Category Archives: Eating & drinking

The death of the banana republic

US-based banana producer and importer Chiquita, the world’s largest banana company, is almost certain to be bought by a Brazilian consortium, after the collapse of its attempted tax-dodge reverse takeover of Irish-based banana importer Fyffes.

In some ways, this is an entirely normal business story.

It features the collapse of the easy, painless [1] tax revenues that the US government could once reliably collect from US-based multinationals’ overseas ventures, as companies move their formal registration and a couple of dozen accountants and lawyers to low-tax jurisdictions like Bermuda, Ireland and the Netherlands whilst keeping management control in the US. It features the growing importance of Brazil’s highly competent and often highly cash-rich middle class, whose flagship was Brazilian-controlled InBev’s takeover of Budweiser brewer Anheuser-Busch.

But that isn’t the whole of it.

The full story takes us back to the tail-end of the 19th century, when advances in shipping made it viable, for the first time, to ship bananas from South America to urban consumers in the northern US.

The United Fruit Company, founded in 1899 by the merger of banana pioneers in Boston and New York, owned and operated plantations in the Caribbean and Central America, and introduced refrigerated sea transport to provide New Yorkers and New Englanders with the freshest fruit.

The UFC [2] found itself building complex logistics networks in countries that had previously lacked any real communications capacity. And as the US became the world’s leading power, and US consumers became richer and hungrier for bananas, the UFC found itself far richer than any of the governments that nominally ruled the Central American countries where it traded [3].

Which is how the term ‘banana republic‘ was coined. Even before WWI, the UFC controlled telecoms and postal networks in Guatemala, Honduras and Costa Rica. With politicians in the company’s pockets, it dominated the US banana trade. It kept costs low by dispossessing peasants of their lands through crooked legal systems, and then employed them as cheap labour on the grounds that serfdom was mostly better than starving to death.

If this sounds familiar, then you’re probably aware of the history of British India.

The main difference between the United Fruit Company and the East India Company is that the former never even required a show of US military force to protect its interests. The implicit threat was so clear, it never needed to be carried out. Besides, bribes are cheaper than wars.

So why am I blethering on about the United Fruit Company? Well, in 1990, it was renamed to Chiquita Brands International. The same one mentioned above. That’s right: the ultimate US imperialist multinational, the inventor of the banana republic, is about to be bought by South Americans.

In the long run, all empires fall and all companies collapse. And often enough, it’s the people they oppressed who take over. The East India Company brand is now owned by an Indian business. There’s nothing new under the sun, and so on.

But I don’t think I’ve seen a quicker shift from colonial corporate power to re-appropriation than Chiquita.

[1] For US consumers and the US economy in general. I’m sure US CEOs were deeply pained.
[2] The best wrestling abbreviation coincidence since Pandas vs Hulk Hogan.
[3] There is some extremely good development economics work on this; this paper is a great start.

How To Calibrate A Booze Up So You’re Halfway Likely To Die

So Dan Nolan was wondering how much beer it would take to kill you.

It turns out the answer (LD50) is 42.5 cans in an hour, or 61 cans in a 24-hour day for a normal drinker, or 96.5 cans in a 24-hour day for a heavy drinker who hasn’t yet developed serious liver damage.

But don’t take my word for it, the model is here for your edification: Too Much Beer Will Kill You Just As Sure As None At All.xlsx

Why minimum alcohol pricing is a terrible idea

Governments in both England and Scotland are planning minimum-pricing regimes for alcohol. These are a terrible idea, not only if you’re a liberal, but even on their own terms. There are three main issues associated with minimum pricing, all of which are conflated by minimum price proponents (this article is a good example of their muddled thinking, and indeed their sanctimony; this piece is expanded from a comment I left there).

1) is it reasonable to expect the government to take measures to reduce the harm that alcohol does to people who aren’t consenting adults?

