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February 28, 2006


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Randy Picker

Ah, for the virtues of monopoly. So one of the points I make in teaching the Alcoa case in antitrust is about rolling out new uses of aluminum. A monopolist has a chance on recovering the investments in developing new uses and educating end-users about those advances. With multiple producers, producers might seek to free ride on the education work of others.

The alternative to that is for the industry to form a group and collect "taxes" from the industry to sponsor general advertising campaigns. Got milk?


Yes, and a funny kind of monopoly; monopolistic competition of the brand variety. We usually say that such downward sloping demand curves and monop. competition satisfies consumer preferences for different kinds of toothpaste, say, but here the problem (if i am right) seems to be that we think that basic commodities like broccoli are what we wish we preferred.


We like cookies because they're better advertised? Isn't it at least in part because they taste better than broccoli?


But my question would be why basic foodstuffs are at such a disadvantage. To be sure, McDonalds can easily create highly differentiated products to attach value to its brand. But Heinz and Kraft have highly valuable brands for ketchup and peanut butter that, to the best of my knowledge, isn't that differentiated from all the rest. Water bottlers likewise create highly valuable brands despite the essential fungibility of their product. If only a minimal degree of differentiation is required, then surely broccoli growers can (and to a small extent, do) differentiate according to location, growing techniques, etc. It is simply that the number of people who pay attention to such differentiation is minimal, but these same people will pay attention to the brand of ketchup they buy.

So while it intuitively seems the case that more basic commodities lack the natural advantage of more processed foods to develop niches for branding due to their essential fungibility, the explanation is unsatisfying because fungibility doesn't seem to be that much of a disadvantage. I would buy your theory a great deal more if somebody could explain why people will pay a premium for Heinz ketchup but not Heinz specially grown broccoli.

The Law Fairy

TJ, do people really pay that much attention to brands? I can't remember the last time I looked for a specific ketchup brand. I couldn't even tell you what's in my fridge right now. I know I do consider ketchup to be something of a necessity, because it's in just about everything, so it doesn't taste right without ketchup. Maybe broccoli farmers *should* be pushing for broccoli pizza :)

William Rothwell

Law Fairy,

Some people care more about their ketchup than others. For most Americans, ketchup is just a tomato-based condiment; for others, it is a political statement:


The Law Fairy

Wouldn't it be easier to just boycott Heinz and buy a Bush bumper sticker?


There are other examples of branding for commodity products. Chiquita is immediately recognized for bananas, Orville Redenbacher for pop corn, Green Giant for vegetables generally and Perdue for chicken. In the case of Perdue, it launched a large advertising campaign many years ago and created their brand literally from nothing. People responded to the marketing and bought Perdue chicken over non-branded chicken. The branding is very effective in my opinion as these companies have been able to differentiate their products against similar products in the market place for a very long time.

As far as why kids (or adults for that matter) respond better to Ronald McDonald that the Green Giant, it probably has more to do with the actual product than the marketing or branding efforts. Simply put, most kids (and adults) would rather eat french fries from a non-branded mom and pop fast food place than green beans with great branding and marketing from Green Giant. I'll let psychologists and nutritionists explain why.

Michael Martin

For an alternative nutritional theory you should check out Seth Roberts's take, starting on page 25 of the linked PDF


Basically, he posits that strong flavor-calorie associations are more fattening.


I've got grandkids who actually like fruit. I hope they aren't defective. They probably aren't; they like cookies and such too. As for broccoli's problem, blame it on Bush 41.


What role do parents have in shaping their kid's tastes? If mom or dad is driving to McDonald's rather than eating at home, eventually kids will grow accustomed to that kind of food & will demand it.


Parents have an enormous role in shaping their children's taste and dietary habits. They are also the ones with the checkbook and car keys, and hence the ones (at least theoretically) making the decisions about what to buy.

The Law Fairy

Parents are important, but so are public schools -- where children spend large chunks of their days. Where schools go the greedy route and contract with Coke, Pepsi, or McDonald's instead of limiting kids' options to healthy ones, we can't say it's entirely parents who are to blame.


I much appreciate these comments. The "what makes food fattening" paper is interesting (one version of the answer is strong-taste/high calorie/wide availability, so that fast food is particularly dangerous and modern). I do agree that some basic commodities seem to have been branded quite well. That was the point of my including peanute butters and boittled waters in the mix. Chickens, bananas,and some cheeses are other good examples. So perhaps broccoli and carrots could be better branded and then they might become a more important part of American diets. But the point remains that this is an uphill battle for the brander.


Good point on the schools -- and just to throw it back on the parents, because I'm mean that way, I'd add that they are the taxpayers best positioned to pipe up and demand better quality food for their kids. I have seen the movement toward banning pop from schools, and I think that's all to the good.

The Law Fairy

I agree citations -- get that crap out of the schools. If parents want their kids drinking soda they can buy it for them on their own time, when they have to deal with the resulting sugar rush.

As for the taxpayer point, it's hard to say. I think the general trend is just to pump more and more money into the school system without the taxpayers getting to say a whole lot about where it goes -- although as parents they can get involved in school boards and PTAs and try to change things that way. As an average single childless (thank god!) taxpayer myself, I've found that the fact that I pay taxes (and, I might add, QUITE A LOT of them) doesn't mean I get much say in how they're spent!

Tyrone Slothrop

Maybe broccoli farmers need to research how to make their product sweeter with high-fructose corn syrup. "The point at which the price of high-fructose corn syrup dropped below that of sugar, due to improved manufacturing methods, coincided with the start of America's obesity epidemic."


