Peanut spreads ~ Brand Mix

Thursday, February 12, 2009

Peanut spreads

Photo: Flickr

According to NPR, Peanut Corporation of America, the company that made the salmonella-tainted peanut products that have sickened at least 575 people, only accounts for 1% of the market. But because many companies source ingredients from multiple manufacturers, 1,790 different products have had to be recalled and the list keeps growing.

Although manufacturers like J.M. Smucker and ConAgra have tried to reassure consumers of the safety of their own products, they have been swept up in the crisis as well, reporting sales down around 25%.

It occurred to me that these peanut problems have a certain similarity to the problems in financial services. They are both about spreading. Source spreading in the case of the peanut industry (for purchasing power and efficiency) and risk spreading in the case of securitization in financial services. In both cases, the potential costs were not given enough consideration vs. the more obvious benefits.

By the way, if you need to get really mad at someone today, this guy seems to be worthy of consideration.

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