Monday, January 7, 2008

Louis J Sheehan Esquire 30025

Doctoral student Catherine Powers traveled to fossil sites around the world, including this one in Greece, to study ancient bryozoan marine communities.

The greatest mass extinction in Earth’s history also may have been one of the slowest, according to a study that casts further doubt on the extinction-by-meteor theory.

Creeping environmental stress fueled by volcanic eruptions and global warming was the likely cause of the Great Dying 250 million years ago, said USC doctoral student Catherine Powers.

Writing in the November issue of the journal Geology, Powers and her adviser David Bottjer, professor of earth sciences at USC College, describe a slow decline in the diversity of some common marine organisms.

The decline began millions of years before the disappearance of 90 percent of Earth’s species at the end of the Permian era, Powers shows in her study.

More damaging to the meteor theory, the study finds that organisms in the deep ocean started dying first, followed by those on ocean shelves and reefs, and finally those living near shore.

“Something has to be coming from the deep ocean,” Powers said. “Something has to be coming up the water column and killing these organisms.”

That something probably was hydrogen sulfide, according to Powers, who cited studies from the University of Washington, Pennsylvania State University, the University of Arizona and the Bottjer laboratory at USC.

Those studies, combined with the new data from Powers and Bottjer, support a model that attributes the extinction to enormous volcanic eruptions that released carbon dioxide and methane, triggering rapid global warming.

The warmer ocean water would have lost some of its ability to retain oxygen, allowing water rich in hydrogen sulfide to well up from the deep (the gas comes from anaerobic bacteria at the bottom of the ocean).

If large amounts of hydrogen sulfide escaped into the atmosphere, the gas would have killed most forms of life and also damaged the ozone shield, increasing the level of harmful ultraviolet radiation reaching the planet’s surface.

Powers and others believe that the same deadly sequence repeated itself for another major extinction 200 million years ago, at the end of the Triassic era.

“There are very few people that hang on to the idea that it was a meteorite impact,” she said. Even if an impact did occur, she added, it could not have been the primary cause of an extinction already in progress.

In her study, Powers analyzed the distribution and diversity of bryozoans, a family of marine invertebrates.

Based on the types of rocks in which the fossils were found, Powers was able to classify the organisms according to age and approximate depth of their habitat.

She found that bryozoan diversity in the deep ocean started to decrease about 270 million years ago and fell sharply in the 10 million years before the mass extinction that marked the end of the Permian era.

But diversity at middle depths and near shore fell off later and gradually, with shoreline bryozoans being affected last, Powers said.

She observed the same pattern before the end-Triassic extinction, 50 million years after the end-Permian.

Powers’ work was funded by the Geological Society of America, the Paleontological Society, the American Museum of Natural History and the Yale Peabody Museum, and supplemented by a grant from USC’s Women in Science and Engineering program.

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
—George Bernard Shaw, Man and Superman

"The Democratic Party was looking for a scapegoat, and I think effectively tried to paint, and did paint, Ralph Nader as the reason why they were not in office, not the fact that ten million more Democrats voted for George Bush than voted for Ralph Nader."

In 1966, General Motors, then the most powerful corporation in the world, sent private investigators to dig up dirt on an obscure 32-year-old public interest lawyer named Ralph Nader. The reason: Nader had written a book that criticized the Corvair, a General Motors car. But the company’s attempt to discredit Nader and sully his character backfired. The scandal that ensued after the smear campaign was revealed launched Nader into national prominence and established him as the leader of the modern American consumer movement. AN UNREASONABLE MAN traces the life and career of this unique and controversial political figure.

Over the next 30 years, Nader built a legislative record that rivals that of any contemporary president—without ever holding public office. Following the General Motors incident, he took on the Federal Trade Commission, which he felt was shirking its duty to protect consumers against fraud and other harmful business practices. To carry out his extensive campaigns, Nader tapped into the power of young people and recruited students from across the United States. In the 1960s, many young recruits flocked to Washington, attracted by the prospect of changing the system. Known as Nader’s Raiders, this army of activists published a series of book-length reports on issues ranging from workplace safety to air quality.

Many things today’s consumers take for granted—seat belts, airbags, product labeling, free airline tickets after being bumped from an overbooked flight—are largely due to the efforts of Ralph Nader and his citizen groups. But did his foray into presidential politics harm his legacy? When most people hear his name, they think of the political “spoiler” who cost the Democrats the 2000 presidential election. While Nader has become a pariah even among his former friends and allies, AN UNREASONABLE MAN illustrates how he continues to be one of the most trusted activists in America, crusading on behalf of consumer rights.