Michael Machen

a few thoughts:

1. what about the role of grocery stores in the marketing process? Other products (soda and chips especially) pay stores for placement, location, prominence, etc. and send their agents to the stores to organize, highlight, and feature new products. Produce is usually in a damp vat off to one side. There could be an issue with the profit margins on produce preventing this, as chips and soda are enormously profitable, enabling this kind of marketing.

2. another distinction is seasonality and quality issues. When you get a big mac or a jar of Jiffy, it's exactly the same every time, except perhaps the packaging. Fresh fruit/vegetables vary widely in their price, color, freshness, quality, and availability, which defies modern marketing techniques. A kid that bites into a rotten apple is going to remember that for a long time.

3. One recent trend that seems a renaissance in food marketing is the Organic label. It is a way of saying that the product has quality, purity, safety, and healthfulness, things that all parents care about. This is a subtle form of marketing, it's not company-based, but still a very effective tool and creates fierce brand loyalty and price premiums. A trip to whole foods quickly demonstrates how much people pay for this perceived benefit. My understanding is incomplete, but I think 'Organic' is a USDA certification.


Although, you have a choice of where to do your grocery shopping (I can see an argument for some constraints here, particularly in low-income areas) and by going to Whole Foods, one is making a 'dollar vote' in favor of healthier food. Whether or not there is promotional material, it is the individual's responsibility to be informed of the products he or she purchases.

Children don't have a choice of being in school, nor do parents have a choice to withdraw their tax dollars from a public school in favor for a private school with healthier meal choices.

Thus, it seems that the school has a responsibility to improve the welfare of its children. There is strong evidence to suggest that good nutrition improves academic ability, which is the school's entire reason for being.

Back to McDonald's or broccoli, no one is forcing an individual into McDonald's. If convenience is more important than health, that's his or her decision. If broccoli sellers can't figure out a way to market their products better, they should blame themselves, not fastfood/junkfood sellers.


Babies develop a taste for foods very early. According to some, even in the womb their senses are developed to the point where they recognize familiar smells and, through their sense of smell, tastes. When mothers eat for two, they really are eating for two. If you're trying to change the tastes from a branding perspective, I think that's too little, too late, because that would mean the child is old enough to take in the branding effectively, and by then his or her taste preferences will have already been long established.

Kids also observe what their parents do, so if the parents refuse to eat greens, the child won't take seriously a "do as I say, not as I do" approach. If women indulged their cravings for carrots and broccoli during pregnancy, parents fed their babies delicious mashed peas and pureed carrots, and parents ate their own fruits and vegetables, then the children would more easily recognize the vegetables and fruits as something familiar and good rather than something completely foreign.

Shefaly Yogendra

Two parts to this comment:

There should be a differentiation between branding of processed foods like ketchup and of basic foods like broccoli, and then the consumer preferences can be examined to determine the influence of branding (e.g. quality, reliability, consistency and so on) on food choice.

Another factor to be examined is the convenience of certain foods. Brand or no brand or whichever brand (dep on what we wish to spend), we are more likely to buy ketchup than tomatoes to make it ourselves.

It is also worth examining whether in certain food categories, consumers prefer unbranded goods or store-branded goods.

On that point, Organic is a market for those who will pay over the odds for not being able to appreciate that without being interspersed with conventional farms, that use pesticides to kill pests, organic farms would not have a foot to stand on. Where does the classic problem of free-riding in organic farming start and end?

In Fat History, Peter Stearns of GMU catalogues how back in the 1800s, Europeans were amazed at the (larger than in Europe) size of American strawberries, the (much larger than in Europe) portion size in the US, the social role of food portions as a signal of plenty in the land of milk and honey (which is not very different from some African cultures today) and the speed at which Americans gorged (not savoured) their food.

The problem of overweight in the US was identified and acknowledged in late 1890s, whereas the identification of 'obesity' only came around in post-war 1940s.

If the 'problem' really does go as far as 2 centuries, is this discussion about broccoli and burgers not futile?

Why question the narrow question of branding and food packaging in shaping consumer preferecnes?

Should we not question intensive agriculture (which also makes food seasonality a moot point), industrialised food production (which means some kids grow up thinking milk comes from Tesco's and not a cow), agricultural subsidies, the combined effect on food prices, and the general inability of the common man to control portion size (indeed to know what a portion is!)?


Because your kids are smart. With the exception of the Oreo's, the first list is loaded with nutrients that are good for ACTIVE children when taken in moderation. As to the second, Fish is too smelly for children's delicate senses of smell. It may have a high mercury content. Kids really don't need carrots or broccoli--try celery (with peanut butter in it) The second list represents more-or-less healthful choices for adults (with the possible exception of the graps) who spend all day in front of the computer.


Hmmm, I guess I haven't been keeping up. If I have a baked potato and some broccoli for dinner, I never think of myself has having two vegetables....


I'm young enough to tell you about school. What happens there is the kids are starving. They could eat 5 of the little school-lunch fiestados during the measly 30 minutes they are given for lunch, which always takes place either at 10 a.m. or 3 p.m. This creates a lifelong binge habit that leads most to become obese. Free the kids.

John  Sullivan

I can relate to this as my son always wants to eat in McDonalds and never wants any healthy foods like fruit and vegetables as in your case, although he did when he was a baby.
I thinking also that the marketing plays a big role in that all the kids want to eat in McDonalds.

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