take up more and more space in landfills thanks to America’s ever-growing love affair with coffee—have raised serious environmental concerns as they’ve increased in popularity. Quartz declared them “the most wasteful form of coffee” on the planet.

For now, though, let’s focus strictly on the household economics of single-pod coffee brewers. To what degree are they “kind of expensive” compared with regular coffee makers?

First, there’s the cost of the machine. Recently, marketing professor Eric Anderson at Northwestern University’s Kellogg School of Management noted that in 2002, the average coffee maker cost $35. Today it’s still easy to find a basic coffee maker for that price, or even $20 or $25. By 2013, however, the average coffee maker purchase price hit around $90, partly due to the spread of pricey single-pod brewers from Keurig (the K in K-Cups), Nespresso, and others. At Bed Bath and Beyond, the least expensive Keurig coffee maker is $100, which seems fairly typical.

But that’s only a small factor in how much more K-Cups cost compared with brewing traditional drip coffee. The Atlantic story estimates that the tiny amount of coffee used in each K-Cup winds up costing the equivalent of $40 per pound. That’s easily three times the price of a pound of ground or whole bean Starbucks coffee.

How much more money, then, does a household spend by using K-Cups? The answer depends on several factors, including how much coffee you drink and what kind, and how carefully you shop for deals on coffee makers and the coffee itself. Over the years, various penny-pinching individuals have done the math on the subject, and the breakdown usually shows that K-Cups cost two or three times more per cup compared with traditionally brewed coffee.

One fairly typical analysis, comparing Caribou brand K-Cups versus ground coffee, showed that the per-cup cost was 66¢ versus 28¢, respectively. If you make three cups a day, 365 days a year, that adds up to around $723 spent on K-Cups, versus $307 for regular coffee brewers. So you’d easily save $400 a year by going the old-fashioned route—which, again, Sylvan points out accurately, ain’t exactly hard to handle.

For an idea of how much your household specifically would save—or, on the flip side, how much you’re paying for the convenience of K-Cups—check out the coffee maker calculator one economist created a couple years back. Enter a few data points into the Excel calculator, including how many cups of coffee you brew per week, the cost of coffee machines you’re considering, how much you typically spend on coffee, and even how much of the coffee pot you usually wind up pouring down the drain, and it’ll spit out the per-cup price breakdowns. We entered several different scenarios, and K-Cups were at least twice as expensive in all cases.

If the majority of your coffee does come brewed via K-Cup, at least you can take solace in the fact that you’re not hitting Starbucks or another coffee shop several times a day. Compared to that, your K-Cup habit will seem downright cheap.

MONEY Saving

Why Candy Companies Hate the Way You’re Shopping

Candy at newsstand
Patti McConville—Alamy

When shoppers are picking up groceries curbside or staring at their smartphones in the checkout line, they're not going to impulsively buy chocolate bars.

No one heads to the supermarket or drugstore with a shopping list that reads:

• Overpriced bottle of Coke
• Trashy celebrity magazine
• Bag of candy I’m not supposed to eat

At least, we hope no one has ever created such a shopping list.

Regardless, those items are snatched up and purchased by many shoppers, typically because they’re tempted while waiting in the checkout area. As customers stand in line, surrounded by the goodies stocked in the vicinity of the cash registers, sometimes their rumbling stomachs and base curiosities get the better of them. The result: They drop a few bucks to satisfy a chocolate craving or read about the latest contrived Kardashian scandal, and the store wins some quick and easy profits.

But what if there were no opportunity for the store to tempt you into making such ill-advised impulse buys? Well, in fact, it’s getting harder for stores to nudge customers into making checkout impulse grabs, and tech is a big reason why.

While the advent of smartphones doesn’t eliminate the possibility of checkout impulse purchases, research indicates that our iPhones and Androids serve as “mobile blinders” that shield us from mindlessly eyeing the candy shelves and other checkout area temptations. In other words, because we’re checking email or Twitter or Instagram or playing some silly game on our phones, the odds are lower that we’ll buy, or even see, gum, chocolate, and the latest issue of Cosmo.

