Blessed by the Potato

There are many talented cosplayers out there with Jedi and Jawas, Chewbaccas and C-3POs represented. But Stormtroopers outnumber them all combined, just check out this photo from Fan Expo. There are a lot of fans out there with really good Stormtrooper costumes. Who watches Star Wars and thinks “Vader, Luke, Solo, Boba Fett… nah, I want to be a Stormtrooper!” Sure, a few would be expected, but the Stormtroopers are nuts. There are a lot of fans with suspiciously good Stormtrooper costumes. I’ve yet to see one in duct tape and Kleenex boxes.

That’s too many to believe, each imbued with too much awesomesauce. And they never take off their helmets. I think something else is going on here: a real galactic invasion, happening right under our noses. They’re masquerading as fans to slowly infiltrate our society. First, conventions. Then, “ironic” appearances of Stormtroopers at bowling alleys and shopping malls, getting us used to the idea of harmless Stormtroopers on our streets. Next, “peaceful” protests in front of our government buildings. After that, who knows — maybe we’ll find out how deadly precise their blaster fire is after all. Obi Wan always seemed to hold it in high regard.

Meat is an interesting and contentious meal choice. I’m personally a vegetarian, but a lacto-ovo one. I don’t have any particularly strong moral objections to using animals for human purposes: though I personally would prefer not to get involved in the process, I don’t throw a fit every time a friend has a BBQ (and my daughter is an omnivore until she decides otherwise). Yet I think people eat vastly too much meat. So many animals raised just for food, it’s so wasteful. Grazing animals can better make use of marginal farm/pastureland/scrub, but many acres of prime farmland is also given over to raising animals or growing feed for them. A laying hen can produce hundreds or thousands of eggs in its lifetime, but you consume way more chicken than that ratio of eggs:meat would suggest should be in your diet (generally you don’t eat the old egg-layers, you grow chickens just for meat and a separate group for eggs that you then feed to your dog).

For cows, it takes 5-100 times as much inputs like land, water, fossil fuels, and grains to make a pound of beef as it does to make a pound of vegetarian feed (in some reports these figures are adjusted for the protein content, so a report that says that it takes 10 pounds of vegetable protein to make 1 pound of beef protein may mean that ~100 pounds of feed went into the pound of meat). The rough rule of thumb I have heard is that we can feed about 10 times as many people on a vegetarian diet as a heavily meat-based one given the same input constraints. Whatever the exact number is, it’s a lot: there’s a fair bit of waste putting a cow between you and your food. I like to cut out the middle man.

The announcement that lab grown meat has been made (and eaten) made the news recently, spurring a lot of speculation about what the future will bring. I think it will be interesting, particularly for those simultaneously interested in animal cruelty and eating hamburgers, but I don’t think this is ushering a new paradigm of how we feed ourselves, and it’s not an immediately apparent investment opportunity.

The big question in my mind is what will the inputs be under the lab-grown scenario? Is there a business case there?

Land: One of the big advantages of lab-grown meat is that you don’t need to waste all that space letting the animal move around. You can pack the meat in close and even stack the building up with multiple stories, putting a lot of production into a small footprint. However, land is not expensive. It perhaps is not right, but anyone can just go and buy up farmland — prime farmland — and plop a condo on it, and most of the cost will still come from the construction process. So saving land is great, but we simply don’t value it enough right now to have this become a factor. Indeed, the need for infrastructure will likely make this way of producing a hamburger much more costly than just letting herds of cattle roam across the foothills of Alberta, and the capital investment required will likely keep many from making the plunge out of curiosity.

Water: I honestly don’t know where all the water is used in cattle farming, the reports suggest ridiculous amounts of it in use. Are the cows being bathed nightly? Anyway, water use will likely decline, but unless these meat factories get built in the boonies the water expense will likely remain unchanged as expensive, treated city water gets used.

Feed: Here is my big question. By not growing a full cow (just the meaty parts), and by just growing it long enough to harvest (rather than burning up resources in ongoing metabolism as the cow wanders around the fields day after day for months and years on end), there should be a big gain in the ratio of feed inputs to meat outputs. But it’s still not going to be very close to 1:1 — there are still inefficiencies in growing muscle tissue. There might be a decent efficiency between the growth medium energy and the meat-like substance protein content, but the question is whether that gain helps us any when you consider the full chain. With a full cow you just shovel a bucketful of corn/hay/wheat/oats into a trough and let the cow do its job. With a lab-grown collection of cells you will have to predigest the grain inputs through some kind of process to produce a sterile nutrient solution. What losses and inefficiencies will be associated with that value chain?