“We’re living on borrowed time.” – Klaus Stohr (World Health Organization)


The H5N1-Bird Flu virus was first found on a farm in Guangdon Province, China in 1996. The first documented outbreak of human infection with H5N1-Bird Flu occurred in Hong Kong in 1997. These 18 human cases in Hong Kong occurred simultaneously with a pathogenic avian influenza in poultry farms and markets which was caused by a virtually identical virus. Studies concluded that direct contact with diseased poultry was the source of human infection.

For reasons – if any – unknown, most H5N1-Bird flu cases have occurred in healthy children and young adults.

A difficulty in discussing H5N1-Bird Flu is that the concern really relates to a current strain evolving into a form which passes easily between humans. Because such strain or strains are not yet known to exist (dare I say “not reported in the press?”), this discussion often contains degrees of equivocation. Any such evolved strain(s) might also contain changes causing any such infection(s) to produce very mild signs and symptoms in humans. On the other hand, any such evolved virus(es) might cause proportionately more deaths and suffering than did the calamitous avian flu strain which caused what is commonly referred to as the 1918 Pandemic or as the Spanish Flu.

I had a little bird
Its name was Enza
I opened the window
And in flew Enza

The 1918 Pandemic was an avian influenza that was easily transmitted between humans.

Most of the 1918 Pandemic victims succumbed to pneumonia caused by opportunistic bacteria that infected those already weakened by the flu (antibiotics had not yet been discovered).

However, an appreciable minority of the 1918 victims died within days of onset from a more severe pneumonia caused by the virus itself that triggered massive hemorrhaging in their lungs or filled their lungs with fluid thus leading to death by suffocation/drowning; they drowned in their own fluids. These victims often developed a bluish skin color with variations of (i) blood pouring from their noses, (ii) ears, (iii) mouths and (iv) eye sockets, all with agony and some with delirium.

More, most 1918 Pandemic deaths (bacterial-pneumatic and drowning) occurred among younger adults between the ages of 15 and 35; people younger than 65 constituted 99% of all “excess” (those above normal) flu deaths in 1918-1919.


The cause of H5N1-Bird Flu is viral infection. Typically, influenza moves via airborne droplets which are inhaled into the victims’ respiratory tracts. However, the infection process of H5N1-Bird Flu is thought to be via both direct contact with (i) infected poultry, and/or (ii) surfaces and objects contaminated by their feces.

Flu comes in three main forms, designated A, B, and C. Types B and C affect only humans and have never caused pandemics.

In contrast, type A flu viruses are found in many types of animals including humans, swine, horses, other mammals, and poultry. Ducks – and aquatic birds – typically serve as the natural reservoir for all known subtypes of influenza A; i.e., the virus typically infects the birds’ guts without causing symptoms. Within the ducks’ guts the viruses can mutate and/or exchange genetic material with other viral strains some of which are capable of passing to humans. Note, however, that this paper’s particular H5N1-Bird Flu kills birds. It spreads very rapidly through poultry flocks where it damages multiple internal organs. Within 48 hours, the poultry mortality rate can approach 100%.

Type A viruses are categorized into two groups based upon distinct proteins on their surfaces which, in turn, cause the hosts to produce different types of antibodies: types HA and NA. Hemagglutinin (HA) has at least 15 known variants and neuraminidase (NA) has 9 subtypes. The HA molecule initiates infection by binding to receptors on the

surfaces of host cells which, in mammals, tend to be cells in the respiratory lining. The NA protein enables the newly produced viruses to escape the hosts’ cells thus allowing them to potentially infect other hosts’ cells.

Signs and Symptoms

Symptoms of avian influenza in humans range from fever, cough, sore throat, muscle aches, eye infections, pneumonia, and severe respiratory diseases.

Unlike the typically mild respiratory symptoms experienced by most people infected with seasonal influenza, H5N1-Bird Flu is aggressive, causing rapid deterioration resulting in high death rates in humans; viral pneumonia and multi-organ failure have been common among people infected by H5N1-Bird Flu.

Diagnostic Procedures

H5N1-Bird Flu is diagnosed by recognizing symptoms followed by either or both examination of respiratory secretions and blood/serology examination.


Data is limited, but Tamiflu and Relenza are thought to reduce the severity and duration of illness caused by H5N1-Bird Flu especially if administered within 48 hours. However, the recent strain of H5N1-Bird Flu isolated in Egypt in March of 2006 was resistant to Tamiflu as was an earlier outbreak in Vietnam in 2005.
Amantadine and Rimantadine can be used to treat H5N1-Bird Flu, but resistance to these drugs seems to develop rapidly; some NON-H5N1-Bird Flu strains are already fully resistant.