What’s more, online shopping, as well as the increasingly popular option of ordering groceries or other goods online and then picking up purchases curbside, all but negates any chance for the shopper to make an impulse buy. Another potential impulse purchase killer is self-checkout: Because shoppers are occupied with scanning their orders, they’re not thinking about how wonderful that chocolate bar in front of them would taste.

For obvious reasons, companies whose business relies on such impulse purchases aren’t happy about any of this, and at least one large candy company is doing something about it. Recently, the blog Retail Wire took note of some comments on the topic—and what’s known by insiders as “dwell time”—made by Chris Witham, a senior manager of front-end experience for Hershey, at an industry event.

“Anytime there is a pause in the shopping trip and shoppers take a look at some of the merchandising that is available, that is dwell time,” explained Witham. Obviously, retailers and companies like Hershey want shoppers to encounter some “dwell time” in order to maximize the odds that they will add an impulse purchase to their carts. Still, they don’t want shoppers to get annoyed by being forced to wait around forever. “As they get to pay points, how much is a good amount of dwell time [going] to encourage impulse purchase, but not have a detrimental effect on the shopping trip as a whole?”

Among the strategies Hershey is actively working on to counter the effects of technology and boost opportunities for impulse buys are adding on-demand chocolate dispensers to self-checkout areas, as well as candy and snack kiosks and vending to curbside pickup areas and perhaps near the pumps at gas stations. What’s clear is that candy companies aren’t simply going to give up on pushing impulse sales, no matter how technology changes the game.

“Impulse, in an indulgent business, is really important … But shopping is changing, and impulse is under threat,” said Frank Jimenez, Hershey’s senior director of retail evolution, according to The (UK) Guardian. “What happens if and when the checkout goes away?”

And what happens if the majority of shoppers turn into those described by the Wall Street Journal last fall:

They are time-pressed and deal savvy, visiting stores only when they run out of items like cereal or toilet paper and after doing extensive research on purchases online and with friends. They buy what they came for—and then leave.

There’s little to no chance a store can ensnare this kind of shopper in an impulse buy. It’s a good thing for stores, and for companies such as Hershey, that other research indicates that 9 out of 10 consumers buy things that aren’t on their shopping lists, and that millennials are most likely to make impulse buys not because they spotted a good deal or promotion but simply to pamper themselves.

Among the takeaways for shoppers who don’t want to be suckered into impulse purchases: 1) Shop with a list. 2) Stick to the list. 3) Keep your head down at the checkout area to avoid temptation. 4) Take advantage of online shopping and/or curbside pick-up services when they make sense.

MONEY groceries

National High-Price Bacon Nightmare Is Over

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Ray Lego—Getty Images

Bacon lovers, rejoice. The heartbreaking, seemingly endless rise of pork prices appears to have subsided.

After hitting record highs over the summer, bacon prices have come down to earth—and even cheaper prices are on the way.

The retail price of bacon hit an all-time high during the summer of 2014, but has since retreated, dropping 5.7% by early December, according to Bloomberg News. What’s more, all signs indicated at the time that prices for pork, ham, and bacon would keep on decreasing. “Hogs and pork are almost surely going to be cheaper, particularly compared to beef, next year,” Doane Advisory Services economist Dan Vaught said.

Sure enough, pork prices are plunging in early 2015. On Tuesday, the Wall Street Journal reported that farmers have rebounded from a virus that decimated pig herds in 2013 and early 2014, and that the nation is riding high on the hog in terms of a record number of pigs approaching slaughter weight. Forecasts call for an all-time high of 23.9 billion pounds of pork to be produced in the U.S. in 2015.

“It’s amazing. We’ve gone from ‘We’re going to run out of pork!’ to ‘What are we going to do with all of this meat?’” John Nalivka, president of the Oregon-based agriculture-advisory firm Sterling Marketing Inc., told the Journal.

Well, one thing they’re clearly going to do is cut prices. Hogs are currently trading at four-year lows on the futures market. Supermarkets are paying less for pork wholesale, and they have begun passing along the savings in the form of cheaper ham, pork loins, and yes, bacon. Last summer, the average retail price for a pound of bacon was over $6 per pound. By December 2014, according to the Bureau of Labor Statistics, a pound of bacon was averaging $5.53 in U.S. grocery stores, and $5.10 in the Midwest.

