'International' Archive
The world’s cheapest car has been put on hold, as protests over Tata Group’s plans for a Nano plant in eastern India have been stymied by protesters and politics.
Although Tata plans to repurpose other plants to build what it has billed as the world’s least expensive car (around $2,500), it had to nix plans for a production volume of 40,000 per month, instead settling for 10,000. The move could affect the price as well, since one of the factors allowing the company to offer the car at this price point was cheap land.
Although normally I would take umbrage at the forced change in Tata’s plans, the critics have a point. From an environmental standpoint, does India need more vehicles? Should it be moving farmers off their land and building factories?
The giant nation is beset by pollution, as are most countries with growing middle classes, and the Nano could exacerbate the problem in India. Another question is that of energy. Won’t 40,000 extra cars a month on India’s roads put pressure on the country’s energy supplies? What about the world’s oil markets?
India has been stepping up its oil development and exploration efforts as domestic demand has risen. The country is a net importer of oil, although it looks to be sitting on some fecund oil and gas fields of its own. The US isn’t the only country seeking energy independence — that could be India’s slogan as well.
The question is, is the increase in oil production going to fuel the Nano, or is the Nano (and increasing wealth that is causing rising consumption) fueling oil production? And if India is truly seeking energy independence, is a Nano in every garage the way to go about it?
Even though I would like countries to scale back their energy consumption, it’s hardly fair to insist that nations forego the conveniences of cheap energy that Americans and Europeans have enjoyed for more than a century. In general, the benefits of a sturdy middle class outweigh the disadvantages of consumption. So I hope Tata’s plan for a Nano plant gets the green light again.
And then, maybe next, Tata can tackle global warming. After all, is there nothing this company can’t do?
Wanna be one of the guys? Belly up to the bar? Patronize your local pub? Coors is courting the ladies. Yep, despite women’s sadly inadequate belching talents and less rabid devotion to football (American-style, or soccer, if you live on the other side of the Atlantic) as their gender counterparts, Coors, among others, is aiming at the ladies.
Coors is not the first brewer to hit upon this supposedly obvious idea to ramp up sales — after all, women are half the population. Interbrew (the Belgian brewery that merged with Brazil’s AmBev in 2004 to become InBev) tried a cherry-flavored concoction called Kreik. Launched in 2004, it was a disaster. Then there are all the craft brewers, whose seasonal beers are often made using the literal fruits of the harvest, who encourage the ladies to tip a few. UK-based Diageo is pushing its Guinness Red by advertising it as (listen up, women) tasting sweeter and smelling less strong than its traditional Guinness.
Trouble is, brewers never quite know how to market the stuff. Do they go with the line that women want to join men in their appreciation of the foam-laden amber liquid (but then, why make separate products?); or do they, as they are trying this time around, offer a “special brew just for you,” which runs the risk of making the companies look like they’re patronizing women? After all, today’s women are the daughters and granddaughters of Rosie, the Riveter, in the workforce in ever greater numbers; they make up more than half the enrollment in medical and law schools; they buy their own automobiles and houses; they even play professional football. Who says women need frilly (dare I say it?) paper-parasol-embellished beers?
Let us digress a moment to speak to women and beer. A few telling facts: 4,000 years ago, the master brewers in Mesopotamia were women. They had a beer goddess. In ancient Babylon, the brewers were designated as priestesses. Zip up a little closer in time to today and we see that until the end of the 1700s, nearly every cottage in the English countryside brewed its own beer. The brewers? The women of the cottages (thus, the term “ale wives”). Eventually, the best of these cottage/home brewery operations became “public houses” or pubs. When traveling through her realm, Queen Elizabeth I sent couriers ahead to taste the local ale. If it wasn’t up to Lizzie’s standards, a shipment of a more pleasing-to-the royal-pallet libation was sent out to her from London.
But let us step out of the Wayback Machine and return to 2008. Beer sales in the UK are sagging (they fell 4.5 % in the second quarter). In the US, they have increased some of late (up 1.9% in the first half as compared to the first half of last year). But 1.9% isn’t enough to make brewers dance atop their oasts.
