Wednesday, 30 January 2013

Greece: still in the Euro

Back in May last year, when informed opinion held that Greece was about to crash out of the Euro currency zone, I confidently predicted that Greece would stay in the Euro because I was sure that the EU would move Heaven and Earth to make it so. Eight months on and the EU chattering classes have moved on from economic troubles to the UK's membership, so I thought it might be worth pointing out that:

1) Greece is still in the Euro
2) Talk of Greek exit and Euro breakup has faded
3) William Hill paid out my £30 winnings on Jan 1st, cheers!

Still, it's not all good news. The euro area is still littered with problems, in many ways the more subtle structural problems that remain are going to be harder to solve than the urgent problems that filled the newspapers last summer. How exactly are Spain and Greece going to rebuild their economies and solve their 26% unemployment rate while still in the same currency as Germany and the Netherlands? It's not obvious how. Is France's Socialist government mad enough to drive Europe's 2nd biggest economy into the mire as well? Maybe. Certainly, they're giving it a go.

The current uneasy truce can't last for ever; historically, economic crises tend to come to a head if unemployment breaches 30%-ish levels, as angry citizens demand radical action from their governments. Greece and Spain are closing in on that, and the EU member states have never shown much inclination to get ahead of the economic problems by taking pre-emptive action, so I dare say that another crisis is around the corner. But they have confirmed what I always believed: when push comes to shove, they intend to do whatever it takes to keep the show on the road. If the Euro or the EU does eventually go down, it will go down fighting and leave behind an almighty mess. 

Curiously Cinnamon

Are supermarket own brand products cheaper because they're poor quality, and less healthy? A quick bit of detective work uncovered a surprise and an interesting bit of economics.

Nestlé Curiously Cinnamons (aka Golden Grahams) are a roaring success in our house, the children basically inhale them and unless we buy them in industrial quantities they're gone in a matter of days. But this week we bought a box of Tesco Cinnamon Squares, a cheaper supermarket own brand equivalent, so I decided to compare.

Tesco's beaver takes on Nestlé's crazy squares

They are basically the same, and both are tasty. The Tesco version tastes slightly less sweet, which we marginally preferred, but it has a noticeably firmer texture which immediately set alarm bells ringing: the texture is fine, but salt is used in cereal to stop it going limp (the same reason you find it in bread). Cereal manufacturers have been under pressure to reduce salt levels and there's been much research into cutting salt without leaving a droopy product. Is Tesco selling an older, salt-laden recipe as a cheaper own-brand product? I decided to check.

Here's the nutritional info from the two boxes, showing grams per 100g (also known as "per cent by weight" for those of us with advanced statistical skills...)

              Nestlé             Tesco
Protein 5 7
Fibre 4.1 7
Carbohydrates 75.7 73
- Of which sugars 32.1 26
Fat 9.9 8
- Of which saturates 3.8 4
Salt equivalent 1.26 0.5

Jumping straight to the salt, the answer is exactly the opposite of what I expected: the Tesco version has 60% less salt than Nestlé's. Blimey, big win for Tesco. In fact, if you compare the other items you find that Tesco's product has more protein, more fibre, less sugar and less fat than Nestlé. That's a slam-dunk; not what I expected at all. A hearty cheer for Tesco and a salty boo for Nestlé!

Price comparison

We bought Curiously Cinnamon in a 565g pack ("big value pack") and Cinnamon Squares in 375g, so I've converted both into a price per Kg. Both were bought from Tesco yesterday.

Tesco Cinnamon Squares: £3.79 per kg
Nestlé Curiously Cinnamon: £6.00 per kg

So Nestlé are looking for a ~60% price premium for a nutritionally inferior product. When companies talk about the value of a brand, this is what they mean - they can charge a significantly higher price for a product that's no better, it may even be inferior, and people will happily pay it because they assume premium brand = premium product. Only geeks like me read the tiny numbers on the side of the packet and compare them between products to decide which is actually better.

Box Comparison

There is a final point which also goes in Tesco's favour.

The back of the Nestlé box features two enormous adverts for other Nestlé products: their Curiously Cinnamon cereal bar, and Curiously Strawberry cereal.

On the back of the beaver-themed Tesco box there are 3 beaver jokes, a Fix The Dam shape puzzle, 4 anagrams to solve, 2 beaver facts and a recipe for a marshmallow and Cinnamon Square fridge cake called Chewy Squares.

Nestlé on left, Tesco on right

It's not a decisive point, but it's a bonus to have something interesting and vaguely educational for children to look at rather than a massive advert, and compiling these things takes time and effort which all has to go into the production cost. Yet it's the cheaper own brand product which shows more care and attention, and a less nakedly commercial outlook.

I think this might be the last box of Curiously Cinnamons we buy.


Just to make it clear, I've no interest in Nestlé or Tesco,  and I don't know anyone who works for either company. I'm just describing what I saw on my breakfast table this morning.