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August 5, 1999

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Subject:

Re: scratch N dent groceries

Author: v1nc1tr1x

[The following reply refers to this post].

The grocery "gray market" is alive and well, and according to some food industry executives, is growing at a worrisome pace. Why worrisome? Several reasons.

First, some of the 'salvage' was diverted to gray markets, when it was contractually supposed to be either donated (to soup kitchens, etc.) or destroyed. So - if this matters to you - you're helping to line the pockets of people who think nothing of breaking their contracts (and who, by the way, often recoup their original inventory costs for these 'unsaleables' from the manufacturer, under the contracts, and then sell the stuff 'out the back door').

Second, although some of the products are in wholesome condition (which is why it would be ok to donate them to food pantries), they may not be at full flavor or freshness. 'Code' dates usually mean that product is reaching the point where flavor, texture, or other hedonic attributes could be impaired. Manufacturers don't want this product to be sold, because it isn't likely to make a good impression on someone who might be a long-term customer.

Third, some products found in gray markets will not be wholesome -- and sometimes you won't be able to tell what is good. For example, salvage is often shipped higgledy-piggledy -- with the broken-box cereal next to the slightly-leaky laundry detergent bottle. Fumes may alter the taste of products or even make them unfit for human consumption. Cross-contamination by insects can occur. The markets themselves may have inadequate standards for cleanliness, augmenting any problems which arose during shipping. But even if the market is spotless, you don't know whether the dented can spent time in a filthy truck and was wiped off with a damp rag on arrival. Manufacturers are understandably concerned that they could be found liable for harm caused by a product which they manufactured, but which left their control in fine shape, and was supposed to have been destroyed.

Fourth, some 'out of code' items (e.g., dairy products in some states, pharmaceuticals) cannot legally be sold at all. You may take issue with overzealous regulators, but the science of food safety is fairly well understood these days, and code dates are seldom substantially ahead of the time when a product is no longer wholesome. Why patronize businesses that take a cavalier attitude toward breaking the law?

Fifth, and perhaps this is the most important point: YOU GET WHAT YOU PAY FOR. These days, you can buy slightly dented cans and slit boxes off the shelves at your regular retailer, too. These items may well be marked down -- even if not as cheap as in the gray markets. If the damage is immaterial and won't affect taste, retailers would prefer to sell it to a regular customer for some substantial fraction of the normal price instead of to a gray marketeer for a small fraction of the normal price. So the stuff you're likely to see in a gray market has a much higher risk of being worthless. Maybe you're a discerning individual and are willing to take that risk -- as long as you don't consume something which makes you sick, the worst thing that will happen is you've wasted money and time for anything you prepare and then discard. But how much money and time can you afford to waste?

The economists in the audience can take issue with me if they like, but my understanding is that the real cost of food has been declining for years. We may spend more raw dollars (maybe even inflation-adjusted) than in the past, but we also eat more prepared and convenience foods, and we eat out far more often. A smarter, and healthier, strategy for saving money on food would be to cut down on the salt-, sugar- and fat-loaded prepared foods, eat out less, and prepare simple, balanced, healthy meals at home. This requires some investment of time, but it's an investment in yourself -- so perhaps you'll live longer to reap the rewards of your Foolish investing!