Tamiflu and Relenza are expensive to produce and production capacity is limited. Current capacity, which has recently quadrupled, will produce enough Tamiflu to treat 20% of the world’s population in 10 years.


As of 4/2/07 there have been 280 reported cases (to emphasize the obvious, the number of non-reported cases is unknown) of H5N1-Bird Flu with 170 of those cases resulting in death. Thus, the death rate overall has been 59%. In contrast, the terrible 1918 Pandemic had a 2% to 5% death rate yet killed 50 to 100 million people worldwide. The death rate of the 1918 Pandemic was up to 50 times the death rates produced by other generic influenza outbreaks.


At present, H5N1-Bird Flu does not easily cross from birds to infect humans.

Although potential vaccines for the H5N1-Bird Flu virus are being researched in several countries, no vaccine is in commercial production. Because any vaccine needs to closely match the pandemic virus, large-scale commercial production probably would not start until any new virus has emerged. Current global production capacity falls far short of the demand expected during a pandemic.

In February 2007, the American Food and Drug Administration (FDA) announced that an H5N1-Bird Flu vaccine developed by Sanofi-Aventis appears to be safe. However, it is unclear how effective the vaccine might be given the particular mutations the virus-of-the-future might contain. The FDA announced that the highest doses tested – two 90-microgram doses given one month apart – produced superior results given the testing assumptions than did the use of lower doses; 46% of the 452 people tested with the highest doses produced sufficient antibodies such that it is thought enough protection against H5N1-Bird Flu might be produced.
All evidence to date indicates that close contact with dead or sick birds or their feces is the primary source of human infection with H5N1-Bird Flu. This would suggest that, theoretically and at a minimum, avoidance of dead and sick birds and their feces is one avenue of prevention. However, a reasonable source of infection has not been identified in a few cases which may mean there are additional sources of infection. Curiously, few cases have been reported involving poultry workers, and cullers.

Why The Topic Was Chosen and What Was Learned

Foreknowledge is valuable in the event of an H5N1-Bird Flu Pandemic. Further, I have not previously been required to read about/research relevant and interesting (and powerful) viral maladies specifically and pandemics generally.

Most amazing was the tremendous variability of outcomes produced by viral mutations/evolution and, thus, the difficulty of planning ahead to combat same; a novice such as myself might also express it another way by saying the instability of viral effects over various periods of time is profound.

Aberich Duerer, the Apocalypse

John M. Barry, The Great Influenza (2005)
Alfred W. Crosby, America’s Forgotten Pandemic (2003)
Mike Davis, The Monster at Our Door (2005)
Marc Siegel, M.D., Bird Flu (2006)


New York Times, New Strain of Bird Flu Found in Egypt is Resistant to Antiviral Drugs (January 18, 2007)
New York Times, Scientists Warn That Bird-flu Virus Remains a Threat (February 15, 2007)
Wall Street Journal, FDA Says Bird-Flu Vaccine Seems Safe; Efficacy Unclear (February 27, 2007)


Scientific American, Capturing a Killer Flu Virus (January 2005)
Scientific American, Preparing for a Pandemic (November 2005)


White House News Releases, November 1, 2005.
World Health Organization, Epidemic and Pandemic Alert and Response (EPR), Avian Influenza (various internal links were accessed)


PBS American Experience, Influenza 1918 (1998)
A&E/History Channel, The Next Plague (2005)

John Edwards has been bashing big health insurers in recent days with the story of a girl who died waiting for a liver transplant. But the details of the case suggest the Democratic presidential candidate may be oversimplifying the tale.

Nataline Sarkisyan had been battling leukemia for three years. Insurer Cigna Corp. rejected coverage for a liver transplant, then reversed its decision and said it would pay. The 17-year-old died before the operation could take place.

By pushing the case so hard on the campaign trail, Mr. Edwards is raising the emotional tone of the debate on health care, which has already emerged as perhaps the leading domestic issue in the campaign. Mr. Edwards and Sen. Hillary Clinton are among the Democratic candidates attacking health insurers.

"We need a president who will take these people on," Mr. Edwards said at the Democratic presidential debate Saturday night. He said Nataline "lost her life a couple of weeks ago because her insurance company would not pay for a liver-transplant operation."

In New Hampshire yesterday, the candidate's wife, Elizabeth Edwards, put her arm around the girl's mother, Hilda, before Mrs. Sarkisyan spoke at a campaign rally.

Cigna defended its handling of the case. "I'm perplexed that this has become a campaign issue," said Jeffrey Kang, Cigna's chief medical officer. "It is highly unlikely that any health-care insurance system, nationally or internationally, would have covered this procedure."