I doubt that having a disembodied bovine stem cell grow a muscle cell in a vat is going to come anywhere near the efficiency of eating some corn and growing a muscle cell yourself. Perhaps the ratio will come down, from say 100:1 to 10:1, but given the other costs I don’t think that makes a business case. I suspect that, at the end of the day, there will be next to no advantage here: 100 pounds of unprocessed grains may be cheaper and less resource intensive than distilling 10 pounds of grains down to soluble carbohydrates and an osmotically balanced protein slurry.

Other inputs: What antibiotics and growth hormones will be needed to keep these cells alive and stimulate them into growing? There won’t be as many fossil fuels needed to drive trucks and manure-spreaders, but what about the electricity needs of the incubators and buildings? What of the plastics and glassware?

Manpower: How educated will the meat rustlers of the future have to be? How many cowboy technicians will we need per pound of beef, versus farmhands per pound the old way, and what wages and benefits will they demand?

I simply have trouble seeing this as the future of food.

Food is cheap. Fundamentally it is the most basic and essential need of every person — even the poorest — and we go through a lot of it. I don’t see how lab-grown meat will come close to the price of traditional meat. Even with scaling up and industrializing the process in a factory, will this be competitive? There might be a niche market for PETA members to get their guilt-free burger fix, no matter the price, but will it truly become an industry?

In some dystopian future where process efficiency trumps capital requirements, maybe. But if we’re in a world that’s down to counting every last grain of wheat, why not just eat the plant matter ourselves?

Now, lab-grown organs are not so different from lab-grown meat (indeed, just a specialized form of lab-grown meat). But people will be willing to pay vastly more per pound of life-saving kidney than they would for mediocre appetite-satisfying hamburger. So while I don’t think lab-grown meat will be a food source to count on soon, lab-grown organs might be here sooner (despite the added complexity). Indeed, if lab-grown meat is to become a viable business, it will likely depend on innovations and technologies developed for organ regeneration.

Netbug asked how to invest in lab-grown meat (as well as a number of other emerging trends). I think that top-down investing is very difficult to do. You can be right overall, but so many factors can prevent you from making money on the call:

1. The profit source isn’t where you think it is. Maybe only private companies are in the area so you can’t invest, or maybe it’s not the guys with the mines that make money in a gold rush, but the guys selling pickaxes and lanterns (or not the guys selling 3D printers, but the stodgy old chemical supply companies with the polymer supplies).

2. The sector moves ahead while companies stumble and fall behind. The airline sector is an interesting one: you could have foreseen an age where people fly all across the globe, hundreds of flights into every major city every day of the week. And if you tried to invest in the airlines as they were founded you likely lost money on that vision. They have gone bankrupt with notorious regularity. People still fly, new airlines emerge (and old ones reorganized and brought out of bankruptcy), but that knowledge hasn’t been very profitable.

Similarly with cell phones: the omniconnected world comes closer every day. Everyone has a cell phone. People are disconnecting landlines in favour of cell phones, something that might have been unfathomable 20 years ago with the spotty service, high cost, poor voice quality, and miserable battery life of early cell phones. Yet even though the vision of a technological future you had may be coming true exactly as you pictured it (right down to that prophetic dream you had about touchscreens), it’s unclear how you should have invested in that trend. Motorola had it’s rise and fall, as did Nokia and then RIM. Apple could well be next. The carriers have done fabulously well in Canada and the US, but some European ones have barely paced their indexes. Cisco was meh while Nortel blew itself up. Maybe you would have been lucky enough to spot Qualcomm in the early nineties (though if you didn’t think about it until the late 90’s you were too late).

3. The market prices in expectations, so not only do you have to be right in your vision, but you have to be one of the few to see it (or at least one of the first). Converting a portion of our vehicle fleet to run on natural gas makes sense for emissions and because of the huge differential the past few years (and projected to remain so) between the price of NG and oil. However, everyone already knows this, so the price of Westport Innovations is through the roof. For many years pharmaceutical stocks had outrageous multiples as everyone counted down the years until the baby boomers’ health started failing.

Enough people have asked me how to invest in certain trends and I’ve banged my head against enough walls trying to figure it out that I have to throw my hands in the air and say I can’t do it. I’m just wired up to be a bottom-up investor (and at least partially as an indexer). But I also think it’s just an inherently harder problem, with more moving parts to spot.

The best macro idea I’ve had has been the Canadian housing bubble. The evidence is there, and it’s contrarian enough that it’s not priced in to a large degree. The problem is I can’t think of what to go long on for that bet, and there aren’t any good hugely asymmetric payoffs like subprime CDOs. The best I’ve got really is to short a few stocks, and the timing is just too hard to call for a straight short or expensive, illiquid put.