Coors has just this year created an operation (code-named Eve) devoted exclusively to the development of beer brands and marketing techniques that appeal to women. Not quite ready with an actual product yet, Coors has begun encouraging pub owners to push its new-to-the-UK-market Blue Moon product “with touches like serving it with an orange slice to accentuate its fruity taste.” Some pubs are coating the orange slices with brown sugar. (It’s enough to rouse the envy of Martha Stewart, these chi-chi touches.)
Back in the good old USA, MillerCoors (a joint venture between UK-based SABMiller and Molson Coors), has come up with MGD 64, the lowest calorie beer ever made for the US market, at 64 calories per 12-ounce serving. (By comparison its standard Miller Genuine Draft has 143 calories per 12-ounce serving.) And we all know, don’t we ladies, that beer is more fattening. (Remember low-carb beer?)
To further its push to females, MGD 64 is being promoted in Seattle and Portland via a clothes-hanger campaign. Dry cleaners in those cities will distribute hangers with an attached message that touts the beer’s 64 calories as “a perfect fit” in order to “exclusively reach adult female consumers in the privacy of their homes.” Why Seattle and Portland women are the lucky recipients of these ad-festooned hangers is not clear. Suffice it to say, it (and the whole clothes-hanger idea) was some enthusiastic marketing decision.
If the coat hangers — I’m not even going near the Mommie Dearest associations — and Coors’ Eve unit (described as “designed to create a world where women love beer as much as they love shoes”) are examples of modern, enlightened, and revenue-enhancing thought, then the boys in the executive suites have no clue beer-wise, regarding a salable answer to Freud’s question, “What do women want?”
Freud, by the way, had no decent answers either.
Top Chew
Cadbury, maker of everyone’s favorite crème-filled chocolate eggs, is the venerable UK candy company that would dearly love to be, and in fact claims to be, the #1 confectionery group in the world, although the company doesn’t specify just what #1 refers to — is it sales, number of brands, area of distribution, number of customers, or some other metric in which it is top dog? But, #1-ness aside, the company is big. And determined too.
After much wailing and gnashing of teeth, it finally shed its carbonated beverage business this year (leaving it to the folks in Plano, Texas, to supply the world with Dr Pepper, Snapple, and Canada Dry). Thus soda-less, Cadbury has turned, full bore, to concocting irresistible confectioneries and placing its flag on the candy mountaintop. And what has it come up with? A gum. A chewing gum. A chocolate-flavored chewing gum.
But then, this is all the fault of us Yanks. Just as Cadbury was set to attain the ultimate spot in the confectionery world (or so it hoped), over here in the cheeky US, Mars (which also likes to claim some kind of #1 spot) and chewing-gum champ, Wrigley, decided to merge.
Dueling Quotes
What’s a newly stand-alone confectionery company to do when faced with the Mars/Wrigley combo which Bill Wrigley now says is “the world’s leading confectionery company?” Another quote, this time from Cadbury chairman, Roger Carr: “We will take whatever measures are necessary.”
Off to the Lab
So the Bunsen Honeydews at Cadbury, charged with taking whatever necessary measures, came up with Sweet Kicks — a mint-flavored gum with a chocolate-flavored liquid center. And, wow, it’s sugar-free and low-calorie. Bunsen and his buddies (probably in marketing) targeted women seeking “a moment of pleasure.” To which I say, “Blech.” Speaking as a woman, I want my chocolate with sugar and calories and most definitely not in the form that loses its flavor on the bedpost overnight.
A Small Wad of Advice
One last thought. What’s a company wantin’ to be #1 to do then? In Cadbury’s case, I would suggest getting out the old checkbook and writing the big one, payable to the shareholders of Hershey.
The Arctic is “hot” again. No, really.
In previous centuries, the expeditions of James Cook, John Franklin, William Parry and others held out an (unfulfilled) commercial promise — an ice-free and relatively short sea route through the Arctic (the Northwest Passage) linking the riches of Asia with the markets of Europe.