The funny thing about bacon is that people love it so much that demand stays incredibly high even when prices rise, and the masses are prone to panic with the slightest hint of bacon being in short supply. And when bacon prices become cheaper, that’s a justification for some bacon lovers to take their bacon consumption to the next level. Businesses that profit on bacon-aholics will surely be more than happy to help. Look for more bacon to be incorporated into restaurant menus and on sale at supermarkets in the months ahead.

MONEY consumer psychology

Panic Shopping! How a Blizzard Turns Us into Irrational Hoarders at the Grocery Store

A long line of shoppers wait beside mostly-empty shelves in the bread aisle of a grocery store, as people stocked up on items ahead of an approaching snowstorm, in Alexandria, Virginia, USA, 12 February 2014.
Michael Reynolds—epa/Corbis A long line of shoppers wait beside mostly-empty shelves in the bread aisle of a grocery store, as people stocked up on items ahead of an approaching snowstorm, in Alexandria, Virginia, USA, 12 February 2014.

Weather forecasts aren't nearly as reliable as the reaction by shoppers when a bad storm has been predicted. And by reaction we mean overreaction.

Almost exactly a year ago, supermarkets cashed in as shoppers rushed in and ransacked store shelves in anticipation of snowy weather and the polar vortex’s subzero temperatures hitting a broad swath of the country. This week, it’s largely the same story in the Northeast, what with a historic blizzard said to be threatening New England and much of the Mid-Atlantic region.

Over the weekend, the panic hoarding began, with shoppers emptying grocery store shelves and grabbing every last loaf of bread, carton of eggs, and bottle of milk in sight. On Sunday, shoppers at one New Jersey supermarket reported it being nearly impossible to find a parking spot outside the store, while inside the scene was one of empty coolers where milk used to be, employees fighting through crowds to restock shelves, and endless lines snaking away from cash registers. Likewise, shoppers have been sharing photos of the crazy mob scenes over the weekend inside grocery stores in Boston, New York City, and elsewhere with #Snowmaggedon2015, #Blizzardof2015, or whatever your preferred nickname is for the storm.

By now, this kind of pre-storm mad rush at the supermarket is to be expected. Heck, it’s far more reliable than the actual weather forecasts ever are. And to some extent, this behavior is reasonable. We’re relentlessly instructed to take precautions, prepare for the worst, go the route of better safe than sorry, and … you get the gist. You don’t want to be stuck in a blizzard without a shovel or enough food to last for a few days, after all.

Yet, as with so many other things involving human beings, there’s a tendency to go completely overboard. What starts out as a prudent and sensible shopping excursion can quickly devolve into a frenzied, agitated exercise in hoarding at an overcrowded supermarket or hardware store, as the ugly, primal side of humanity rises to the surface.

During the polar vortex of early 2014, for instance, some supermarket customers reported that meat and bread were swiped from their shopping carts while their backs were turned. Ever since Superstorm Sandy left gas stations without gas and led to some instances of price gouging where gas was available, drivers have been known to flock to the pumps to fill up when a big storm is in the forecast. Far more often than not, of course, it’s wholly unnecessary to wait in line for 30 minutes or longer just to top off your gas tank.

What is it, then, that pushes us over the edge? Why do shoppers head out to the store in preparation of some snow and perhaps a couple days without power, and then they (OK—we) wind up hoarding all manner of goods as if preparing for the apocalypse?

Part of the explanation is mob mentality. When we see others streaming into stores and snatching up perishable goods by the cartload, we feel pressure to do the same. Perhaps, we think, these crazed shoppers all around us know something we don’t? It’s easy to see how this mentality snowballs—excuse the pun—when an epic blizzard is expected. This kind of thinking also pushes consumers into the realm of irrationality on days like Black Friday, when the bustle of crowds and competition causes people to overreact and buy things they wouldn’t have had there not been dozens of shoppers fighting to get their hands on some supposedly hot, must-have holiday purchase.

Consumer psychologist Kit Yarrow, an author and frequent TIME and MONEY contributor, explained via email that no matter if it’s Black Friday or the day before a blizzard or hurricane is about to hit, when crowds descend on stores we essentially revert to cavemen. “Clearly we’re responding to emotions and crowds, and our brains are a few steps behind,” said Yarrow. What else could explain the act of rampaging through the supermarket and “greedily grabbing the last can of Spam”?

