Dwarkesh Patel: belief

Transcript context

…This is the non-commodity part of the industry. The broader context on those retailers is that almost all the top US retailers have made pledges to stop selling eggs from caged hens. A lot of them were meant to do that by this year, and a lot of them have not done it. Walmart and Kroger have not followed through. What they say is, "Our consumers don't want cage-free eggs because they're way more expensive." And it's true, they're way more expensive. They're selling them for like a dollar to two dollars more per dozen. When you look at the underlying production costs, it's only 19 cents difference. What we see is these retailers are using this as an opportunity to get a big markup with less price-sensitive consumers and are in the process massively hampering their ability to fulfill their commitments. By contrast, Costco went 100% cage-free. They followed through on their promise. What we see is they are now selling cage-free eggs for the same price as Walmart sells its caged eggs. There is that competitive pressure. Once cage-free becomes the new baseline, it does become the commodity market and you do see those margins competed away. It’s the same thing in states where they've banned the sale of caged eggs. Cage-free eggs now cost the same thing as the caged eggs cost next door. You do see that competed away once it becomes a commodity. It's until it reaches that point that you're seeing these crazy margins. Interesting. If these companies are already making these commitments, in many cases following through on them, to move towards more ethical ways of procuring meat, procuring eggs, etc…. I think I learned from you that McDonald's has made these commitments or that Chipotle has made these commitments. I didn't learn from McDonald's. What is the reason that this is not a more prominent part of their own advertising, given how much consumers care and how universally popular animal welfare is? The very best companies are advertising this, like Vital Farms or NestFresh eggs. They are out front focusing on the animal welfare benefits because they're pasture-raised and it looks amazing. The fundamental problem for the large-scale companies is they have just made things less bad. It's still really good what they're doing. Moving from caged to cage-free is incredible. But there are two problems. One is, their consumers already thought they weren't using caged eggs. So if they advertise, "Hey, we're cage-free now," everyone's like, "What? What were you doing all this time? You didn't tell us you were using caged eggs." And people still might think that even the new reality is not as good as what they thought things should be. They still would rather the animals were going outside, which they're not. And in a lot of cases, there are these phase-ins over time. So McDonald's is like, “In 10 years' time, we're going to get rid of the caged eggs.” You don't want to advertise that too loudly because then people are going to be for the next 10 years, "I'm eating caged eggs, and I didn't know that previously." That is just the unfortunate dynamic. Because this dissonance is so great between current practices and reality, that merely getting rid of the worst practices is not enough to create an advertising claim.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.