Marketplace - Food, glorious food!

Episode Date: March 19, 2024

Food plays a big role in this economy, and we’ll dig in to some industry niches in today’s episode. First up: Unilever is cutting ties with its ice cream brands, including Ben & Jerry’s and Breyers. We’ll also chew on Trader Joe’s recalls and chocolate bunny inflation. Plus: geothermal energy on Chicago’s South Side and NCAA women’s basketball.

We've got some housing news in the show today, a whole mess of food, and some women's basketball from American Public Media. This is Marketplace. In Baltimore, I'm Amy Scott in for Kai Risdahl, who is out on assignment. It's Tuesday, March 19th. Good to have you with us. We talked on the show yesterday about how home building is still catching up from the big housing crash of the mid-2000s. Well, today, some new data from the Census Bureau shows builders have picked up the pace. Groundbreaking on new homes, housing starts they're called, rose by more than 10.5 percent in February from the month before. Single-family starts reached a two-year high. Now, as we say all the time, these monthly numbers are volatile, but the trend tells a story. Marketplace's Samantha Fields has the details.

Typically, when interest rates go up, new home construction slows down. Builders would say, OK, higher interest rates mean fewer buyers. We don't want to continue to build. But Allie Wolfe at the housing data and consultancy firm Zonda says that's not what's been happening lately. What we've seen is actually higher interest rates have meant that the resale inventory continues to be really tight and builders are finding a huge opportunity today. And right now they're building, building, building. And she says that's likely to continue. According to Zonda's data, 80 percent of home builders say they plan to build more this year than last. Lisa Sturtevant, chief economist at Bright MLS, says what they're building is shifting.

Single-family starts are on the rise. On the other side, though, we're seeing that multifamily construction, which really peaked last year, that's where we're seeing a lot of slowdown. In part, she says, because rents have started softening in some parts of the country, whereas the demand for single-family homes to buy remains high. Even with all of this new construction, Hannah Jones, a senior economic research analyst at Realtor.com, says there's still a big gap between supply and demand.

The housing market is still vastly undersupplied. This just is bringing us back towards more balance, and we have a really long way to go. Though a lot depends on where you live. Allie Wolfe at Zonda says most of these new single-family homes are being built in suburbs far from downtown areas in certain parts of the country. We're finding that pockets of the Midwest, Southeast, Southwest have seen big increases in new housing supply coming online.

But the Northeast and West Coast, not so much. I'm Samantha Fields for Marketplace. Wall Street found plenty to cheer about today. We'll have the details when we do the numbers. Apparently Unilever has lost its taste for ice cream. 24 years after the massive food and consumer goods company bought Ben & Jerry's, Unilever announced this morning it's spinning off its ice cream division. Ben & Jerry's and Breyers, Klondike and Magnum will be folded into a standalone business, leaving Unilever a simpler, more focused company. Marketplace's Sabri Benesher looks into the corporate strategy at work here. What do Axe Body Wash and Ben & Jerry's ice cream have in common?

Not much, except they are both owned by Unilever, and that is part of the problem. The supply chain logistics of ice cream is completely different. Matt Britsman is an equity analyst at Hargreaves Lansdowne in the UK, where Unilever is headquartered. Ice cream needs refrigerated trucks and refrigerated storage. Having all that isn't making Unilever is headquartered. Ice cream needs refrigerated trucks and refrigerated storage. Having all that isn't making Unilever any more efficient. It's not like it can save on shipping by throwing the deodorant in the same freezer truck as the Chunky Monkey. Also, temperature isn't the only cold thing about ice cream these days. So it's actually been one of the lagging

major business divisions over the last couple of years. Consumers have given ice cream inflation a frosty reception. At the same time, it's more expensive than ever to make this stuff. So ice cream has joined a growing number of businesses Unilever is letting go. This is a classic corporate strategy for a public company. Eric Gordon is a professor at the University of Michigan's Ross School of Business. Public companies are under pressure to constantly grow. If they don't grow, people pay a lower price for the stock, and a lower price for the stock means the CEO gets fired.

So Unilever and its new CEO want to chop off the parts of the business that don't add to growth and focus instead on what they're best at. They are following in a long line of companies who have expanded only to shrink. You see all these roll-ups and acquisitions, and everybody wants to get big. William R. Snow is a managing director at Focus Investment Banking. So what do they do? Well, you need to diversify. You create this behemoth, and then these things get large and out of control, and they're not as profitable.