“It starts with a normal impulse to stock up on things that might not be available for a few days,” Yarrow said. “Panic hits when the stores are jammed with other shoppers and the shelves look a little bare. It’s not so much a thought as it is an impulse that hits, and it’s associated with the caveman parts of our brain that take over when we perceive we might be in physical danger. We are prewired to fight for food when we sense that resources are scarce.”

Afterwards, we’re likely to look back on our behavior with puzzlement, and perhaps embarrassment. “Shoppers are going to find that canned food in the back of their pantries someday and wonder what they were thinking,” said Yarrow. “The fact is, they really weren’t thinking. Primal brain took over.”

Try to keep this in mind when, inevitably, the next “historic” storm is on the horizon and your supermarket seems to have been invaded by hoarding barbarian masses. By then, however, it’ll probably be too late. You’ll be in the store, not thinking, and instead following the primal impulse to race to get the last loaf of bread before it’s gone.

Speaking of which, anyone have any good recipes that involve Spam? Somehow, I have a bunch in the pantry, though I don’t remember even buying them.

MONEY Shopping

5 Everyday Items You Paid More for in 2014—and 3 That Got Cheaper

A few of America's favorite items for snacking, cooking, and recaffeinating got a lot more expensive this year. Meanwhile, one big cost has gotten much cheaper.

Inflation causes the slow, steady rise in prices for all manner of goods and services. But the price hikes incurred by the five common expenditures below have far outshot inflation. Over the past year, chances are a much larger portion of your household budget has been allocated to the following expenses.

 

  • Olive Oil

    Bottle of olive oil
    Sue Wilson—Alamy

    Olive Oil Times noted recently that “2014 will go down as one of the worst years in recent history for olive oil production in Italy.” Production has slowed significantly in Spain and Portugal as well, thanks to a range of factors including a fruit fly infestation and a cold spring followed by a hot, humid summer—followed by hail storms. The end result is that global production of olive oil could be down as much as 27%, and prices for high-quality European olive oil are soaring: Recently, wholesale prices for extra virgin olive oil in Italy were up 121% compared to a year ago.

  • Beef

    T-bone steak on white butcher paper
    Foodcollection.com—Alamy

    Virtually all meat prices rose in 2014, thanks largely to long periods of drought in the American West colliding with increased global demand. Yet beef prices rose swiftest of all this year, with live cattle futures hitting an all-time high in November and retail prices being pushed up 18% to 20% compared to a year ago. And get this: Skyrocketing beef prices are being blamed for what appears to be the return of cattle rustlers, who presumably made off with 150 cows that were reported missing in Idaho, and that are worth over $300,000. Perhaps worst of all, bacon prices have been rising nearly as steeply as beef.

  • Chocolate

    Hershey's, Mr. Goodbar and Krackel chocolate bars.
    Kristoffer Tripplaar—Alamy

    Surging cocoa prices led both Hershey’s and Mars to raise prices by 8% or so on your favorite chocolate candy bars this year. And because the supply of chocolate appears unable to keep up with demand—which is soaring in particular in Latin America and Asia—chocolate prices are expected to keep rising going forward.

     

  • Airfare

    Airport planes
    Nicholas J. Reid—Getty Images

    The average round trip flight in the U.S. surpassed $500 in 2014, and the cost of flying domestically has been rising nearly 11% over the past five years, after adjusting for inflation. What’s puzzling—not to mention frustrating—for travelers is that base prices for flights have been soaring at a time when airline fees and airline profits are both sharply on the rise. Lower fuel prices have served to make profits even larger, and while the airlines have kept prices high thus far in the new era of cheap oil, costs have declined so dramatically that some are anticipating slightly cheaper airfare in 2015.

  • Coffee

    The Starbucks Corp. logo sits on carboard coffee cups inside a Starbucks coffee shop.
    Jason Alden—Bloomberg via Getty Images

    Starbucks, Folgers, and Dunkin’ Donuts are among the well-known coffee brands subjected to price increases in 2014. Persistent drought in Brazil, the world’s largest coffee bean producer, has been blamed as the main reason for the price hikes. And while it may seem as if coffee drinkers will pay any price to get their java fix, a recent report noting falling coffee sales from Smuckers, maker of Folgers, indicates that the demand for coffee has its limits. Meanwhile, Starbucks’ new plan focuses on a luxury retail concept, where a haute cup of Joe will run around $6.

