Nestlé Takes Majority Stake in Blue Bottle
nytimes.com
nytimes.com
One in every five or six cups of coffee is Blue Bottle or "third-wave specialty" coffee? This simply can't be true considering the scale of Starbucks, McDonald's, and Dunkin' Donuts, let alone brewing at home and coffee consumed at diners and non-specialty restaurants.
I'm surprised the Times would cite the SCAA so uncritically.
Unless I'm in some big city, most of time I'm just getting whatever bulk coffee they happened to buy from some wholesaler. They arent serving me $18/lb coffee from some boutique farm in Nicaragua.
Specialty coffee was great for the margins, but the market-share was not even close to the numbers being reported in this article.
That said, I'll most likely pass up Blue Bottle now even though their affogatos are amazing.
So this news is a little disappointing, but I'm hopeful nothing at my local cafe will drastically change for at least the next several months. I am, however, curious to see what impact this will have on the bean and roast quality.
https://gimletmedia.com/episode/building-perfect-cup-coffee/
I'd argue consumers themselves, but I don't know if that's really just a cop-out or not.
Unless a significant portion of profits are directed towards the improvement of farming methods, scale tends to decrease quality.
Certainly we could grow more coffee, and that would likely increase net output of high quality coffee. However, if a company is buying the 'best 10%' of coffee and need to double their output, it is more likely that they buy 80th-90th percentile coffee than reinvest their profits into increase the quality that tranche of coffee to meet that of the top 10%. Even if a company chose to do this, the amount of time it takes to deploy capital in agriculture (~1yr+) is likely much less than the amount of time it takes to deploy capital in manufacturing (months), which effectively would cap growth rate.
Said another way, is the slope of quality distribution that severe?
I'd guess its a long-tailed distribution something like this (https://qph.ec.quoracdn.net/main-qimg-3b21f991d3f0446ce30b9b...) (quality on x axis, volume on y-axis) However, I know little about the complexities of coffee agricultural and manufacturing process, mostly just speaking in abstract armchair economics terms.
Today there is still difficulty in generating enough incentive to get farmers into arabica, but that changes with different practices, which Blue Bottle has historically practiced (direct trade and direct investment in farms, etc.). This model seems to be very sustainable for the time being.
On the buying end, the roasting end, distribution, etc., the challenges in scaling are similar or the same as scaling any other business as far as I can tell.
My intuition is that consumer demand for genuinely premium coffee would run out before the land or the farmers do, but I know the market far less well than I'm sure others here do.
He argues water should have a market value so that it is treated more like a resource that should be well managed. Of course a state can also do this and in my opinion should, but of course as a company they want to fill this role. If water is treated as a market asset then more investment will happen (which can also happen through a state entity) - a good thing. In a later video, after the 2005 video was a total PR disaster, he tries to clarify his argument by saying that water should be a human right to humans who need it for living, but not for gardening or washing a car. To me that seems like a valid case.
Sounds like a good case for cap-and-trade. That is, don't allow people to withdraw groundwater faster than it's being replenished, and don't allow people to withdraw enough surface water to harm fish populations. And then let folks trade their allocations.
the closest analog is the Colorado river basin but the various state's government agencies sort that out themselves without the need for intermediary market markers.
Where are his statements on their practices regarding infant formula, the use of child slavery for chocolate, the use of general slavery in their seafood production in Thailand, and the intimidation of workers who wish to unionize in India?
Yet the firm's permit to operate this seven-mile pipeline in the mountains expired in 1988, though since it pays its yearly $524, the licence is still considered valid by the US Forest Service and by Nestle.... However, activists consider the permit expired and the US government is now reviewing Nestle's licence. A public comment period has just closed and this month a federal hearing will consider the legality of the permit.
Later that year a federal judge sided with the Forest Service and declared the permit legal:
A federal judge on Wednesday ruled in favor of the U.S. Forest Service, declaring valid Nestlé’s permit for water-bottling operations in the San Bernardino Mountains, on a motion filed by three environmental groups that sought to shut down the company’s efforts until its effects on the environment could be evaluated.
http://www.sbsun.com/2016/09/21/why-nestl-can-continue-to-bo...
Because you know, the government would never engage in quid pro quo for the benefit of capitalism over humanity
Why can't local groups be given the tax benefits and other handouts to manage this?
