Over the past few months Jamie Oliver, Britain’s own Naked Chef, has captivated American viewers with his hit show Jamie Oliver’s Food Revolution – a tale of one chef’s battle against obesity and to transform the way Americans eat and live.
However, while emotionally compelling and entertaining (I didn’t miss an episode!), Jamie’s movement, which focuses on food education as the solution to obesity, faces a much larger barrier to success than ignorant parents and overzealous lunch ladies.
The cost of healthy eating is too high and the cost of junk food is too low
The over subsidizing of certain agricultural products like soy and corn have thrown the economics of the food industry upside down, drastically decreasing the prices of unhealthy junk food and increasing the relative prices of healthy fruits and vegetables.
It’s no mystery why corn, or some version thereof, is the major ingredient in almost everything we buy. Government farm subsidies have artificially suppressed the market price of corn so low that it nears the actual cost of production. These suppressed prices have incentivized producers to replace other ingredients with cheaper corn additives. Therefore, as corn subsidies increase and the price of corn drops, so drops the prices of all the products incorporating it – products that now span the full food spectrum from drinks to processed meats to bread to fast food.
A shocking study in the American Journal of Clinical Nutrition found that a dollar could buy 1,200 calories of potato chips or 875 calories of soda but ONLY 250 calories of vegetables or 170 calories of fresh fruit. We’ve found ourselves living in a parallel universe where the price of chips, a product made from multiple ingredients in a factory, can cost less than a bushel of carrots pulled directly from the ground.
These artificially low prices have made healthy eating choices cost prohibitive. It’s no surprise that we’re so fat; it simply costs too much to be thin!
Low Income Families Get Hit the Hardest
Obesity and related issues are the top causes of death in this country and cost Americans over $150 billion per year.
Those with the luxury of choice have spoken, driving the demand for healthier, sustainable and organic products through the roof and into the fastest growing segment of the food industry. However, this tiny upper class minority isn’t the concern. The real destruction is occurring at the bottom of the income ladder.
When a bag of cheeseburgers cost less than a head of broccoli, no amount of health education can suppress a low income mother’s need to feed her family. Research led by New York University’s Department of Nutrition, Food Studies and Public Health found that neighborhoods with decreased economic and social resources have higher rates of obesity. So long as unhealthy food prices are artificially depressed, the lower to middle classes will continue to suffer.
Jamie Oliver’s Food Revolution offers school education and corporate responsibility as solutions. And yes, education is one major piece to solving the obesity puzzle. However, to completely revolutionize the way Americans buy, cook and eat food, we must change the underlying economics and the way our government subsidizes the food industry from the ground up.
Someone should make a reality show about that. Just some food for thought.
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Notes: For those interested in finding sources of locally produced organic food, here are a few fantastic startups trying to change the landscape of how we buy independent and local.
LocalDirt.com
Foodzie.com
Foodoro.com
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Demand Generation vs. Demand Fulfillment
Talking about demand tends to elicit ill acid trips of undergraduate econ 101 (or 401 for us idiots who decided to major).
But the fact of the matter is, in the business world, we talk about it . . . a lot. In the startup world, one of the first questions a potential investor or critic will ask is whether there exists adequate demand to support yet another new product in the market. And, obviously, it is an important question. Without demand, there is no need for supply, which means no need for your business.
However, with our typical usage of demand, more often than not, we limit ourselves to thinking only in terms of demand fulfillment – the satisfying of a present-day amount of customer “want” – instead of demand generation – the idea that the size of the market can be expanded by introducing new variables that increase the “want” and “desire” for a particular product or service.
Bringing a successful product to market, especially in the consumer ecommerce space, requires not just satisfying demand, but generating it in the first place.
Such variables as innovative pricing models, sleek distribution systems, and inspiring marketing content all affect the expansion of the total pie, not just the portion you get to cut for yourself.
In recent years, we’ve seen companies introducing just such variables.
The “Groupon” or “daily deals” model increased the overall market size by driving up demand through price reduction and social validation (i.e. if my friends are purchasing, then why shouldn’t I). Private Sales companies like Gilt Groupe and Lot18 create desire for their products by curating their selections along side rich and inspiring content.
Uber.com (which officially launched today in NYC) is doing it by offering a sleek and innovative interface for purchasing a black car service. By creating a new distribution channel, Uber has actually increased the size of the black car market – as seen in San Fransisco as car companies are hiring more drivers to meet increased demand.
Looking forward, demand generation will be at the core of every ecommerce model. Product curration, personalization, and user interaction will be as important as customer service and convenience are today. Companies that simply satisfy current demand will no longer be good enough.
Inspiring and generating the “want” and “desire to purchase” is the ecommerce model of the future.