Yes of course. Hence, tougher powers for councils to revoke the licenses of pubs and clubs associated with violent behaviour, tougher enforcement of bans on sales to minors, better treatment for domestically abusive alcoholics and support for their families, and so on are a good idea.

Nobody has come up with any evidence *at all* that minimum pricing would have any impact on this. Booze consumed in pubs and clubs is always going to be above any minimum price level that encompasses off-trade sales, because *that markup is what pays for the pub to exist*, so the town centre violence argument is nonsense; and bottle-a-day alkies are merely going to have less money to spend on other, less important things like food.

2) is it reasonable to expect the government to impose restrictive measures on consenting adults, based on the probability of health risks in later life *to the person being considered*?

Not in my opinion. If people choose to lower their life expectancy from 80 to 60 but have a better time on the way, that’s entirely their lookout.

This is where the puritan wing (‘teetotalitarians’) and the liberal wing of the left diverge: the puritans want to compel everyone else to live in the way that they view as most appropriate. Which, y’know, is pretty much exactly the same as religious fundamentalists compelling everyone else to live in the way that they view as most appropriate.

3) Even if you accept the puritan argument, is a minimum price a good way of achieving it?

Absolutely not, it’s a fucking terrible idea, because THE ECONOMIC BENEFITS OF THE POLICY GO TO THE BREWERS AND THE SUPERMARKETS. Suddenly, there’s a floor to price competition in the market, which means that everyone involved makes far more profit. This is what a cartel *is*.

If Cameron wasn’t in the industry’s pocket, he’d be suggesting that alcohol tax were raised to ensure that, based on the current lowest-cost production, all forms of booze cost at least 50p a unit (formal policy, actual rates reviewed every year based on what was available in the market). This would have the same impact on consumption of cheap booze as the proposed policy on drinking, whatever you think that impact may be, but the money raised would go to schools’n’hospitals rather than to Mr Tesco and Mr Heineken. At the same time, it would encourage people above the ‘cheap booze’ cutoff point to moderate their consumption, which is a desirable goal if you support the puritan argument (d’you think Christopher Hitchens drank cheap cider or Special Brew? Not exactly…)

The only reason to support a minimum price over higher tax is if you think the poor should have their lifestyle choices forcibly controlled by the state, but that the middle classes shouldn’t. In which case, you’re a bit of a scumbag, nah?

(disclosure as always: I’ve done consulting work for the drinks industry in the past and will probably do so in the future.)

Facebook discussions with an old socialist

My dad’s friend Martin is an old-school Labour man. I’m his friend on Facebook. It’s nice being in touch with such people. Whilst they’re not always right, sometimes they are.

[Martin R]: The poor are dangerous.

Some people: “this is patronising”. Me:

The poor *are* dangerous. This is clear from Tunisia, Egypt and Libya.

Western liberal-ish states were built on understanding that, understanding that Marx wasn’t wrong, and transferring enough of the money to the working class to stop the poor being actively dangerous. Note the extent to which governments started serious wealth-transfer schemes after WWI, once the USSR had emerged as a serious threat.

Enough Republicanism/Conservatism, and the poor will become dangerous again. There’s only so far things can go before revolutions start happening.

Other chap, who’s not wrong:

The poor can also be wrong. They are most dangerous when they resort to fascist ideologies


…and they’re most likely to resort to fascist ideologies when living in deeply unequal and unfair societies, where fascists lie that they’re poor because of [Jews/Blacks/Muslims] and that’s the reason why they’re poor. And most likely to be engaged with society when the benefits of economic growth are shared with everyone across the income scale.


Arguments about fairness are different. And I don’t suggest that people are right because they are poor. But poor people have little to lose. They can rise up if pushed hard enough. They may not vote, or participate in the political process, but guarding against the possibility of revolt is and undercurrent in every political system. This government seems to have forgotten it.