Are the people at Nestle THAT good at this? No one else can figure out the logistics?
The whole notion that my community, a metro area of 3 million residents, multiple universities and tech companies, needs this redundancy
But if Uncle Sam says so! Well who am I to question them!?
I was pointing that that they apparently had the legal right to the water.
Why can't local groups be given the tax benefits and other handouts to manage this? Are the people at Nestle THAT good at this? No one else can figure out the logistics?
What is the "this" you're referring to? Getting permits? Bottling water? Do you think "local groups" are less likely to be influenced by businesses and other special interests than federal agencies? Who would oversee all of these local groups to be sure they are operating fairly?
The whole notion that my community, a metro area of 3 million residents, multiple universities and tech companies, needs this redundancy
Again, you've lost me, what redundancy are you talking about?
But if Uncle Sam says so! Well who am I to question them!?
By all means, question the government, but why blame a company for operating under the conditions of the permit issued to them by the government agency that regulates the resource?
By the way, the 36 million gallons mentioned in the article is about 110 acre feet, or the same amount of water used to irrigate a 25-50 acre almond orchard (depending on location). It's nothing, and it's being used as drinking water, not to wash cars, water lawns, fill swimming pools or any of the other more wasteful ways people use water.
(I've helped manage large aquaculture projects dealing with much larger quantities of water, so I'm not reacting to what seems like a big number. It's striking how differently the EPA treats the diversion of ground water vs. surface water)
The federal government is charging Nestlé $524 for 36,000,000 gal of water. I just checked, and that same amount of water would cost me $303,689 from my local utility.
I entirely fail to see why Nestle should get a huge discount for water that is then sold to American citizens at $1.79 a gallon, for a 122,976% markup.
It very well may be that Nestle (and many other companies) are under-paying for their water rights, but I don't think you're comparing apples to apples.
Disclaimer: Nestle are utterly evil
Well, when you phrase it that way it sounds terrible, but it's a completely bogus comparison. A retail water user is paying not just for the water but more importantly for it's storage and delivery to their doorstep. That increasers the price. You also are not buying in bulk. If you were, you would only be paying $50-200 an acre foot as most California farmers do to have water stored and delivered to their farms. Nestle is only paying for access to a water source. Is $524 too low a fee for a permit? Yeah, probably, but the company isn't "stealing" water, and compared to what farmers pay for similar amounts of water isn't not that that different.
More info at https://en.wikipedia.org/wiki/Nestlé_boycott#Baby_milk_issue
RIP Blue Bottle and long live Philz, Four Barrel, etc.
"They're so poor, some of them can't even lactate enough to feed their babies, we should sell them cheap formula so they can compensate"
Then the cheap formula becomes itself problematic because they hadn't realized that water itself was dirty and their cheap formula wasn't as good as the expansive one.
They could start with themselves. They pay $200/year to suck 130M gallons of Michigan water, and fight attempts to charge a fair rate for it.
http://www.mlive.com/news/index.ssf/2016/12/why_nestle_pays_...
What that article says is some environmental law experts claim it would likely be fought, and a statement by Nestle saying they are ready to discuss an amount if the state wants to. The fight it talks about is about a cap on the quantity of water, not on a price.
> Now, "Nestle can argue under the Michigan Court of Appeals decision in 2005 that its pumping is within the scope of its reasonable use, to the extent it isn't harming anybody," he said. "And it doesn't have to pay for it."
It's weird because other rights are what others _can't_ do to you, but this right is what others _must provide_ you. Who and how just aren't clear.
1. Something that can't be taken away by someone else.
2. A contract between an individual and the country/state with which they are a citizen. In return for paying taxes and following laws, they can expect services, utilities, military, education, etc.
3. These things are not something you're entitled to morally (like water, as there's no one to sue if you don't have water in your region), but societies should recognize the need for water, and thus it is moral and right to help ensure that all people have access.
Positive rights are very much a real thing, but they're very different from negative rights, and they have very different implementation issues.
Life, liberty, and property are all things that are only guaranteed by societal standards and enforcement. Murder, theft, and enslavement is the norm where the rule of law and enshrinement of rights are absent.
