Floods in the US and Commodity Prices

Just as some people had been hoping that commodity prices and oil prices might have peaked, we are now seeing historic flooding in the US Midwest. Many farmers who might have been enjoying the high prices for corn and other commodities are now losing their crops and in some cases their homes.

Very sad, but it is also going to have a ripple effect - first on the crops directly effected, corn and soy, then on other grains as well, since there is a certain amount of interchangeability. It might also have an effect on oil prices as corn is increasingly being used for biofuel. Corn prices have reached 7 dollars per bushel for the first time ever, and oil prices are now being predicted to reach 140 dollars per barrel (although I have not seen a flood-oil price link referred to yet).

Higher Profits on Higher Food Prices?

According to this article in Investopeida, US food producers are showing increased profits resulting from higher prices. Heinz raised prices 4.5% and saw net income increase 7%. General Mills has seen a 17% earnings gain at the same time it was reducing box sizes to offset higher ingredient prices. If that works for them, great, but in Japan, the talk at many companies is simply how to stay profitable.

The article credits brand loyalty and stronger oversees sales. I am not in marketing, but I would guess that brand loyalty is not nearly as strong in Japan, because a culture of always trying something new has been cultivated. Consumers see a price they consider too high or a box they think is not as big as it should be and they simply buy something else.

Japanese Dairy Farmers are Also Squeezed

Japanese dairy farmers are also being squeezed by high food prices, or at least the Japanese government thinks so. According to this article, the 187.1 billion yen in supports for dairy farmers and stockbreeders, which was already up 63.2 billion yen from last year is going to be raised an additional 70 billion yen. These are mostly in the form of unit-subsidies.

I feel sure the butter shortage has also influenced this move, although any boosts in production will lag far behind a stimulus - especially in the dairy industry, where you cannot exactly plant more cows next year, you have to breed more herds of dairy cattle to make a difference.

Serving Size 2 Food Companies

Food companies are also reformulating or cutting serving size. Smaller packages, fewer slices, etc. has become the norm. Here is an example of a convenience store sausage wrap.

　

This was pretty obvious because the same product used to have 2 sausages, but now has only 1. The size of the remaining sausage might be a bit bigger, but the total size has certainly been reduced and the price, to be best of my recollection, has not changed. (Unfortunately, this tells you something about my eating habits.)

Serving Size 1 Restaurants

My family and I occasionally eat at a Japanese food family restaurant chain called Yumean (夢案), which we all enjoy. I took this picture last month, but at the time we were all surprised and amused to see that the size of this child's plate had shrunk quite a bit. Since that time, we have noticed the same thing a many other restaurants - often in the form a new menu. Hoping you will not notice, I am sure. Because of rising prices and possibly also due to smaller or unsatisfactory new menu items, it is easy to see that restaurants are not as crowded as they were only several months ago.

Reduced serving sizes are especially interesting to foreigners, because we typically laughed a small serving sizes before the current food crisis. I have generally assumed that Japanese serving sizes are about half of what they are in the US. This does not leave you very much room to cut further. Small serving sizes are undoubtedly more healthy than the huge platters you receive in the US, but at some point even Japanese are going to be left hungry.

Food Prices in Japan . . . Going Up

Food prices are big news all over the world and Japan is no exception. In fact, there is little upside to high food prices here, because Japan produces such a small percentage of what it consumes. Food companies and restaurants are caught in a squeeze, just trying to eek out a profit. Raise prices too much and you loose customers.

In a very unscientific survey, sampling size n=1, my wife said typical trips to the grocery store which used to cost around 6 to 7 thousand yen, now lost around 9 thousand yen.

Coffee Hunter

Coca Cola's Georgia coffee brand has come out with an interesting new product called Coffee Hunter, which has an silhouette of someone who might be confused with Indiana Jones. This explorer travels the world looking for the best coffee beans. This looks to be the first in a series.

　

This coffee is from beans grown in Flores Island, Indonesia. 「コーヒーハンターが世界中の産地を巡って探し出してきたとっておきのコーヒー豆をお届けました。」 It tastes pretty standard to me, but it might very well be a good promotion to go along with the new Indiana Jones movie.

A Label to be Envious of

Meiji Dairies "Ocha" Green Tea

Energy 0

Carbohydrates 0

Protein 0

Fat 0

Sodium 37 mg

Ingredients: Green Tea, Vitamin C

"Natural Water is Used"

"Shizuoka Tea Leaves are Used"

　

Nothing to hide or cause concern on this label, and it is all natural. This is a good example of popular tea products in Japan. Teas and coffees outsell soft drinks here, and aside from the health benefits of tea ingredients which have been proposed, simply consuming a natural, calorie free drink likely helps a great deal in keeping weight off.

If you eat Japanese food in a restaurant or if you buy a Japanese boxed lunch (bento, 弁当) in a railway station, various teas are frequently your only choice of drink, because stronger tasting or sweet drinks are thought not to go well with traditional Japanese food.

PET Bottles and Cats

This post certainly has nothing to do with science. A number of years ago (7 or more), the urban myth spread in Japan that you could keep away cats by putting out PET bottles filled with water. I didn't realize that cats were that big of a problem, but around that time you started to see water-filled PET bottles everywhere.

This myth has been proven false repeatedly, but water-filled PET bottles are still easy to find on a stroll down almost any street.

Burger King Celebrates 1st Anniversary in Japan . . . again

Burger King was in Japan from 1996 to 2001, but reportedly could not compete with McDonald's in a price war. I also heard at the time that there were marketing disagreements with partners and people in different parts of the company. Even if that was not true, it made sense to me at the time. The offerings were largely the same as in the US, where you forget about calories and focus on size and strong taste.

Personally, I thought that the Burger King taste was the main problem, even though I like it myself. Burger King sandwiches have a strong meaty taste and aroma which is not common in Japan. This is in contrast with McDonald's sandwiches which are much milder in this respect.

Now they are back for another try. They only have 6 locations so far - all in Tokyo. Japanese tastes have been changing over the years, so maybe Japan is ready for Burger King now. Recently monster-size burgers at McDonald's and other chains have been popular, so the size of Burger King's sandwiches might prove to be popular.

This time around, Burger King Japan opened its first store on June 8, 2007 and therefore is now celebrating its one year anniversary. Good Luck.