Tag Archives: Economics

Beer, Tequila, and Bio-Fuels

I offer the following two stories up for you to compare and contrast:

Mexicans torch tequila fields for ethanol boom corn

Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.

Biofuel Fettering Beer Business in Germany

Brewers in Germany may be forced to raise beer prices in the coming months. Since increasing area of farmland in the country is now being used for growing subsidized crops used for obtaining bio fuels and not beer, thereby causing price rise on the ingredients of beer.

Welcome to Economics 101.

Whilst I have very little in the way of snark for the above stories, I do find them notable for a variety of reasons. First is the impact of energy consumption has upon farming. From everything I’ve read in regard to bio-fuels, I don’t recall once seeing any predictions regarding how the demand for corn (and other bio-fuel plants) would adversely affect the beer and spirits industry. Of course, I didn’t see anyone predict the adverse affect it would have on the tortilla industry either, so I shouldn’t be all that surprised.

Secondly, while I think the German Beer market will work itself out, I think that the 25 percent to 35 percent reduction of agave growth will hurt the Tequila industry. Which is a shame, because there has been a tremendous amount of new and unique brands of tequila to come out of Mexico recently. Not the cheap stuff either, but high end artisinal brands which are changing many people’s perception of the spirit.

Let’s hope I’m wrong.


Cultures and Cuisines

A Commenter over at Megnut posed this question:

I’ve been reading ‘The Omnivore’s Dilemma’ and near the end Pollan talks about all cultures being omnivorous but picking a selection of the available foods (forming their cuisine) and about all cultures having rules of eating (whether they’re codified concretely or not). This got me wondering if anyone has collected in one place the essence of different cuisines…

The short answer is no, there has been no attempt at defining the essence of various cuisines.

The Long answer is that it would be quite an impossible task. Impossible, not in the sense of “Oh my GOD that’s a lot of work”, but rather in the “the thesis is invalid and unworkable”. This might take a bit of explaining.

Cuisines are a direct result of economies, with a little bit of politics and religion thrown into the mix. “Culture”, for lack of a better phrase, only gets its hands on affecting cuisines once the aforementioned variables have played their roles.

Because economies, politics, and religion can significantly change in a society (sometimes over a timeframe as short as a generation), a culture’s cuisine will find itself in constant flux. American cuisine (in all of its iterations, from Cajun and Tex-Mex, to fast food and supermarket selections) is the perfect example of this.

Let’s take fast food for an example. The popularity of fast food would have not taken off without an assist from the automotive industry, as well as the creation of well maintained roads that provided easy access to these restaurant. That the rise of fast food restaurants in the 50′s, 60′s, and 70′s coincided with the creation and completion of the interstate is not a coincidence. But I digress.

Economics play the biggest role in food cultures. Poverty, food supplies, trade, barter systems all play a role, with other variables such as political instability and even the weather affecting all of the above in some fashion or another. Pollan’s comment that culture’s picked their foods, is really shorthand for the economic realities that everyday people had to contend with.

The idea of recognizing cuisines is still rather new on the planet, and is likely a direct result of having little concern over one’s access to a food source. When a culture has less wealth, it’s less likely to concern itself with the idea of cuisine, and more likely to simply try to feed itself.

Look at it this way – Do you think the poor of the middle ages were concerned with rules of eating, or do you think that they were more concerned with ensuring there was food available to them in the long periods of time between harvest season and growing season. Culturally, it’s only with the relatively recent explosion of the middle class since the time of the industrial revolution that has seen an interest in food beyond simple survival. I’m speaking other than the ruling class of course, who have almost always have been lavish with foods, but they are the exception that proves the rule.

Once a culture gets to a point where it has the luxury to actually examine other cuisines of the world and apply them to themselves, it’s always through the bias of their circumstances.

Let’s take Italian food for instance. America, Argentina, and Ethiopia all have had notable amounts immigrants and expatriates from Italy. These immigrants and expatriates left their mark on each countries perception of Italian food. But America has focused more on pastas and tomato sauces, almost completely ignoring polenta and meat, Argentina has meat dishes and polentas with very distinct Italian influences. And while American Italian food was directly influenced by poor immigrants, Ethiopian Italian food is influenced by by wealth, due to Italy’s history as colonizers. Meanwhile, back in Italy, they have their own take on their own cuisine, with differences both subtle and great.

My overall point, I suppose, is that there is no “one essence” of any cuisine, due in large part due to economic fluctuations, as well as the biases we all carry in regard to food. Changes in food due to culture has played a lesser role in teh shaping of cuisines.

Technorati Tags: Cultures,, Cuisines


The Economics of Alcohol

Over at Fermentation, Tom alerts us to some interesting statistics:

People who consume alcohol make more money than abstainers.

To be specific, a study published in the Journal of Health Economics in 1998 found:

U.S. males who drink alcohol make 7% higher wages than do abstainer.
Women who drink receive about three and one-half percent higher wages than do abstainers.

Tom then asks Why this occurs.

Statistics can be interpretted in many ways of course, so take my opinion with a grain of salt. The issue here is cause and affect.

Drinking does not cause people to make more money. Rather the inverse is true: making more money causes people to drink more, as people who make more money tend to have more disposable income. Alcohol, for people not addicted to it, is a luxury item.

I can hear some of you saying “Yeah, but Kate – aren’t the costs of a bottle of vodka and a bottle of wine roughly the same?”

At first glance, yes, it does appear that a bottle of wine and a bottle of vodka can have a similar price…roughly twenty dollars depending upon where you live. But the vodka is more cost efficient than wine. Ask yourself this: How many glasses of wine can you get from a bottle? Compare that with how many glasses of screwdrivers you can make with one bottle of vodka.

Additionally, once you open a bottle of wine, it needs to be consumed within a relatively short period of time or it will go bad. An open bottle of Vodka has no such concern.

Technorati Tags: Drink, Alcohol, Economics, Wine


Why Coke uses High Fructose Corn Syrup

I mentioned this in the comments of the previous post, but I think the numbers are fairly important…

Some quick numbers, on why Coke would use HFCS over sugar.

Annual US Per capita consumption of Coke in servings: 411

People in the United States: 297,890,000

Servings of Coke in the US, per year: 122,432,790,000

How much a 5 cent cost increase in sweetner, per serving, would affect the bottom line of Coca Cola: $6,121,639,500

How much a penny cost increase in sweetner, per serving, would cost Coca-Cola:
$1,224,327,900

How much 1/10th of a cent increase in sweetner, per serving, would cost Coca-Cola:
$122,423,790. Still nothing to sneeze at

That’s a cost saving in the billions over years time. Of course, what Coke doesn’t tell you is that your tax dollars are supporting their profit margins. You can thank Corn subsidies for that.

UPDATE: For more explanation on the Government’s role in Corn and Corn Syrup, read this article.

Additionally, Per Capita consumption of Coca Cola can be found in any of their company annual reports.

Technorati Tags: Food and Drink, Coca-Cola, Corn Subsidies