Insurers are highly unpopular with many doctors, who complain about insurance-company bureaucracy, and with patients who don't like having medical claims denied. Left-leaning critics of the U.S. health-care system say it isn't appropriate for some insurers to be making billions of dollars in profit while tens of millions of Americans go without insurance. They would prefer the "single payer" type of system in many European nations, where the government takes the leading role in paying for care.

While none of the leading Democratic candidates go that far, they have railed against insurers' cherry-picking when they decide who is eligible for a policy. People who are sick or have pre-existing conditions find it's hard or impossible to buy coverage on their own, something the leading Democratic candidates for president all vow to change.

Mr. Edwards, a former trial lawyer and North Carolina senator, wants to offer a government-run public plan, like Medicare, that would be open to all Americans. This could be a step toward the single-payer plan that many liberals want, and Mr. Edwards has said that it's a good opportunity to test that idea's popularity. He also wants to cap insurance-company profits.

The candidates have differed over what role insurance companies should have as health-care change is hammered out. Mr. Edwards takes a harsher tone, saying they can't be negotiated with, while Illinois Sen. Barack Obama says insurance companies deserve a seat at the table.

Nataline's case could provide fuel to both sides of the argument about whether insurance companies generally do a good job covering Americans. The day before Thanksgiving, she received a bone-marrow transplant from her brother. Soon after, her liver failed, and she went into a coma. Her doctors at the medical center of the University of California, Los Angeles, recommended a liver transplant, saying that patients in such situations would have a 65% chance of living another six months.

Cigna said both its own medical experts as well as an outside transplant surgeon and a cancer doctor with transplant expertise concluded there wasn't enough evidence that the procedure would be safe or effective. But after the denial got press coverage, the company reversed the decision on Dec. 20 "out of empathy for the family." Nataline died later the same day.

A UCLA spokeswoman declined to comment yesterday on Nataline's treatment, saying her family hasn't given the university permission to discuss the case.

Cigna said it wouldn't have benefited financially from denying the transplant because it only administered the health plan of Nataline's father's employer. In reversing the decision, it said it would pay for the transplant itself.

"We are asked to make the right clinical decision by our employer customers, so it would have been unfair to make them pay for it," said Dr. Kang, Cigna's chief medical officer.

Richard Freeman, a professor of surgery at Tufts University School of Medicine who wasn't involved in the case, said such cases happen too rarely to provide statistically validated medical evidence about the benefit, if any, of a transplant.

Rather, it "boils down to a philosophical argument," he said. Some doctors want to pursue aggressive treatment of a patient who appears to be dying, believing it's worth improving the chances, however slim, and fostering medical innovation. Others say the trauma and pain of an invasive procedure such as a transplant are likely to outweigh any medical benefit and the financial costs.

John Ford, an associate professor at UCLA who wasn't involved in Nataline's case, questioned in a recent post on his blog whether the survival data for a transplant were clear-cut. "It seems highly unlikely that such data, if it exists at all, has any degree of reliability," he wrote.

Nonetheless, the case has found a natural fit with Mr. Edwards's pitch. The candidate is an experienced practitioner in the modern political art of putting an ordinary person's face on policy prescriptions. At yesterday's rally in New Hampshire, Mr. Edwards turned the microphone over to the family of Nataline. Her father, mother and brother emotionally spoke of her death and their anger at Cigna.

Her father, Grigor Sarkisyan, spoke in raw terms about his loss before a packed crowd of more than 500 people at the Franco-American Center in Manchester, N.H. He said he had promised to buy his daughter a white car when she got her driver's license. "After she passed away, I bought a coffin for her because Cigna -- they killed my daughter. I don't have a daughter any more."

He added that he didn't think he'd have to worry about this sort of issue because his family had health insurance. "That's not right -- not in America," he said, echoing Mr. Edwards' stump speech. "This is not right. Maybe someplace else, but not in America."

The Edwards campaign says the candidate had been talking about Nataline's story for weeks when, on the night of the Iowa caucuses last Thursday, the family heard him mention their daughter on television. They contacted the Armenian National Committee of America, which in turn called the campaign's headquarters.

Karen Ignani, president of America's Health Insurance Plans, the main industry lobby group, said it's addressing the desire for health-care change by making its own proposals for universal coverage. Last month, it offered a proposal for guaranteeing access to individual health insurance to anyone who applies. The industry has long opposed that idea in practice.

The group also plans to work with medical societies on how to finance or cover experimental treatments. "We're not taking a P.R. approach to this but a policy approach," she said. "People want us to solve the problem, not just discuss it."

Still, Robert Laszewski, a health-care consultant in Washington, said the industry often muffs its public-relations strategy. Cigna's delay in reversing its decision on Nataline's transplant "shows just how tone-deaf" the industry is, he said.