Today, melting ice caps and rising oil prices have combined to create a new commercial opportunity in the Arctic. A major geological survey has found that the region might hold as much as a fifth of the world’s yet to-be-discovered oil and natural gas reserves. In a major assessment, the U.S. Geological Survey reported last week that the Arctic might have up to 90 billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. On its face, this is equivalent to 13% of the world’s total undiscovered oil and 30% of its undiscovered natural gas.
Good news for the governments of the US, Canada, Russia, Norway, and Denmark (through its Greenland dependency) and the numerous oil and gas companies that do business with them. According to Donald Gautier, the chief geologist for this U.S. Geological Survey project (despite a history of contentious territorial disputes) “most of the resources are on the continental shelf in areas already under territorial claims.”
Big Oil already has experience in the Arctic — the development of Alaska’s North Slope in the 1970s brought in such giants as BP, Shell, and ConocoPhillips, all of which currently jointly own and operate the 800-mile long Alyeska Pipeline, which links the oil fields of Prudhoe Bay to the port of Valdez. Russian and Canadian companies have had similar success in exploiting onshore Arctic oil and gas assets in their countries.
The prospect of drilling on the continental shelf in the Arctic raises serious environmental and conservation concerns. Environmentalists fear the addition of industrial activity might help speed the already accelerating melting of sea ice, reinforcing global warming. Conservationists are concerned about the threat of massive drilling to the Arctic’s unique natural systems and wildlife, and the dispruption to the way of life of indigenous peoples.
But the drive for new hydrocarbon sources is strong, and the Arctic has already proven its potential. In the past several decades, more than 400 fields have been discovered in the Arctic, with reserves of more than 1,100 trillion cubic feet of natural gas and 40 billion barrels of oil (or about 10% of the planet’s conventional oil and gas resources).
However, the Arctic is a long way from civilization and new fields may take a decade or more of expensive infrastructure creation to get the oil to market. Ditto the Northwest Passage. Captain Cook’s dream may now actually be a reality. (Last year, the ice-free Northwest Passage across the top of Canada was navigable by large ships for the first time). But with no nearby infrastructure (communications networks, power grids, ports, etc) the viability of a new shipping route, like the commercial availablity of new Arctic oil, is still many years away.
There’s a lot of speculation circulating about whether leading biotechnology firm Genentech will accept pharmaceutical giant Roche’s $43.7 billion takeover bid, the largest pharma/biotech merger price tag in several years.
The offer came as a surprise for Genentech, which has maintained a unique culture despite Roche’s controlling ownership stake. If Roche’s offer is accepted, the pharmaceutical giant says that it wants to keep Genentech independent so as not to squelch its innovative atmosphere. I imagine that Genentech executives and employees are wondering whether this goal is realistic though, especially since Roche has also announced its intention to integrate some US functions to cut costs.
Also at issue is the popular opinion that the offer is undervalued, only giving a 9% premium over Genentech’s stock value. Some analysts and investors are betting that Roche will have to up its offer before Genentech will commit, while others feel that Roche will use its advantage as majority shareholder to keep the price down.
Roche has thus far been satisfied with its controlling interest in Genentech, which has allowed it to reap profits from the division while avoiding management duties. The shift in strategy is less of a surprise, however, when you consider current competitive and consolidation trends in the pharmaceutical/generic/biotech industries, as well as the rise of foreign investments in US assets.
Roche itself has made several acquisitions in its quest to remain in the top ranks of drug companies, especially in the areas of biotechnology and diagnostics. (It also recently bumped up its stake in another majority-owned subsidiary, Japan’s Chugai Pharmaceutical.) Like many other pharma companies, Roche is looking to biotechnology firms to bolster its product offerings in the face of generic competition. Generic firms are also joining forces to get ahead of the game.
Though Roche will probably have to raise the stakes, it’s highly likely that Genentech will eventually end up taking the bait in this situation, if for no other reason than to secure its position in the increasingly challenging marketplace. However, let’s not completely discount that the California company may yet fight for its (partial) freedom with San Francisco flair.