McDonald’s In Sticky Situation With Vt. Over ‘Maple’ Oatmeal Dispute

McDonald’s (NYSE: MCD) is the undisputed king of fast-food breakfast, with almost a quarter of the company’s revenue generated during the early hours before its typical Big Mac and McNugget menu is in full swing for lunch. Thanks to a steady stable of old favorites like the Egg McMuffin and recent innovations like McCafe premium coffees, consumers see the Golden Arches as a breakfast joint almost as much as a burger joint.

In order to maintain its dominance, McDonald’s continues to a steady line of promotions and new products rolling out. One of its most recent items, Fruit and Maple Oatmeal, saw big success in regional markets and is going national this month.

Unfortunately, the king of fast food breakfast didn’t count on the oatmeal outcry it would cause with the launch – all stemming from the item’s seemingly innocuous name.

The Vermont Agency of Agriculture has taken aim at the “maple” in McDonald’s new Fruit and Maple Oatmeal. In fact, in the words of a former Vermont agriculture official, MCD is in clear violation of what he calls “maple laws.”

“Our maple laws say if it’s a natural maple product it has to have maple syrup. And it has to show that it has maple syrup and they haven’t done that yet,” former Vt. Agriculture Secretary Roger Allbee said in an interview with a Vermont broadcaster WCAX.

In short, the McDonald’s oatmeal is flavored with “natural maple flavoring” according to the MCD corporate site

. That doesn’t fly with Vermont, which honors the sugar maple as its state tree.

But MCD investors and oatmeal-loving consumers shouldn’t fret. Vermont isn’t demanding McDonald’s scrap the menu item or that it pay a hefty fine. All that the Green Mountain State wants is to see real maple syrup – obviously from Vermont farms — to their product.

So will the Golden Arches Cave? Maybe not. McDonald’s told WCAX that “natural maple flavor” meets the standard under current Food and Drug Administration regulations. And most recently, privately held Pinnacle Foods — owned by the Blackstone Group (BX) – was criticized by Vermont for its Log Cabin syrup brand that claimed it was “all natural” despite only containing 4% real maple syrup. Outraged officials protested, but all they got was a slight change to remove small amounts of Xanthan gum and citric acid from the mix, while keeping its original marketing and packaging.

Maybe MCD will do the right thing and use real syrup. But considering that profits are driving the national rollout of this product, it’s probably most likely McDonald’s isn’t going to budge.

Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, https://investorplace.com/2011/01/mcdonalds-mcd-maple-syrup-oatmeal-vermont/.

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