Health insurers have also been fighting a legal battle in California over their right to rescind the policies of members who make misstatements on their applications. Critics say the insurers sometimes use small errors as an excuse to withdraw coverage. "They don't get the critical nature of the debate," said Mr. Laszewski.

Mrs. William P. Orr was riding in a car on Fifth Avenue in New York City in 1904 when she lit up a cigarette. A policeman on a bicycle ordered her to put it out. "You can't do that on Fifth Avenue while I'm patrolling here," he told her.

Until the late 1920s, a woman who smoked in public was not only considered vulgar, she risked a warning from the police. In 1922, a New York alderman, Peter McGuinness, proposed a city ordinance that would prohibit women from smoking in hotels, restaurants or other public places.

"Young fellows go into our restaurants to find women folks sucking cigarettes," the alderman argued. "What happens? The young fellows lose all respect for the women, and the next thing you know the young fellows, vampired by these smoking women, desert their homes, their wives and children, rob their employers and even commit murder so that they can get money to lavish on these smoking women."

A Washington Post editorial in 1914 declared, "A man may take out a woman who smokes for a good time, but he won't marry her, and if he does, he won't stay married."

There had been famous high-profile female smokers, of course. In the late 18th century, Rachel Jackson, wife of the seventh president, sometimes handed her pipe to a dinner guest, saying, "Honey, won't you take a smoke?" In the mid-19th century, the French novelist George Sand openly smoked cigars. But before the 1930s, most women smoked only in the privacy of their own homes.

"To smoke in public is always bad taste in a woman," Alexandre Duval, a Parisian restaurateur, said in 1921: "In private she may be pardoned if she does it with sufficient elegance."

World War I drew many women out of their homes to jobs where their co-workers smoked. Americans who traveled abroad, or who entertained foreign guests, saw aristocratic women smoking, often with elegant holders, at dinner parties. The suffrage movement, culminating in the 19th Amendment in 1920, drew attention to other gender inequalities. Smoking became a visible symbol of defiance and feminism.

Working women in New York in the 1920s would sometimes jump into a cab at lunchtime for a private smoke. Upper-class female smokers in Charleston, S.C., at around the same time ordered their cigarettes by mail so the local tobacconist wouldn't know their dirty secret.

But the old ways died hard. In 1920, Hugh S. Cumming, surgeon general of the U.S., warned that "the cigarette habit indulged by women tends to cause nervousness and insomnia and ruins the complexion. This is one of the most evil influences in American life today."

The manager of a Manhattan hotel told a New York Times reporter, "I hate to see women smoking. Apart from the moral reason, they really don't know how to smoke. One woman smoking one cigarette at a dinner table will stir up more smoke than a whole tableful of men smoking cigars. They don't seem to know what to do with the smoke. Neither do they know how to hold their cigarettes properly. They make a mess of the whole performance."

Several women's colleges banned smoking. At Smith College, students seen smoking, even off campus, received a demerit. Three demerits meant expulsion. Bryn Mawr students were prohibited from smoking within 25 miles of the college except in private homes.

In 1921, U.S. Rep. Paul Johnson of Mississippi proposed a bill to make it illegal for "female persons" to smoke in "any public place where two or more persons are gathered together" in the capital. "Regulating smoking by women comes under police power and, as is well known, police powers are practically without limit," he said. (The bill never came to a vote.)

In 1928, the executive board of the Cleveland Boy Scouts recommended that scouts use their influence to discourage women from smoking, saying it "coarsens" women and "detracts from the ideal of fine motherhood." Sioux Falls, S.D., barred billboards picturing women smoking, and Lynn, Mass., banned the showing of films in which women smoked.

Capitalism came to the rescue. Philip Morris brought out a cigarette for women with the slogan "Mild as May." The American Tobacco Co. suggested smoking could make you thin, proclaiming "You can't hide fat, clumsy ankles. When tempted to overindulge, reach for a Lucky."

Finally, a public-relations genius, Edward Bernays, dreamed up a campaign that echoed across the country. He persuaded a dozen debutantes to light up cigarettes while marching in the Easter Parade on Fifth Avenue in 1929. The attractive young women called their cigarettes "torches of freedom."

According to a U.S. government estimate, the number of women between 18 and 20 years old who began smoking cigarettes tripled between 1911 and 1925 and more than tripled again by 1939.