Much of the US enslaved human beings for hundreds of years - liberty is clearly only something we get by being a member of a specific society.
edit: I may have misunderstood your comment. I mean that human rights are things that are violated by taking them away, not failing to give them to you. So while life can be taken from you, doing so would violate human rights. Whereas arguing that internet is a human right doesn't work with this model, because the current violation of that 'right' doesn't just result from someone taking something away, but from someone failing to give it to you.
<Citation needed>.
The conventional Enlightenment-era arguments for natural rights, like those which inspired the American Founding Fathers, claimed that those natural rights were endowed by a Creator. Unfortunately, over the following two centuries-plus, fewer and fewer people accept the existence of a Creator that can endow such rights. Meanwhile, the study of homo sapiens as a social animal has proceeded apace, and it is clear to many – if not most – people today that “rights” are a rather arbitrary thing that human beings in groups posit for utilitarian reasons, but they have no foundation beyond that.
You could live in a totally government-free society and somebody, somewhere will eventually come along and fuck your shit up. Then you are just fighting to keep your rights, which for many might be preferable than trusting a government to do it for you.
The question is are you more likely to retain those rights under a government than without one? If so, what kind of government?
It's not a long-term solution but it was effective.
It's not like some made up non-existent issue, it's in direct response to corporations privatizing water, then calling all water illegal.
When you put it like that it, of course, sounds silly but try to see it the other way around: Take all the money spent on wars, where lots of infrastructure (usually among the first targets) and environment ends up being destroyed, and imagine it's instead spent on infrastructure projects helping the actual civilian population.
Yes it's naive, yes it's very unlikely to ever happen, but I still like to think that the US Military acting as a demilitarized "global infrastructure building force" would have done far more good for humanity than constantly waging wars on barely defined things like "terrorism", leaving destroyed wastelands and lot's of disgruntled people in their wake.
It's their system. The Baby Boomers, and it is an abject failure.
We can create something better Hackernews. We just have to give a shit.
It's not particularly meaningful to say that water is a human right. Far better to talk about obligations. Who has the obligation to provide people with access to clean water? That is where the discussion can begin.
I would argue that whoever controls access to clean water should be the first to answer the question of obligations. If those who control water refuse to provide it to those in need, why should we allow them to control water?
Oxfam would be a good place to start https://www.oxfam.org.au/
Here in BC, numerous articles in past, they are paying like 2-3$ per million litres of water extracted.
That's cheaper than a single small water bottle in many stores which aren't even 1 litre size
The reality is they make huge amounts of money selling something that people can get for next to nothing from their cities and towns and pay next to nothing for it, at the expense of the people living where the water is taken and where it is sold at insane margins. Yeah, it is on us for letting them do it, but like everything they hold a lot more cards than we do, so they are just one more huge powerful corporation that will have to be challenged by the people which will take another gargantuan effort of education and activism.
[1] http://www.mintpressnews.com/nestle-spent-11m-lobbying-congr...
Isn't water already a managed resource? People pay for the water they use to garden or wash cars right? Sure it is the same amount irrespective of what you use the water for, but it is still not free right?
An essay about the issue: https://www.progress.org/articles/water-creates-rent
My family owns a water company in Lake Tahoe.
We are precluded from bottling or otherwise selling our water by the PUD to anyone other than the homes for which our water serves.
The bullshit factr in this is that PUDs (public utility districts) have made deals with companies like Nestle to allow them to slurp up thousands of litres per penny from wells/springs/aquifers and then sell that water for thousands % more than they pay...
Yet they limit small water companies who own their full infra and prevent them from going after market value for their water.
So as a small family water company, fuck nestle. I find your argument BS from the front lines of regulations that favor mega-corps and fuck over small companies.
We have been trying to get our Tahoe water bottled for decades - but it takes big money. And our water comes from a natural spring, not from the lake - and should not be regulated the way it is.
Still don't want him or the company he manages anywhere near any of it
In order for it to work out there needs to be a ton of regulations in that market, but once the market is set, they will just lobby it for decades until regulations are essentially gone.
People like the CEO say that it should have market value, because they are the ones that can only see value in markets. The rest of the world does not need to but a price tag in something to see value in it. Also, habitats all around include millions of plants and animals without a dime to spend, a water market will see no value in catering to them, we should just trust these companies with abysmal track record to ensure habitats are maintained?