Sometimes, I think that those of us on the liberal/libertarian side of things forget this. Liberal politics is fundamentally borne out of the desire of both the upper class and the wealthier classes to not have our heads cut off. Yes, if you’re a computer programmer, or an accountant, or any kind of middle-class private sector job that’s going, you pay some tax, and people who are poorer than you don’t, and many people who are poorer than you even get paid benefits from the tax that you pay – but do bear in mind that as a result, they aren’t marching through the town with your head on a spike.

Which, if you take the sheer “fittest will survive, others will fail” creed of right-libertarianism at its word, is what will happen.

I’m quite happy to have a well-paid job and pay a sizeable amount of tax. Not only for the sheer, base point that in Somalia, I’d be unlikely to have an internet connection and sell anyone business advice [*] but also for the extra “non-scary” points that living in a Western country buys you.

I respect the US position of taxing you on your global income (minus taxes already levied in non-hostile countries) on the grounds that it’s the difference between “fair tax” and “danger money cos we’re gonna get you out when you’re in trouble”. The way I’d modify that, were I in charge of taxation for anywhere, is “tax is on your global income ignoring anywhere you’re a citizen of”, given that anywhere you’re a citizen of, you don’t get any help defending you from.

So in Libya – we had a bunch of people with British passports out of there. Awesome; skills. They were being paid US$100k+ tax-free, meanwhile, the average UK taxpayer earns less than GBP25k per year. Should we have left them to die? Hell, no. Is it reasonable that the operation was subsidised by the average UK taxpayer and they paid nothing towards it? Hmm.

This piece is a giant ramble; I’m aware of that. But I have a blog and that’s what Having A Blog is for. And whatever the state may be for, I’m pretty convinced it’s not about ensuring that people who mostly don’t believe in The State can go to foreign places, dodge tax, and then be rescued by gunships at The State’s expense.

[*] I live in Australia, but the taxation regime is very similar to the UK’s and I spent the previous 10 years paying a fair amount of UK tax, and will happily defend any points based on difference to the death.

Alcohol-related stupidity

Alcohol is famous for its ability to cause stupidity. As with most other drugs, this property doesn’t solely apply to chronic abusers – it also applies to policymakers and opinion writers, even the sober ones. Drugs and alcohol are second only to immigration as a leading cause of utterly stupid articles.

Now, I’ve written plenty on this blog in the past about how nannyist fools lie about the levels of drink-related violence and disease, and adopt completely the wrong policies for cutting alcohol consumption even if it were a good idea to do so.

So, in the interests of balance, today I’m looking at a piece from Harry’s Place that opposes a minimum price for alcohol. Now, there’s nothing wrong with opposing a minimum price for alcohol, mostly because it’s an attempt to solve a problem that doesn’t exist. But the piece in question manages to seize upon all the stupidest grounds for doing so that it possibly could.

Its starting point is that alcohol is price-inelastic:

Certain products – the classic example being alcohol – do not respond in the typical way to price changes in the market. A price increase does not lead to a significant drop in demand. People simply grin and bear the price increase.

There’s only one small problem: this is bollocks. According to actual evidence (Table 7), the price elasticity for alcohol is around -1; in other words, a 1% rise in price leads to a 1% fall in consumption. While the various studies vary in terms of total magnitude, all show that price elasticity is significant. A rise in the price of alcohol does, empirically, lead to a cut in alcohol consumption.

Impressively, the article goes on to get worse:

Far from reducing alchol-related social ills, arguably, it may even have the opposite effect. It will make social drinking at pubs even more expensive relative to wholesale drinking. People will end up drinking more at home, quaffing back the artificially inflated (but still cheaper) supermarket booze in the environment most likely to encourage them to destroy their livers, beat up their spouses and neglect their children, and to cause accidents at work even more than before.

The problem here is that alcohol minimum pricing proposals that have been made for the UK by even vaguely serious organisations have been talking about a minimum price to the consumer.