    On the flip side, you paid less for these three expenditures in 2014:

  • Gas

    Mark Monaham, owner of the Raceway gas station in McComb, Miss., changes his fuel price billboard, Friday, Dec. 19, 2014. Gas prices throughout the region continue to fall as oil prices plummet.
    Daniel Lin—AP

    Thanks to an increase in supply and lower consumption due to more fuel efficient vehicles and other factors, gas prices launched into a slow, steady decline last summer that hasn’t really ended. The national average hit what was then a low for 2014 in early October, at $3.27 per gallon—a rate that seems quite expensive of late. Prices dipped under $2 per gallon in a few stations in Oklahoma in early December, and government forecasts are predicting a national average of $2.60 per gallon for 2015, down from $3.51 in 2013.

     

  • TVs

    A Walmart employee helps a customer with a 50" TV on sale for $218 on Black Friday in Broomfield, Colorado November 28, 2014.
    Rick Wilking—Reuters

    It’s no surprise that the price of most electronics drops year after year, thanks to increasingly lower production costs and the fact that any technology available for more than six months is deemed old and unhip—and therefore must be discounted. Even so, the dip in TV prices in 2014 has been pretty amazing. In October, the Labor Department reported that TV prices were down 14%, and that decrease of course occurred well before the rollout of super cheap TV deals on Black Friday and the rest of the holiday period. As Consumer Reports noted recently, it’s now pretty easy to find a 40-inch TV for less than the price of an 8-inch tablet.

     

  • Cellphone Bills

    Pedestrians pass a Verizon Wireless store on Canal Street in New York.
    John Minchillo—AP

    The past year brought with it more changes in cellphone plans than we’ve seen in perhaps the previous five years combined. In addition to a sharp shift toward more possibilities in “non-contract” plans, in which you’re not locked into a two-year deal, wireless providers have been especially aggressive this year in terms of rolling out new plans and bonuses in order to win over customers from the competition. In August, for instance, Verizon and Sprint both introduced significantly cheaper plans to new customers—potentially cutting one’s monthly bill by 50%. More recently, Sprint promised a new unlimited talk and text deal that would cut in half the bill currently paid by any AT&T or Verizon customer.

    None of this necessarily means that your household’s smartphone bill actually went down in 2014. But considering the increased competition and wide range of new individual and family plan offers on the table, you should be paying less. If you’re not, it’s time to start shopping around to get a better deal. You might not even have to switch providers. Sometimes it’s as simple as calling up and asking for a cheaper option.

TIME Diet/Nutrition

Kalettes: A Brand-New Veggie You Should Know About

Kalettes

Kalettes, a cross between kale and Brussels sprouts, are the latest hybrid vegetable to hit the U.S. market.

The new veggie was created by Tozer Seeds, a British vegetable-breeding company that brought the vegetable to the United States in fall 2014. The non-genetically-modified vegetable took 15 years to perfect. “The inspiration behind Kalettes came from a desire to create a kale type vegetable that was versatile, easy to prepare and looked great,” Kalettes’ website reads. “Crossing kale with brussels sprouts was a natural fit since they are both from the brassica oleracea species, which also includes cabbage, cauliflower and broccoli.” Kalettes, like many dark leafy greens, are very high in vitamin C. They’re also high in vitamin K.

In the early stages of Kalettes’ development, Brussels sprouts were dropping out of popularity in the U.K., and the new hybrid was thought of as a potential way to increase the veggie’s popularity, Modern Farmer reports.

Kalettes look similar to a small cabbage and are available at Trader Joe’s nationwide, as well as at some regional groceries like Whole Foods and Costco. Kalettes are are simple to prepare and cook quicker than Brussels sprouts, the company says. Taste wise, Kalettes have a nutty, savory flavor.

MONEY groceries

Rumors Are Flying of a Thanksgiving Turkey Shortage

Turkeys in a grocery store
Richard Levine—Alamy

You may have heard that there's a turkey shortage, and that prices are rising just in time for Thanksgiving. Hogwash.