So consumers screamed, supplies screamed, and Unilever said goodbye scream. In New York, I'm Sabri Beneshour for Marketplace. Goodbye, Scream. Hard to top that. Sticking with the subject of food, you may have noticed more recalls in the news lately. Market research firm Sedgwick counted more than 500 FDA recalls of food and drink last year, the highest number in five years. And if you want to spoil your appetite, reading the list is fun. years. And if you want to spoil your appetite, reading the list is fun. Just this month, Trader Joe's recalled its chicken soup dumplings for possible plastic contamination and cashews for possible salmonella. These are the latest in a series of recalls at the company. To find out how unsafe products make it to store shelves, we called up Karen Landman, a reporter at Vox who

wrote about holes in the American food safety system. Welcome to the program. Thanks so much for having me, Amy. How is food safety regulated in this country? Yeah, so there are sort of two main agencies that oversee food safety in the U.S. One is the Food Safety and Inspection Service, the FSIS, which is a branch of the USDA, the Department of Agriculture. And they primarily oversee meat and egg products. And they're in those production facilities every day. The Food and Drug Administration oversees pretty much everything else, which is about 80% of our food supply.

They really only inspect the production lines and the plants where these products are made about every three to five years. So a lot of their regulation of our food supply safety really happens through a response when there are problems rather than sort of a more proactive response that the FSIS can take. So every three to five years compared to daily inspections, why is the system so disparate? I mean, don't we care about all the foods that aren't eggs and meat? The FSIS is simply mandated to do this level of inspection while the FDA is not. And the amount of staff and funding that these agencies have to do their work corresponds to the amount of oversight that they are required to provide to our food supply. And we should say just because a government inspector isn't visiting these manufacturers, there are inspections.

How does the voluntary system work? Yeah, so there are lots of different ways that producers of food can decide they want to maintain the safety of the product that they put out. Those producers with more resources often have a really intense and robust quality assurance process happening inside their facilities every day. So smaller producers will still have some kind of quality assurance process in place and some safety processes in place, but they may just not be as intense. They may not be quite as rigorous. They may happen on a less frequent interval. And they might just look a little bit different. For example, instead of being automated, they might be manual safety processes. But clearly things are slipping through the cracks. And just to name an example that you covered in your recent story, Trader

Joe's has had a number of recalls over chicken soup, dumplings, falafel, pilaf. And, you know, the concerns are things like rocks and other contaminants showing up in this food. Is there something about Trader Joe's specifically that is leading to more of these recalls than we see elsewhere? Yeah. So Trader Joe's gets to decide what kind of standards their food suppliers have to adhere to, right? And if they say, well, we're willing to accept a somewhat looser standard of food safety among our producers, it really expands the number of producers and the number of small producers even that they can source food from. So the variety of products and perhaps the uniqueness of the products that turn up on Trader Joe's shelves as a consequence

is going to be different from what you see in other grocers' departments. But the variety of safety approaches and perhaps the intensity of inspections and safety approaches, there's also going to be a lot of variety there. How did Trader Joe's respond when you asked them about these problems? Do they have a laxer standard for some of their products? So Trader Joe's told me when I spoke with them back in August of last year after a spate of recalls that they only buy products that are produced in FDA or USDA licensed facilities. And they told me that they err on the side of caution and they're really proactive about addressing issues. What they did not say, but what you can see when you compare the types of certifications that Trader Joe's

accepts among their food producers with the types of certifications that, say, Kroger's requires from their food producers, is that they don't require those sorts of certifications that are on the higher end of quality assurance. And that's not illegal. It is perfectly legal. And it's clearly a tradeoff that consumers are in some ways happy to accept. They may seem worth the tradeoff in some cases of having a selection of products that you really just don't see anywhere else because they are unique. Companies obviously have a lot of incentive not to sell products that have contaminants in them.

Recalls, I assume, are bad for business. that have contaminants in them. Recalls, I assume, are bad for business. But are those incentives strong enough or do you think we actually need more regulation? I think we ultimately get the food system that we demand. If people really felt like we did not have the ability to tolerate a passive kind of reactive approach, then there would be a little more pressure on the FDA to change things. But the FDA can't do that without a whole lot more

resources. They currently do not have what they would need to have in order to inspect plants and, you know, just meet the requirements that might be set if we really demanded a more rigorous approach to food safety in this country. Karen Landman is a senior reporter at Vox covering health, also a trained physician and epidemiologist. Karen, thanks so much for sharing your reporting. I really appreciate it. Thanks so much. sharing your reporting. I really appreciate it. Thanks so much. We reached out to Trader Joe's for comment. A spokesperson said, quote, we stand by our proactive practices and continually improve our food safety processes. You can read the full statement at marketplace.org. dot org.