Let’s assume the minimum price at retail is set at 50p a unit. If I’m a manufacturer of gin, I don’t have to worry whether Tesco are paying me 50p a unit when they buy a truckload of gin from me to sell in their shops, and I don’t have to worry whether Mitchells & Butlers are paying me 50p a unit when they buy a truckload of gin from me to sell in their pubs. Rather, it’s Tesco’s responsibility not to sell you a bottle of gin for less than GBP14, and it’s M&B’s responsibility not to sell you a shot of gin for less than 50p.

Now, at the moment you can buy a bottle of gin for way under GBP14 in any supermarket, but you certainly can’t get a shot of gin for under 50p in any pub. The same would apply to beer as well: a 50p/unit minimum price would ban pubs from charging less than GBP1.25 for a pint of Kronenbourg, which none of them currently do, while banning supermarkets from charging less than GBP1 for a tin of Kronenbourg, which all of them currently do.

In other words, there’d be a significant impact on supermarket prices, but no impact on pub prices. So there’d be a significant decline in home consumption, but no decline in pub consumption. Which, if you believe that there’s a binge drinking problem with evil effects that are made worse by drinking at home (not, of course, that any evidence is produced for this one either), would be a good outcome.

Rather depressingly, Tim cites the HP piece as an example of lefties understanding economics. Which I suppose is true, in that it’s using the cargo-cult sense of economics that glibertoonians often base their arguments on – relying solely on half-remembered theory from the sixth form, missing obvious theoretical points out (whether because they’re inconvenient or because you’re slapdash, who can say?), not testing your theory against empirical data because you can’t be bothered, not doing sums because they’re hard, and coming up with clownish bullshit that even a GCSE economics teacher would grade as “F minus, see me”. In that sense, it’s absolutely spot on.

Secularists Go Silly On Halal

I’ve always found halal slaughter less unpleasant than regular industrial animal slaughter. As anyone who’s ever cut themselves with a properly sharp blade knows, cutting yourself with a sharp blade doesn’t hurt at all until about a minute after the event, by which point the animal is already distinctly dead. You might prefer your animals to be shot in the head with a bolt-gun first; whatever floats your boat.

There’s no strong evidence to support either view – the only thing it’s fair to conclude is that it doesn’t make much difference [*], that both methods are almost entirely painless and instantaneous, and that slaughter is probably the least problematic aspect of the entire industrial meat supply chain from an animal welfare point of view.

Anyway. Apparently a sizeable proportion of the meat on sale in the UK is killed halal-style, along with nearly all frozen lamb imported from New Zealand (the latter because the Gulf is New Zealand’s largest meat export destination). Now, I can see that if you were some kind of hardcore religious type, you might be opposed to eating halal meat, because a prayer was said to the wrong imaginary sky fairy when it was killed and so your imaginary sky fairy might be cross. In which case, fair play to you – I disagree, but it makes sense in your worldview.

But much more baffling is this response from the National Secular Society:

We suspected that meat killed by the halal and kosher methods was being used for general consumption but we never imagined it was so widespread. It is disgraceful that ­people aren’t being told if the food they are being served is from meat that has not been stunned prior to slaughter

This is a witless quote, for two reasons.

The biggest is that the NSS spokesman’s “if” clause is wrong: 90% of halal meat sold in the UK is pre-stunned, including all NZ meat and all meat sold to supermarket chains and major foodservice companies – which is what the article in question is talking about. The only difference between this sort of ‘halal’ meat and non-halal meat is that it’s been killed by a chap who said a prayer when he cut the animal’s throat. If you object to that for any reason other than “I’m worried my god will punish me”, you are purely and simply a bigot.

But even boycotting the other 10% of halal meat, killed in the traditional style (you’re unlikely to find this on sale outside of dedicated halal butchers shops, takeaways and curry houses), is still jumping to silly conclusions about animal welfare based on your own personal sense of ‘ewww’.

If you are, genuinely, so concerned about animal welfare that a possible, unproven, small difference in possibilities of consciousness between stunned and unstunned slaughter affects your purchasing decisions, then you shouldn’t be eating randomly sourced meat in the first place – the suffering that industrially farmed animals undergo compared to compassionately farmed animals is several orders of magnitude greater than anything that happens in the slaughterhouse.