Some men who disapproved of women smoking thought it might be the lesser of two evils. "If it were a question between their smoking and their voting, and they would promise to stay at home and smoke," Sen. Joseph Bailey of Texas said in 1918, "I would say let them smoke."
Louis J Sheehan
Louis J Sheehan, Esquire

January 6. A patent lawyer named Dickerson prepared and published what he calls a plea or argument in a case before the court in Washington that is a tissue of the vilest misrepresentations and fabrications that could well be gathered together, if I may judge from such parts as I have seen. I do not see the New York Herald, in which it was published and paid for. The great object appears to have been a reckless assault on Isherwood, Engineer-in-Chief, but the Department is also in every way assailed. Of course the partisan press in opposition take up and indorse as truth these attacks, and vicious men in Congress of the opposition and equally vicious persons of the Administration side adopt and reëcho these slanders. It is pitiable to witness this morbid love of slander and defamation. That there may have been errors I cannot doubt, but not in the matter charged by Dickerson.

I think Isherwood has exerted himself to discharge his duty, and serve the government and country. His errors and faults — for he cannot be exempt — I shall be glad to have detected and corrected, but the abuse bestowed is wholly unjustifiable and inexcusable. As he is connected with the Navy Department, any accusation against him, or any one connected with the Department, furnishes the factious, like J. P. Hale, an opportunity to vent their spite and malignity by giving it all the importance and notoriety they can impart. I hear of Hale and H. Winter Davis and one or two others cavilling and exerting themselves to bear down upon the Engineer-in-Chief. There is an evident wish that he should be considered and treated as a rogue and a dishonest man, unless he can prove himself otherwise. Truth is not wanted, unless it is against him and the Department.

McDonald's is setting out to poach Starbucks customers with the biggest addition to its menu in 30 years. Starting this year, the company's nearly 14,000 U.S. locations will install coffee bars with "baristas" serving cappuccinos, lattes, mochas and the Frappe, similar to Starbucks' ice-blended Frappuccino.

Internal documents from 2007 say the program, which also will add smoothies and bottled beverages, will add $1 billion to McDonald's annual sales of $21.6 billion.

The confrontation between Starbucks Corp. and McDonald's Corp. once seemed improbable. Hailing from very different corners of the restaurant world, the two chains have gradually encroached on each other's turf. McDonald's upgraded its drip coffee and its interiors, while Starbucks added drive-through windows and hot breakfast sandwiches.

The growing overlap between the chains shows how convenience has become the dominant force shaping the food-service industry. Consumers who are unwilling to cross the street to get coffee or make a left turn to grab lunch have pushed all food purveyors to adapt the strategies of fast-food chains.

It also shows how the chains' efforts to adapt to a changing market have had drastically different results on their bottom lines. McDonald's is entering the sixth year of a successful turnaround, while Starbucks has begun struggling after years of strong earnings and stock growth.
Louis J Sheehan Esquire

Still, the new coffee program is a risky bet for McDonald's. It could slow down operations and alienate customers who come to McDonald's for cheap, simple fare rather than theatrics. Franchisees say that many of their customers don't know what a latte is.

The program attempts to replicate the Starbucks experience in many ways -- starting with borrowing the barista moniker. Espresso machines will be displayed at the front counters, a big shift for a company that has always hidden its food assembly from customers. McDonald's says it wants customers to see the coffee beans being ground and baristas topping the mochas and Frappes with whipped cream.

"You create a little bit more of a theater there," says John Betts, McDonald's vice president of national beverage strategy.

Ads for the espresso drinks running in the Kansas City area, where the concept is already being tested, say you don't get a "condescending look" for mispronouncing the size of the drink at McDonald's -- a jab at the "grande" and "venti" sizes at Starbucks. (At McDonald's, you just ask for small, medium or large.)

Starbucks Chairman Howard Schultz popularized lattes and cappuccinos in the U.S. after borrowing the idea from espresso bars he visited in Italy. When he began expanding Starbucks beyond Seattle in the late 1980s, he said he wanted the cafes to serve as a "third place" where people gather between home and work and feel some of the romance of the European cafe.

But the coffee chain has evolved into more of a filling station. It is now battling fast-food outlets for some of the same customers and meal dollars. Today, about 80% of the orders purchased at U.S. Starbucks are consumed outside the store. The average income and education levels of Starbucks customers have gone down, the company has said. As part of a big push into food, Starbucks sells lunch at more than two-thirds of its company-owned locations in the U.S.

Starbucks's rapid store and menu expansion have slowed traffic at older locations and gummed up operations behind its counters. After years of downplaying threats from rivals, Starbucks executives now say they're preparing for competitive encroachment.

"We understand all too well that we have built a very attractive business for others to look at and try and take away," Mr. Schultz told investors on a conference call this November. "We are up for the defense and we are going to get on the offense." Starbucks declined to make executives available for this story or specifically address competition from McDonald's.

