Technology Leads to More Cooking – and Even More Sports
Nick is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“Whether it’s the restaurant or the supermarket or the kitchen supply shop, it’s hard to think of sector that is more commercialized and more replete with entrepreneurship and innovation. It is all monetized. … Quality customers are often more important to a restaurant than a quality chef.”
Professor Tyler Cowen’s recent book, An Economist Gets Lunch, is his latest success at illustrating “markets in everything” – and like his wildly popular blog, Marginal Revolution, the engaging read’s ideas and insights are also directly applicable to making discerning choices in stocks, partnerships, and other investments.
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Slepko: Motley Fool Advisor Jeff Fischer has noted that Tupperware (NYSE: TUP) is “a stealth emerging market story with 66% of its revenue originating from overseas (growing 11% last quarter).” In your book you write a lot about your fondness for cooking and your choice of gadgets and other equipment – in particular your four woks and four grinders. (Fischer’s pick is the apple peeler.) Regarding Tupperware, why do you think their parties would be so successful overseas?
Cowen: Companies like Tupperware do well because they understand how to tap into local social network effects. Part of the product is building and extending the social network. That can be hard to do locally – and you see a lot of religions doing it. Mormons, for instance, have been very successful in a lot of very different countries…In America, quality will be a major factor in American kitchen products. People will be spending more on food, and home cooking is not a dying art – absolutely not. People love it. It’s fun. Think about it: With more and more jobs, half your time you are on the Internet, for better or worse. So, you are at home, you want to do something else. What’s better than the Internet? I say cooking. I think a golden age of cooking is coming up…You’re standing, you’re free ranging, you’re creating something with your hands. It creates a balance.
Slepko: You’ve mentioned your favorite cook book series is the Spanish-language 50-some volume Indigenous and Popular Cuisine, but last year, former Microsoft Chief Technologist Nathan Myhrvold published, Modernist Cuisine, a five volume, 52-pound “scientific” cookbook that supposedly is, “The cookbook to end all cookbooks.” Now whether he means he’ll sue anyone that tries to publish another cookbook or not, I’m unsure, but have you had a chance to review any of the volumes?
Cowen: Those volumes are hilarious, it is like a big work of Dada art. That and patent trolling were his two things from last year. He’s a brilliant guy, but it’s more something to admired rather than used. I would buy them, but they cost too much money [$625 retail]. I figure, look I’m not going to do this stuff, I’d rather just spend my time perfecting a hamburger with cheddar cheese on top…Maybe someone will send me a review copy.
Cookbooks are in a way obsolete. They are like mementos. The best cookbooks now are ones like Fuchsia Dunlop’s, which you treat just like regular books.
Slepko: Despite the increasingly awful management decisions that seemed to have picked up speed since her release from prison (such as the addition of her personal hair dresser on the board and its compensation committee), Martha Stewart Living Omnimedia (NYSE: MSO) appears to be a harbinger of things to come. Do you believe activities like Omnimedia’s acquisition of the Emeril Lagasse empire in 2008 for $50 million will be more common in the coming years? Is designer/branded food something we can expect more of in the future, or have the cooking shows and channels run their course?
Cowen: I think cooking shows are here to stay, and branded food will just get better and better as we master logistics. In the further future, you can look to robots and artificial intelligence doing much more of it.
Slepko: Are you comparing Martha Stewart to AI and robots? Isn’t she sort of the Anti-Cowen?
Cowen: Well, the robot will be better…I once heard her speak and her total command of the material and grasp of the practical and conceptual ideas behind the questions she was asked was impressive. I was also extremely impressed at how smart, articulate, and analytical she thinks. I left with the impression that she was truly an astute businessperson. Even to do any version of what [Martha Stewart’s] done requires substantial talent. And I think she was sent to jail totally unjustly – so I’m actually a Martha Stewart fan and while she doesn’t do what I do, I don’t think of her as the Anti-Cowen. I think she’s great.
Slepko: What about the Food Network and Cooking Channel [both majority owned by Scripps Networks Interactive (NYSE: SNI)]? It seems that food has more universal interest than sports. What are the chances a food channel will rival ESPN [majority owned by Disney (NYSE: DIS)] and it’s almost $9 billion in revenue (and a valuation likely in the tens of billions)?
Cowen: Never ever. Sports is the big winner in modern culture. You can’t really time shift it. You have to watch it when it’s happening. The live version of it is robust, and it is immune to rip offs in the IP/piracy sense. Plus, it’s exciting and it’s something that if you sat all day in front of the Internet you might then go out and watch or play. I think some of the problems sports has as a business is that new sports are hard to market. People’s attentions are crowded. I think existing sports will do great though.
Slepko: In your book you examine the business of popcorn and other cross-subsidies and why theaters like Regal Entertainment (NYSE: RGC) have developed as they have. In particular, you noted how alternative/art house theaters are more likely to focus on the quality of their food as their clientèle is largely adults, not children and it is one way to differentiate the experience they offer. What do you see as the future of movie theater cuisine? Will it get as upscale as the baseball stadiums where places like Seattle offer yakisoba in addition to the traditional chocolate frosties?
Cowen: Increasingly, it will go upscale and in any case offer more choice when it comes to the level of quality. Why shouldn’t they?
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Nick Slepko (hukgon) has no position in any company mentioned here at the time of publication. The Motley Fool owns shares of Walt Disney and Tupperware Brands. Motley Fool newsletter services recommend Walt Disney, Martha Stewart Living, and Scripps Networks Interactive. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.