Supermarkets have plenty of turkeys, and prices are incredibly cheap right now. How cheap? How about 79¢ per pound? That’s what the Kroger chain of supermarkets is offering in a special deal valid through Thanksgiving, so long as the customer buys an additional $35 or more in groceries.

If that’s too pricey, check out the offer from Meijer: When a customer spends at least $20 in the store, the chain’s own brand of turkeys are 50% off, which translates to 54¢ per pound for frozen birds and 98¢ per pound for fresh ones. In competitive markets such as western Michigan, meanwhile, some local grocery stores are selling turkeys for as little as 49¢ a pound. The latest Stop & Shop circular is advertising frozen turkeys for 59¢ per pound with a $25 purchase, and the chain says it will match the turkey prices of any grocery competitor. Yet another large player in the grocery field, Hy-Vee, has a coupon valid for a free 10- to 14-lb. Honeysuckle White Turkey for customers who purchase a Hormel whole ham. And ShopRite is giving reward club members a free turkey once the customer meets certain spending requirements (usually $400) over a period of a few weeks.

So why are so many headlines are making the rounds lately indicating that turkey is getting expensive?

It’s true that production is down, and that wholesale prices are up for turkey. But the important takeaway for shoppers is that neither of these factors is necessarily translating to rising prices in stores.

Due to long periods of drought and rising prices for feed, production of all manner of livestock has been on the decline in recent years. Beef prices, for instance, have increased to the point that consumers needed smart strategies to keep barbecue costs down over the summer. The Associated Press recently reported that American farmers will produce a total of 235 million turkeys this year, “the lowest since 1986, when U.S. farmers produced roughly 207 million birds.”

It sounds pretty dire. And yet, there’s nothing remotely true about the idea of there being a turkey “shortage,” as some have called it. A shortage means there’s not enough to go around—that the supply can’t keep up with demand. But as no less an authority than the National Turkey Federation noted that Americans collectively consumed 46 million turkeys at Thanksgiving 2012, and 210 million turkeys during the year as a whole. That, combined with the fact that there are ample supplies of turkeys at supermarkets all over the country, should dispel any claims of a “shortage.”

As far as prices go, wholesale prices may be rising—reportedly up 12% in October compared with last year—but, as USDA agriculture economist David Harvey explained to the AP, “There’s really no correlation between what grocery store chains are paying and what they’re selling them at.”

This year—and every year around this time—supermarkets use turkeys as “loss leaders.” The stores advertise exceptionally low prices on turkeys, knowing that doing so will be a draw for customers. The grocers don’t care if they make little or no money, or even if they lose money, on turkey sales; shoppers who come for turkeys almost always buy plenty more groceries when they’re in the stores, especially when they’re required to do so, as the best deals stipulate, and it’s in these purchases where the supermarkets make their money.

What’s more, the idea that there is a turkey shortage and/or that turkey prices are soaring is a myth that pops up regularly around this time of year. Last year’s “shortage” turned out to be hype because, once anyone read past the headlines, it was clear that even as the supply of one particular kind of turkey had declined, the vast majority of turkeys (and consumers) were completely unaffected.

In a story published today by the New Jersey Star Ledger, Ashley Myers, co-owner of Ashley Farms, is quoted laughing off the idea of there being a shortage of turkeys. “They say that every year,” she said.

And every year, everyone who wants to buy a turkey for Thanksgiving is able to buy a turkey very easily, generally at very low prices—or even free. This year is no exception.

MONEY groceries

Lawsuit Could Force Upstart Condiment Brand to Hold the ‘Mayo’

141111_EM_JustMayo
Jim Wilson—The New York Times/Redux In a lawsuit, food giant Unilever says that Just Mayo must change its labeling because it is not real mayonnaise.

In a David vs. Goliath battle over sandwich spread labeling, things could get messy.

Unilever, the food giant that owns the Hellmann’s brand of Real Mayonnaise, recently filed a lawsuit against Hampton Creek, a well-funded startup backed by the likes of Bill Gates. The upstart company is being accused of false advertising because its sandwich spread brand Just Mayo contains no eggs and is therefore not real mayonnaise.