March Madness is here, and this year the women's college basketball tournament is expected to draw plenty of interest after a buzzy regular season marked by record-breaking performances by players and coaches, plus a surge in ticket sales and TV ratings. This is no fluke. As Marketplace's Savannah Marr reports, the attention follows bigger investments in women's elite sports. There's one NCAA women's player who's getting a lot of credit for the league's growing profile. They're going to get the ball up in time. Clark for the win! And there's no doubt, Iowa's Kaitlyn Clark is a phenomenon. But this is not the one and only talent. Jada Mumjoo is a professor of sports management at the University of New Haven. She says past greats came up when the only way to watch at home was on a handful of cable networks that weren't giving the women's game much airtime. Then you would find women's sports on ESPN 2 or 3 or God knows where.

Now there are a lot more ways to watch and engage with sports. People are seeking out women's leagues on streaming platforms, social media hype is attracting new fans, and brands are taking notice, says Destiny Washington with the Wasserman Collective. The Nikes, the Gatorades, the Molson Coors, Michelob Ultra. Those are just some of the names you'll see splashed across jerseys and advertising in stadiums and women's sports these days. When it comes to investing in teams, leagues, and infrastructure, this helps the overall ecosystem. With more resources, leagues grow, play gets more competitive, and fans get on board,

like we've seen with women's college hoops. It's exciting, but it's also a moment of uncertainty. Kenneth Shropshire studies the business of sports at Wharton. Now that we've captured this fan avidity moment. With athletes like Kaitlyn Clark and Angel Reese becoming household names, Shropshire says the women's game needs to cultivate more superstars and superstar matchups to keep fans engaged and investors bought in. I'm Savannah Marr for Marketplace. Coming up... In the way that a group of birds is called a flock of birds, a group of bunnies is called a fluffle of bunnies.

That's pretty cute. But first, let's do the numbers. The Dow Jones Industrial Average gained 320 points, 0.8% to close at 39,110. The Nasdaq rose 63 points, 0.4% to finish at 16,166. And the S&P 500 grew 29 points, about six-tenths percent, and at 51.78. Sabri was telling us about Unilever's plans to spin off its ice cream unit as part of a corporate restructuring. The move could impact as many as 7,500 jobs at the firm. Shares of the British consumer conglomerate sweetened two-and-three-quarters percent. General Mills, owner of the Haagen-Dazs ice cream brand, added 1.3%.

Bond prices rose. The yield on the 10-year T-note fell to 4.29%. You're listening to Marketplace. This is Marketplace. I'm Amy Scott. The United Nations issued a red alert for the planet today, confirming that last year was the hottest on record by a clear margin, at 1.45 degrees Celsius above the pre-industrial average, as dangerously close to the 1.5 degree threshold, beyond which scientists predict more severe impacts from climate change. To meet its pledges to reduce greenhouse gas emissions, the Biden administration is aiming to create a carbon pollution-free power sector by 2035. And to get there, communities are going

to have to entertain all kinds of renewable options, including geothermal energy. From WBEZ and the news organization Grist, Juan Pablo Ramirez Franco has the story of one neighborhood effort in Chicago. Naomi Davis is the head of the environmental justice group Blacks and Green based in Chicago. Greetings, cousins! How y'all doing? At this community meeting, she pitches geothermal energy, power drawn from underground that can heat and cool homes. The hope is that it could make life easier for residents here in West Woodlawn, a historically black neighborhood on the city's south side.

The project could lower utility bills, bring green jobs, and cut pollution. We're about the business of energy justice, which means that we have a campaign to end energy poverty and we're not playing. Blacks and Green is one of many community partners across the country that was given a grant by the U.S. Department of Energy to design a geothermal pilot. The task is to create a shared geothermal district networked across four city blocks. It would include more than 150 residential buildings. across four city blocks. It would include more than 150 residential buildings. Debra Gay lives nearby and came with questions.

Given that our city lots are so tightly spaced, how would you do that for an existing home? And would that create some disruption? Gay's mom, Retta Ford, wonders if the project could affect existing home foundations. Because it seemed like you're taking the water out of the earth under the buildings. So it would just seem like it would make it unstable. Experts say it wouldn't affect the stability of the ground because the system would be buried hundreds of feet underground. And Chicago has a unique option to build geothermal that wouldn't disrupt existing utility lines or private properties, according to consultant Andrew Barbeau.