So unless you’re veggie, or you stick solely to meat that’s been produced under a recognised ‘compassion in farming’ certification scheme (or a local farm that you know follows the same principles, of course), then you should probably shut up about halal meat already. Otherwise, people might start to think that you’re just in the ‘bigot’ camp too…

[*] people have been known to argue against halal slaughter from an animal welfare point of view. However, these people tend to be arguing from prejudice, not evidence: there have been surprisingly few scientific studies done on the topic, not least because working out how much an animal has suffered during slaughter is pretty much impossible. The most comprehensive study, carried out in Germany, found that ritual slaughter was painless for sheep and calves. There is some evidence to suggest that cows, being large, take show some signs of brain activity (which doesn’t necessarily mean suffering or pain) when killed by halal/kosher slaughter – there is none to suggest the same for chickens or sheep. The Farm Animal Welfare Council report that’s usually quoted on the subject by anti-halal/kosher types ignores the evidence on either side in favour of proof-by-assertion, which is a distinctly poor show (paragraph 195).

Finding a new Foster home

So there’s an interesting piece on Bloomberg quoting the Sunday Times saying that Fosters Group, the Aussie wine and beer company, might sell its beer operations (branded Carlton & United Breweries, confusingly enough) to SABMiller.

This makes sense. Since I was working as a drinks industry reporter getting on for ten years ago, I’ve been saying Fosters should flog off the beer business. They’re a combination of a global premium wine company, a low-margin domestic beer business, and one mysteriously popular global beer brand – which, oddly enough, has almost entirely disappeared from their home turf. Being a global wine distributor, while providing a global beer company with a global brand, and an opportunity to distribute their other brands into Australia, was always going to be a better call.

I’d always taken a British take on ‘appropriate buyers for CUB’, on the basis that Heineken (formerly Scottish & Newcastle) owned the EU rights. Obviously, that would’ve been a good fit. But I’d forgotten the fact that the USA is the world’s largest beer market, that Foster’s is a popular import brand in the USA (“throw another shrimp on the barbie”, etc), and that Miller owned the US rights to the brand.

Meanwhile, SABMiller – which, like Kraft Foods, is part-owned and heavily cash-backed by Altria (= Phillip Morris) in a desperate attempt to stop all their shareholders’ money going to compensate lung cancer victims – has fallen way behind Anheuser-Busch Inbev in the “being a serious global brewer” stakes.

A leading position in a mature but profitable beer market (yes, oddly enough, selling beer to Australians is popular. See: selling crack in Baltimore; selling expensive houses in Mayfair) is nice from a cash-generation point of view. And for some utterly mystifying reason Foster’s is a much-loved beer brand everywhere except Australia, and as brand promotion becomes global it’s becoming important to have the rights to your most important assets, rather than having them owned by some comedy convict jokers [*].

So if the news is true, then it’s a good call on SABMiller’s part, as well as a bloody relief to Fosters Group (who’ll presumably have to rename themselves to ‘Australian Wine Company’ or a made-up name like Geadeo or something). And some kind of deal with Heineken to sort out the global rights would probably also be sensible.

And no, none of my alcoholic drinks market wisdom would have made the slightest difference to share-tippery at any point ever. If you want to make money on markets by thinking you know more than people about fundamentals, horse-racing is still a better bet. Stock analysts are still voodoo-merchants; my skills are only worthwhile if you actually want advice on what to do if you’re trying to market grog.

[*] dear the Australian Department of Immigration and Citizenship: I don’t believe that all Australian businessmen are comedy convict jokers. As the owner of an official certificate of being an Australian Businessman, I take Australian business very seriously. And mentioning Alan Bond and John Elliott at this point would be deeply unfair, and the fact that Mr Elliott used to own CUB isn’t even slightly relevant.