McDonald's executives say they aren't launching espresso drinks to go after Starbucks, but instead to cater to consumers' growing interest in specialty drinks. And although McDonald's is encroaching on the business that Starbucks invented, analysts say McDonald's may pose more of a threat to Dunkin' Donuts, which has a more similar customer base. Analysts also point out that McDonald's overall beverage expansion, which includes bottled drinks, is as much aimed at taking business from convenience stores and vending machines as it is from specialty cafes.

Starbucks increased its sales even in parts of the country where Dunkin' Donuts has a strong presence. Some analysts say Dunkin' and other fast-food competitors actually have helped Starbucks by expanding the total market for upscale coffee drinks.

A Dunkin' spokeswoman says the company doesn't comment on competition but says the chain believes it has "democratized" espresso and become a coffee destination.

McDonald's grew from a single San Bernardino, Calif., hamburger outlet that opened in 1948 into the world's largest restaurant chain by offering consistent hamburgers and french fries served quickly and at a low price. Its beverage lineup, anchored by Coca-Cola Co. sodas, was designed to complement its food.

McDonald's executives watching the growth of Starbucks at the beginning of this decade realized that they were missing out on the fastest-growing parts of the beverage business. Data showed that soda sales had flattened while sales of specialty coffee and smoothies were growing at a double-digit rate outside McDonald's. Customers were buying food at McDonald's, then going to convenience stores to get bottled energy drinks, sports drinks and tea, as well as sodas by Coke competitors.

Early on, Starbucks didn't see the Golden Arches as a competitor "because McDonald's was selling hot, brown liquid masquerading as coffee," says John Moore, who spent almost a decade in Starbucks's marketing department before leaving in 2003.

McDonald's move into upscale coffees dates back to a concept that is unfamiliar to most of its customers: the McCafé. It started in Australia in 1993. McDonald's brought the cafes to the U.S. in 2001 by carving out a corner of the restaurant, decorating it with leather couches and adding a counter that sold cappuccinos and sweets. But the cafes never took off here because they didn't feed into McDonald's drive-through business, where two-thirds of sales take place, says Don Thompson, president of the chain's U.S. business.

In 2003, McDonald's initiated a turnaround strategy called Plan to Win. Among other things, it included a total remodeling at thousands of U.S. locations. Molded plastic booths were replaced with oversized chairs, lighting was softened and muted tones took the place of bright colors. Wireless Internet access was also added.

"We began to realize...we could definitely sell coffee in this environment," Mr. Thompson said. In 2006, McDonald's changed its drip coffee to a stronger blend and began marketing it as a "premium" roast.

In recent years, Starbucks started to see fast-food chains as more of a threat, according to former employees and people close to the company. In parts of the Northeast, store managers told baristas their biggest competition was Dunkin' Donuts, now a unit of Dunkin' Brands Inc., which made a national push into espresso drinks in 2004.

Starbucks increased the pace of its store expansion at the beginning of this decade. Some changes, including drive-through windows and breakfast sandwiches similar to the Egg McMuffin, mirrored techniques used by fast-food chains. This led to tensions among management and employees about whether the chain was eroding the core of the Starbucks experience, according to former employees and people close to the company.

At McDonald's, the success of its upgraded drip coffee emboldened the chain. In 2005, it began testing drinks sold under the McCafé banner at a handful of franchises in Michigan. It sold lattes and cappuccinos from the front counter so it could pass them to the drive-through windows.
WSJ's Janet Adamy reports that McDonald's will add espresso, lattes and other specialty drinks to its menu in 2008. By launching "McCafe," McDonald's hopes grab some of the upscale coffee market from Starbucks.

McDonald's researchers contacted customers of Starbucks and other coffee purveyors and conducted three-hour interviews where they videotaped the customers talking about their coffee-buying habits. The researchers got in the cars of the customers and drove with them to their favorite coffee place, then took them to McDonald's and had them try the espresso drinks.

"There was a surprise factor," says Patrick Roney, a director of U.S. consumer and business insights at McDonald's. "The people who were on the fence...there was an opportunity to get those."

Restaurants that tested the drinks began passing out complimentary small mochas and lattes. "A lot of our customers don't know what a latte is," says John DeVera, an Overland Park, Kan., franchisee who is testing the drinks.

Management advised restaurant operators to hire baristas who are "very friendly" and show a "willingness to learn about the competitor's product," according to a 2006 internal memo about how to start selling the drinks. "For example, a typical Starbucks customer would ask for a Grande Latte; our Baristas need to know that this is a medium size drink," the memo says.

Unlike at Starbucks, where baristas steam pitchers of milk then combine it with the espresso, McDonald's process is more automated. It uses a single machine to make all the components of each drink. Espresso is brewed using beans with a darker roast that are more finely ground than those for drip coffee, resulting in a concentrated form that's usually mixed with hot milk to make lattes and cappuccinos. McDonald's has three flavors it adds to its espresso drinks, a significantly narrower lineup than Starbucks, which boasts thousands of drink combinations.