He's helping build out the pilot project. The key here is Chicago's trademark alleys. Out in front, you've got water, you've got gas, you've got sewer and other things. But in our alleys, there's nothing under that ground. That's right. Here's the plan. Leverage the earth underneath the alleys behind homes and businesses to build out a community geothermal system. That will mean a series of deep 450-foot holes that pipe water into the ground, absorb the temperature of the earth, and then bring it back up to the surface.

Barbeau says the underground heating system will form a giant neighborhood loop. Along the way, connect into each building or everyone who's participating. This all works because starting at about 20 feet below the surface of the earth, the temperature is a consistent 55 degrees Fahrenheit, says Prairie Research Institute geologist Andrew Stumpf. In the shallow surface, you're pulling out 55 degree temperature. So circulate water in a pipe and you exchanges the heat into the pipe into the water and you're pulling that temperature out. Geothermal in Woodlawn is a long way out. Once the community engagement phase wraps up, Blacks and Green will be able to vie for federal

funding to actually go out and build the system. But Stump says that in a sense, the geology is the easy part. There are bigger questions when the community runs the power system. We're considering like how do people afford these systems, who would own the systems, how you actually install it. The hope isn't just to break ground on geothermal, but explore new ownership models that center equity along the way. Back at the Blacks and Green meeting, Southside resident Rosalia Groyer says energy affordability has been a big issue in this area. Prices around energy costs are skyrocketing. Utilities are skyrocketing. She says the community having ownership in the energy system would be huge. And so we can either just complain about it,

or we can educate ourselves about it and make the change that we know needs to happen. Groye says the more that people know about geothermal, the more likely they'll be on board. In Chicago, I'm Juan Pablo Ramirez Franco for Marketplace. Okay, so we talked about ice cream earlier in the show. Now to chocolate. You may have noticed that tempting candy bar in the checkout lane is a little more expensive than it used to be. That's thanks to a cocoa shortage caused in part by climate change. The thing about chocolate is people still want it, even if they have to pay more, at least so far. We checked in with Kristen Talheimer-Bingham.

She's co-owner of Dean's Sweets in Portland, Maine, and preparing for a busy Easter holiday. We are basically surrounded by bunnies right now. basically surrounded by bunnies right now. We are very much in high production mode, just making Easter chocolate pretty much as quickly as we can. It is really such a fun time of year. We are very enamored this year with this adorable bunny, a mold we got from Belgium. Did you know that in the way that a group of birds is called a flock of birds, a group of bunnies is called a fluffle of bunnies? Somehow with chocolate, that just seems so right to us. So we're working on our fluffles, lots and lots of chocolate fluffles for Easter this year. We haven't been able to build up much of an inventory for Easter, so we're making our

chocolate almost as quickly as we can sell it. It feels very just in time to me, which isn't such a bad strategy, but it does add a tiny bit of stress to our days. As far as prices go, a tiny bit of stress to our days. As far as prices go, we've had to increase them only for just a few items and only by a small percentage in the last few months. It's a matter of keeping up with costs, of course. We know down the line, we've heard that the costs of cacao and chocolate are predicted to rise. So we're watching that, we're anticipating that, and we'll have to deal with that when it happens. But for now, our prices have been quite stable for the last year. As the weather gets warmer and spring really does start here, we'll see more and more visitors to Maine, which we always love. They give us hope that spring will arrive here soon. Well,

you know, spring in Maine doesn't arrive very quickly, but the chocolate bunnies and colorful Easter eggs let us at least imagine that warmer days might arrive soon. That's Kristen Thalheimer Bingham, co-owner of Dean's Suites in Portland, Maine. Music This final note on the way out today. Yesterday, Mitchell Hartman told us about how pretty much every central bank around the world has been raising interest rates to fight inflation, with one big exception, Japan. Well, today, the Japanese central bank ended a long era of negative interest rates

by raising overnight rates for the first time since February 2007. Bank of Japan Governor Kazuo Ueda told reporters that negative rates and other measures to fight deflation have fulfilled their roles, with wages and prices gradually rising. Japan, by the way, is currently the fourth largest economy in the world. Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Miettinen, Janet Nguyen, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of digital and on-demand. And I'm Amy Scott. We'll be back tomorrow.

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