Unfortunately, this will taint Blue Bottle's 'premium' experience for me. I guess I'll go to Philz instead.
So parents mixed the water with the formula, giving their infants diseases they didn't have any protection against because they didn't get any antibodies from their mother's milk
This is HEINOUS behavior, and the primary reason I won't support any Nestle company or product.
His specific number could be argued - I don't remember what it was, but I think it was in the liters per day. Regardless, I think it's interesting to think about the idea that the commoditization of something begins after a certain amount, unlike chocolate for example.
That being said, I wouldn't trust the current political climate to be able to come up with a reasonable number here
"Here at Philz, we roast our own coffees at our roasting plant in Oakland, California."
https://www.philzcoffee.com/our-coffee
They obviously don't do espresso drinks but there are about 1,000 places in San Francisco that do (Four Barrel, Ritual, Stanza, etc. etc.)
I'm serious considering leaving my current job because the office coffee moved from Sightglass to some over-roasted junk from somewhere in Marin county...
I guess there's Philz a bit further, or Blue Bottle even more further.. but those are hardly convenient and Philz isn't great anyway.
Additionally, Stumptown as well as Intellegencia are both owned by the same private equity firm that owns Peet's, Blue Bottle also got a ton of outside investment to allow them to grow as rapidly as they did, in addition to having a successful business of delivering their cold brew to peoples homes.
The thing about the food industry is that it has really high startup costs that take a very long time to pay off, so opening up a new store using the profits from existing stores isn't really all that easy to do without having a hundreds of stores already.
Saying water isn't a human right is different than saying not everyone should have access to water.
I generally agree that water isn't a right. I think it's a misuse of the word "right" and a misapplication of the concept of a "right".
Rights define what you're free to do for yourself, and the various ways in which those freedoms can't be infringed upon by others. For example, you have a right to free speech and people can't infringe on that. You have a right to not be tortured and people can't infringe on that. In the US, if the government is going to take your property or jail you as punishment for a crime, you have a right to a fair trial first before they can do that to you.
There's a distinction between that and things like water and healthcare. One is a list of rights, and the other is a list of things people generally need to live a happy and healthy life. If we're going to dilute the definition of "right" down to that degree, why don't we just throw in housing and free trips for vacation and a loving partner while we're at it?
South Africa has housing as a right in their constitution. They also have 200,000 homeless people. So who's infringing on their rights? Every citizen of South Africa?
The UN General Assembly declared water a human right. The world also has close to a billion people who don't have access to clean drinking water. Who's infringing on their rights? Are you?
Rights aren't about what resources (time, money, commodities, services, etc) you're free to take from others. When you start defining rights that way, rights all start contradicting each other. What about a doctor's freedom to choose who they perform surgery on? What about your freedom to live a life not solely dedicated to plumbing in Gabon?
Of course you're correct about the way the word "right" is generally used in philosophy and ethics. But that's absolutely not the definition being used here.
The Nestle CEO was using the correct definition of "human right". Now people are going to attribute their inaccurate definition of the term to his statements, and condemn him for it (like the parent comment did).
It's all semantics.
Now how about we start using the word correctly so we can avoid this? Or how about the liberals condemning him try being intellectually honest for once, and stop deliberately and knowingly misinterpreting what he said just because it's convenient for the argument they're trying to make?
Making rainwater harvesting illegal (and thus forcing people to overpay a monopolized water system) is arguably a violation of human rights. It is a prohibition of what you are 'free to do for yourself', that forces people to pay for something they need to survive (and could otherwise get for free).
However, I agree on the haziness around the issue. Mandating that everyone receives X amount of drinkable water may be expensive to implement, economically unsustainable and create perverse incentives.
But the right to use water that lands on your property? Never heard of "rain water rights". Unless it was previously declared somehow, forcing you not to collect rainwater would highlight the need for the right to bear arms. I would like to know more about how that came about in those cases.
I believe are some serious injustices around water privatization in South America, however.
What they do to women with their formula in developing nations is a crime. They miseducate them by telling them that Formula is better, give them free samples until their milk dries up, and then start charging them.
It's deplorable behavior, and as a result I refuse to buy any Nestle product.