During testing, plain shots of espresso were taken off the menu and more whipped cream was added to some drinks. The company also moved the espresso machines to the front counter from the back after realizing the drinks undersold when employees made them with their backs to the customer.

Drinks are priced from $1.99 to $3.29 and come in vanilla, caramel and mocha flavors. In advertisements in test markets, McDonald's tells customers those are 60 cents to 80 cents less than competitors' prices.

Heather Pelis, a 19-year-old babysitter from Rayville, Mo., says she didn't like the McDonald's vanilla latte when she tried it. "It was a little syrupy tasting," Ms. Pelis said recently while drinking a drip coffee at a McDonald's in Liberty, Mo. But she says she'd be willing to try another espresso drink because they are cheaper than the caramel macchiatos she buys at Starbucks, and because McDonald's is more conveniently located. The nearest Starbucks is a 30-minute drive from her, she says.

McDonald's franchisees say they think the new coffee drinks will be particularly helpful in drawing young consumers who prefer them to drip coffee. Gary Granader, a Detroit-area McDonald's franchisee, has started seeing groups of teenagers at some of his restaurants after school since he added espresso drinks a year ago. Mr. Thompson says McDonald's also is considering adding some type of music-downloading service at its locations.

McDonald's beverage expansion will add a new line of bottled drinks by Coke competitors. The drinks being considered include PepsiCo Inc.'s Mountain Dew, Lipton green tea and Red Bull GmbH's namesake caffeine drink. Restaurants also are getting a soda fountain with flavor shots that allow customers to create their own drinks like cherry Sprite and vanilla Diet Coke. Mr. Thompson said that Coke remains the "big brand" at McDonald's, and a Coke spokesman said the company is not concerned about the competing beverages being sold at McDonald's.

Only about 800 of McDonald's U.S. restaurants have the specialty coffee drinks now, and some may not get the full beverage program until 2009. Executives and franchisees will not give specifics on how well the espresso drinks have sold in tests.

McDonald's has already made some headway in gaining coffee credibility. In February, the magazine Consumer Reports rated the chain's drip coffee as better-tasting than Starbucks. Starbucks responded that taste is subjective and its millions of customer visits per week demonstrated the popularity of its coffee.

The rating nevertheless angered some top officials at Starbucks, according to a person familiar with the situation. Around the same time, Mr. Schultz sent a memo to Starbucks executives warning that the chain may be commoditizing its brand and making itself more vulnerable to competition from fast-food chains and other coffee shops. He lamented the loss of the "romance and theatre" that occurred when the company switched to automated espresso machines several years ago.

To improve store traffic and same-store sales growth, Starbucks has said it is trying to make its operations more consistent. It is reducing the number of items and promotions it offers and is focusing on what executives call the "vital few" areas that improve results, like selling more beverages and attracting more customers.

Starbucks executives have attributed the slowdown in sales growth and store traffic in the U.S. to the weak economy.

Mr. Schultz has said that new competition actually helps Starbucks by expanding the specialty-coffee category. "Those consumers over time are going to trade up," he told investors in November. "They're going to trade up because they are not going to be satisfied with the commoditized experience or the flavor." He has emphasized that Starbucks's baristas, who are instructed to memorize customers' drink orders and make genuine conversation with patrons, will continue to set the chain apart.

But some Starbucks baristas say that the chain's push into food and drive-through service has made that a lot more difficult. Some workers say their managers instruct them to ask customers whether they want a breakfast sandwich with their coffee -- a selling technique that feels unnatural when they know the customer doesn't want one.

"The more and more business they get in the store, the more it seems like another fast-food job," says Joe Tessone, a Chicago barista who has worked at Starbucks for three years.

The overlap between McDonald's and Starbucks has put Jack Rodgers in an unusual position. In 1958, McDonald's pioneer Ray Kroc granted Mr. Rodgers one of the chain's first franchises for a restaurant in St. Charles, Ill. Mr. Rodgers eventually traded that location and today owns part of three McDonald's around Newport Beach, Calif.

Mr. Rodgers later moved to Seattle where in 1985 he wound up investing in the predecessor chain of the modern-day Starbucks cafe. He later became a Starbucks board member and executive. He left the company in 1996 but remains a shareholder and a friend of Mr. Schultz.

Now Mr. Rodgers is looking at adding the lattes and cappuccinos to his McDonald's restaurants. He didn't envision the chains would compete so closely when he first invested in Starbucks. "Not in my wildest dreams did I see this coming," he says.

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