The Food & Drug Administration stipulates that any product calling itself mayonnaise must contain one or more “egg yolk-containing ingredients,” and Just Mayo is made with yellow peas instead of eggs. The rules also require genuine mayonnaise to be at least 65% vegetable oil—which is why Kraft’s Miracle Whip, which doesn’t meet that standard, is not a mayonnaise and is technically classified as a salad dressing.

Unilever is demanding that Just Mayo change its labels, and it is seeking unspecified compensatory damages. The “harm is impossible to quantify because of the difficulty of measuring lost good will and sales” for Hellmann’s and other mayonnaise makers, the suit states. The suit claims that the “Just Mayo false name” has “caused consumer deception and serious, irreparable harm to Unilever,” and that it’s “part of a larger campaign and pattern of unfair competition by Hampton Creek to falsely promote Just Mayo spread as tasting better than, and being superior to, Best Foods and Hellmann’s mayonnaise.”

On its website, Just Mayo states its spread is “outrageously delicious, better for your body, for your wallet, and for the planet.” In recent months, the product—which is vegan but isn’t marketed overtly as such—has appeared on the shelves of national retailers such as Whole Foods, Costco, and Walmart.

Putting taste aside because that’s a subjective matter, how can Just Mayo label itself mayonnaise when it’s not mayonnaise? Well, actually Just Mayo never says that it is mayonnaise. The product is always referred to as “mayo,” not “mayonnaise.” Hampton Creek maintains that there’s a difference, that it never claimed the product was genuine mayonnaise, and that the lawsuit is the result of Unilever and Hellmann’s feeling threatened in the marketplace. “We’re competing directly with a company that hasn’t had real competition in decades,” Hampton Creek CEO Josh Tetrick told the Wall Street Journal. “These things happen.”

Andrew Zimmern, the celebrity chef and Travel Channel personality who is quoted calling Just Mayo a “must have” on the Hampton Creek website, has created a Change.org petition against Big Mayo, asking others to join his effort to get Unilever to “Stop Bullying Sustainable Food Companies.” The online petition, which urges Unilever to drop the lawsuit and “focus more on creating a better world rather than preventing others from trying to do so,” has already registered more than 15,000 signatures. Look for the movement to spread.

MONEY groceries

Why Amazon Wants to Deliver Your Groceries

AmazonFresh delivery, San Francisco, CA.
SiliconValleyStock—Alamy

Amazon's next target: The place where you do 20% of your spending.

Selling groceries is a horrible business. Competition is stiff. Margins are tight. And it’s heavily capital intensive.

You’d be excused, in other words, for wondering why a company like Amazon.com AMAZON.COM INC. AMZN -0.66% is so intent on not only selling groceries, but on delivering them to your doorstep the same day you order them.

I’m referring to AmazonFresh, the e-commerce giant’s grocery-delivery subsidiary. Launched in Seattle in 2007, the service has now expanded to include Los Angeles, San Francisco, and New York City.

While perplexing, my guess is that the source of Amazon’s interest is actually quite simple. Namely, aside from sales of general merchandise, groceries make up the next largest category of retail sales excluding car sales.

In 2013, total grocery sales in the United States added up to $580 billion. By contrast, sales of general merchandise (Amazon’s bread and butter) totaled $653 billion. Meanwhile, the third-largest category, building materials and garden equipment, came in at $312 billion.

On a percentage basis, this means that nearly 20% of all domestic retail sales are associated with groceries. Thus, for a company that aspires to be the “everything store,” it seems obvious they’re a necessary offering.

amazonfresh_large

It’s worth noting, moreover, that Amazon’s desire to tap into the grocery business fits snugly into its emerging business model, which is in the process of fundamentally altering the retail landscape as we know it.

Over the last five years, the Seattle-based company has accelerated the construction of fulfillment centers across the United States. At present, it now has mammoth facilities perched on the outskirts of nearly every major metropolitan area in the country, including New York City, Chicago, and Los Angeles.

Aside from reducing the time it takes to dispatch goods from warehouses to customers, this positions Amazon to wage a direct assault on a host of once-sheltered brick-and-mortar retailers.

Large appliances serve as a perfect example. When Amazon only operated a handful of fulfillment centers in places like Kentucky, Delaware, Indiana, and Washington, it wasn’t feasible to ship a refrigerator to a customer in Dallas. But now that Amazon has a 1-million-square-foot facility in neighboring Fort Worth, that barrier has largely been eliminated.