Was just reading a WHO report today (as one does) when I came across this graph on the global burden of disease — external causes:

WTF is happening in Europe? For most places “poisoning” is a tiny little sliver of external cause, but for European males (and largely just males) it’s like 10% of disability-adjusted years of life lost, up there with car accidents. This big chunk of deaths, from poisoning. I know poison was an old hazard of courtly European life, but in this day and age? Why are there no in-depth reports about this apparent European male poisoning epidemic? Wayfare suggested that it was due to all the grody unpasteurized stuff they eat over there (surely poisoning must include food poisoning?), but then… why just the men?

Oh no, I’ve asked too many questions already, haven’t I?

Umm… I’ll make my own dinner tonight, thanks for offering though.

I’ve written a lot about personal finance, investing, and saving lately. I’ve joined or led letter-writing campaigns for tax sanity, landlord-tenant reform, and internet competition’s usage-based-billing issue. But now it’s time to mobilize around an issue of true national importance: the distinct lack of Cherry Coke Zero in our stores.

It’s quite frankly ridiculous that Canada doesn’t have Cherry Coke Zero available*. It’s 2013, we’re supposed to be living in the future here, not like savages with nothing but plain Coke Zero on our grocery store shelves. It’s particularly disturbing because so much of Coke’s advertising is Canadian-derived: polar bears, Santa, happy people not shooting each other (go ahead and check, hardly any Coke ads feature gun violence, it’s extremely Canadian), and frosty glasses with condensation (wait, that one isn’t Canadian, but does happen here**). Though created in America, Coke’s second home is clearly Canada — and we are beyond a doubt Coke’s muse — yet we get tossed aside on flavour selection like unrepentant Pepsi fanatics saving up for a Harrier jet.

It’s time to do something about that. I have laid out a plan of action to bring Cherry Coke Zero to thirsty Canadians everywhere***. First, I will ask, politely. That is the Canadian way. Below I’ve pasted the letter that I have sent to the public contact address**** on Coke’s website.

Coca-Cola Canada
335 King Street East
Toronto, Ontario
M5A 1L1

August 9, 2013

To Whom It May Concern;

Cherry Coke Zero is, simply put, a wonderful beverage. Whenever I’m in the US it seems to be the only thing I drink. Like many Canadians, if I’m driving south of the border and don’t have a restrictive baggage allowance, I’m sure to bring a few cases home. They quickly run out though, and I am left wondering: why doesn’t Coca-Cola sell Cherry Coke Zero in Canada?

Presumably your market research has indicated that the Canadian market lacks the demand to make introducing a new flavour of Coke worthwhile. I don’t know what methodological errors your market research people made, or if the lack of Cherry Coke Zero was merely an oversight and the market hasn’t actually been studied yet, but I assure you that the demand is there in Canada, with many vocal proponents of the flavour.

Indeed, three of the top ten Google search results for “Cherry Coke Zero” are of Canadians discussing where to find and buy the product they love. The biggest buzz around the few Freestyle machines in Toronto is that they are a way to get an occasional taste of Cherry Coke Zero without taking a five-hour drive. The multitude of other flavours do not merit a mention.

The question pressing on my mind is: what will it take to convince Coca-Cola Canada to bring Cherry Coke Zero to Canadians? My sincere hope is that nobody has thought to simply ask before now, and that this plea alone will soon bring 12-packs of the delicious nectar to a grocery store near me. Please offer Cherry Coke Zero in Canada. If merely asking is insufficient, what would sway the leadership team? Masses of people would be eager to sign a petition; hunger strikes are not really the forte of myself nor my fellow Cherry Coke Zero aficionados, but we could try. Do I need to petition the heads of Loblaws, Sobeys, and Metro first?

I hope to hear exciting news about changes to your product line-up soon.

Sincerely;

If that doesn’t work, I will bring out the memes. Naturally the first will be the Futurama’s “shut up and take my money!” one. If that doesn’t work, there will be more, possibly with cats, likely with polar bears*****. I’ll give that a few months to work, until it’s nice and snowy, setting the scene for the final stage: unleashing polar bears on King street. I haven’t yet secured a loan from the Toronto Zoo for the bears, as there’s a lot of paperwork and they’re not satisfied with my proposed display of setting them free to run amok until our beverage demands are met, as the swimming and other environmental enrichment components are not up to their standards. As a backup I’m trying to see how many Cherry Coke Zero fans are among the polar bears swim club ranks.

* – with the exception of expensive single-serve Coke Freestyle machines at select fast food restaurants and movie theatres. A few weeks ago I paid $3 just to get a single-serve Cherry Coke Zero at Hero Burger. PS: Hero Burger your prices suck.

***** – it’s the internet, it’ll be cats. Maybe at best, cats in itty bitty polar bear costumes.