We’ve had an endless series of products whose ingredients have been cheapened in order to maintain the price. Consumers won’t be able to taste the difference, the theory goes. So, as the horse-meat lasagna scandal in Europe is spiraling beautifully out of control, we’re now getting hit where it hurts: Maker’s Mark is watering down its bourbon.

Unlike the horse-meat folks, Maker’s Mark announced it. They even had an official reason. “Fact is, demand for our bourbon is exceeding our ability to make it, which means we’re running very low on supply,” said the missive that COO Rob Samuels sent to his customers. They’d add water to the remaining batch—it would lower alcohol content from 45% to 42%—so that there’d be enough for everybody.

The uproar was immediate. The company, a subsidiary of Beam, Inc., though still run by the founding family, had to deal with the clamor. Chairman Emeritus Bill Samuels, Jr. crafted the response. The company’s focus over the past 50 years has been on “product quality and consistency.” And the primary measure of that consistency was “the unique Maker’s Mark taste profile,” he wrote. “That’s all that truly matters in the end.”

So why not just run out and play on scarcity? Knob Creek, my personal favorite and also a Beam subsidiary, had done that successfully in 2009. Samuels did not provide an answer. Or why not raise the price to lower demand instead of watering down their bourbon? Well, he wrote, “We don’t want to price Maker’s Mark out of reach.”

Fighting inflation by watering down bourbon. But there was nothing to worry about. He and Rob personally tested batches of watered-down bourbon, and they all had “the same taste profile that we’ve always had.” Their Tasting Panel and “structured consumer research” agreed: “there’s no difference in the taste.”

Nobody noticed a difference in the taste either when horse meat replaced beef in frozen lasagna. It was found out through testing. Turns out, there was a vast trading scheme that involved slaughter houses in Romania, traders in Cyprus and the Netherlands, and companies in France, including a subcontractor of the brand Findus, which shipped the meat to tax haven Luxembourg where it was manufactured into frozen dishes that then spread to freezers across Europe.

At first it was just lasagna in Britain. Then lasagna in France and elsewhere. Now they’re finding horse meat in other frozen foods. In France, for example, cannelloni, spaghetti bolognese, moussaka, and hachis parmentier were hastily yanked off the shelves at six supermarket chains. On Wednesday, another French brand, Picard, found horse meat in its frozen lasagna and chili con carne. It suspended the sale of all products containing “beef” that had been supplied by one of the parties in the Findus web.

In Britain, an investigation has started. Catherine Brown, chief executive of the Foods Standards Agency, called for retailers to test their dishes containing “pork,” “chicken,” and other meats. Retailers were currently focusing on “comminuted” beef, she explained, “the stuff where meat is ground up to the point that it is not readily recognizable.”

But there is a dilemma. In France, horse meat consumption has plummeted from 1.8 kg per capita (4 pounds) in 1979 to a measly 0.34 kg (12 ounces) in 2009. It now makes up only 0.4% of total meat consumptions—not counting the “beef” in frozen foods. In other European countries, demand for horse meat has collapsed similarly. Prices are low. The meat isn’t toxic. So why not feed it to people who don’t know what they’re eating? Just grind it up, stuff it in manufactured lasagna or whatever, hide it inside an enticing package, call it “beef,” freeze it, and when consumers stick it in the microwave, they’ll never know. Because they can’t taste the difference.

“Industrial terrorism,” it was called in France. Findus and every company in the trading web claim to have been victimized, much like consumers. But if they’d wanted to know what that cheap meat was and where it had come from, they could have found out. Or they could have refused to buy meat of shady origin. But they didn’t want to. What mattered was the cost of the meat. It would keep profit margins high and avoid price increases.

As the belts of consumers are being tightened notch by notch, price pressures become enormous. Consumer product companies are reacting in a myriad ways [The “Pauperization of Europe”]. Some are disclosed or obvious, others are hard to detect. But it’s an insidious form of inflation that doesn’t show up on the price tag and isn’t counted in the inflation statistics. But you’re eating lower quality food, and you’re getting less for your money that is constantly being debased, and then, when you finally had it, you end up self-medicating with watered-down bourbon.

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