It stands to reason that any retailer even remotely vulnerable to disruption is now within Amazon’s crosshairs. And first and foremost among these are businesses like grocery stores that shoulder the expense of owning or leasing high-priced real estate in densely populated areas.

Does this mean grocery stores will soon go the way of the dodo bird? No, not completely at least, as Amazon’s ability to generate a reasonable rate of return from AmazonFresh remains to be seen. At the same time, it doesn’t require an extraordinary leap of faith to assume that Amazon will find a way to crack this nut and begin devouring yet another large category of retail sales.

MONEY groceries

Whole Foods Is Losing Its ‘Whole Paycheck’ Reputation

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Justin Sullivan—Getty Images

Whole Foods is winning over customers based on the pitch that high food standards don't necessarily have to come with high price tags.

In Whole Foods’ fourth-quarter results released on Wednesday, investors found out that total sales increased 9% year over year, while comparable-store sales inched up 3.1%—”in line with its expectations, but marking its worst growth rate in over four years,” the Wall Street Journal noted.

Nonetheless, investors were plenty pleased with the direction the company is going, sending Whole Foods shares up more than 10% early Thursday.

Investments aside, what’s most interesting for everyday shoppers about the results—and about Whole Foods’ plans going forward—is that the supermarket often dubbed “Whole Paycheck” for its high-end and high-priced selection is experiencing success in a broad initiative to lower prices.

Last spring, Whole Foods shares tanked after it began to look increasingly difficult for the company to dominate sales of organic foods, since Walmart and other mass retailers had widely expanded their offerings. Organic foods are incredibly important to Whole Foods, as co-chief executive officer Walter Robb explained via statement yesterday:

“Natural and organic products are increasingly available, yet no one offers the shopping experience we offer. We hold the idea of ‘food’ to a higher standard, banning more than 75 ingredients commonly found in other stores, and we believe our unparalleled quality standards are a large part of why we maintain a broad base of loyal customers and attract new customers aspiring to a natural and organic lifestyle.”

Yet it’s not just Whole Foods’ “higher standards” that have given store sales a boost. In recent weeks, the company launched its first national ad campaign featuring the slogan “Values matter.” That’s values plural because of the standards mentioned above, as well as the old-fashioned value of a dollar. Whole Foods has been trying to rein in prices for at least two years—after all, it’s easier to attract new customers to the “natural and organic lifestyle” when it doesn’t cost an arm and a leg to do so. The initiative has hurt gross margins, which fell from 35.7% to 35.4%, but it has helped Whole Foods win over new shoppers and keep loyal customers at a time when it’s easier than ever to find organic foods elsewhere—at increasingly lower prices, no less.

In October, the company introduced a new “Responsibly Grown” system for rating produce at several hundred Whole Foods stores. On Wednesday, co-CEO John Mackey told analysts that he was “encouraged” by what he’s seen in the new system, which rates produce and flowers as Good, Better, or Best according to various sustainability measures. The ratings are supposed to help shoppers evaluate and make an informed decision to buy, for instance, a bag of green apples that’s double the price of a nearly identical one right next to it in the store. Or to help them make the informed decision to do just the opposite and choose the less expensive option.

Mackey said that going forward, Whole Foods will put special emphasis on offering more and more goods at the lower end of the pricing spectrum. “We remain committed to the highest quality standards and to expanding our value offering,” he said, noting there are “opportunities to broaden our selection of products at entry-level price points, increase promotions and narrow price gaps on select known-value items.”

In the future, Whole Foods hopes to expand its Good, Better, Best system to all perishables. The supermarket chain is already testing such a plan at five stores in Austin, Texas, and analysts say the initiative could pay major dividends in terms of changing the company’s upscale, overpriced reputation and broadening its appeal to the masses.

“Price is still a significant barrier in the way people look at Whole Foods, and it will take a while to change the ‘Whole Paycheck’ perception the company has,” said Kate Wendt, senior analyst with Wells Fargo Securities, according to Supermarket News. “But lowering prices in perishables — the category where people shop most frequently at Whole Foods — could help accelerate a change in that perception.”

Read next: Target Is Closing Another 11 Stores

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