Hey Snackers,
Airbnb is doubling down on quirky stays with a $10M investment to build 100 absurd accommodations, from a floating avocado abode, to a cozy Dutch clog, to a giant cheese wedge. And you thought glamping was creative.
The techy Nasdaq surged 3.4% yesterday as stocks rallied after better-than-expected earnings from Bank of America and BNY Mellon. Across the Pacific, China delayed releasing GDP stats as Beijing leaders met for the twice-a-decade national congress of the Communist Party.
Kroger agrees to buy Albertsons for $25B, but the super-merger is about more than groceries
Scanning a bean can… This barcode has a bigger price tag: on Friday, Kroger said it was buying smaller rival grocer Albertsons for $24.6B. The super-merger is one of the largest in America’s grocery history. Combined, Ralphs owner Kroger and Safeway parent Albertsons would have 7K+ workers in 5K stores, gaining (super) market share:
- The top dog is Walmart, which controls a fifth of the US grocery market. Kroger’s #2 with 10% of total dollars spent, followed by Costco.
- Post-merger, Kroger and Albertsons would have ~15% market share. But the deal could be challenged by regulators.
- Not in the bag: Kroger and Albertsons are expected to sell stores in regions where they have overlapping influence, to help gain regulatory approval.
Add ads to the bagging area… The merger could boost profits by integrating Kroger’s and Albertsons’ operations and giving them more leverage in vendor negotiations. But it could also boost their share of the “retail media” market — one of the fastest-growing advertising sectors. You can tell a lot about someone from their grocery cart (Red Bulls + ramen = college). By combining their customer data, Kroger and Albertsons could boost their ad-targeting value.
- Kroger and Albertsons both have a retail ad biz (think: promos on sites), though they don’t break out how much they earn from them.
- Kroger was one of the first retailers to expand its ad biz beyond its own properties, letting brands use its shoppers’ data to target them on third-party apps and sites.
Profit puppies aren’t always visible… Kroger’s and Albertsons’ moneymakers seem to be groceries. But the real value of this deal could lie in ads — which you don’t see on shelves. Companies like Walmart, Amazon, Instacart, and Uber are monetizing customer data to sell ad space across digital properties. The merger would make Kroger-Albertsons the #4 player in the $41B retail ad market, with a 13% share.
Procter & Gamble runs celeb-studded ads to persuade shoppers to pay premium prices for name brands
Doubling down on Dawn… Procter & Gamble is aggressively advertising pricey premium products like Dawn dish soap, even as cash-strapped shoppers struggle with rising prices. P&G, which makes aisle all-stars like Gillette razors and Charmin toilet paper, is running new sustainability-focused ads for Tide detergent that feature stars like Ice-T and Vanilla Ice.
- Ice ice water: P&G’s ads say shoppers will save $$ buying premium Tide detergent because it works in cold water, which is cheaper than hot.
- Maximizing market share: Last quarter P&G’s sales jumped 6% despite its largest price hikes in years. In the past four years, P&G gained US market share while raising prices as consumers continued reaching for its famous brands.
It’s good to be iconic… Leading companies can find an upside during downturns by leaning on their most recognizable brands. During the 2008 recession, consumer favorites like McDonald’s and Kraft (now Kraft Heinz) were some of the market’s top performers. Last week, PepsiCo raised its annual sales and profit expectations on strong demand for fan favorites like Doritos and Gatorade. Pepsi’s CEO said the snack giant has historically done well in recessions.
Even loyal shoppers have a price… Detergent divas could eventually turn on Tide if it gets too pricey. P&G has maintained strong growth so far despite decades-high inflation. But more consumers are starting to “trade down” to cheaper options like private labels. Mega-retailers like Best Buy, Costco, and Dick’s Sporting Goods say shoppers are ditching premium products for store-brand alternatives.
What else we’re Snackin’
- Bleak: Europe is prepping for a winter of blackouts after Russia cut natural-gas supplies. It's not just the EU: New England's energy cos say overseas competition could mean winter blackouts stateside.
- Rates: Big banks like Chase and Wells Fargo reported "relatively solid" third-quarter earnings, but investors eyed a standout detail: home-lending revenue is way down as spiking mortgage rates cool the market.
- Gassy: Oil juggernaut BP said it would buy "biogas" (picture: farm waste) biz Archaea Energy in a $4.1B deal. Execs said it'll get them in the renewable-gas game, while netting BP tax breaks for green investment.
- Inwest: Kanye West is buying the social platform Parler, the company said. Twitter and Insta locked West out of his accounts this month after he posted antisemitic statements.
- Plastic: Mastercard said it would help banks offer their customers crypto trading, and would handle regulations and security. The move could push some crypto-hesitant investors and banks off the sidelines.
Tuesday
- Earnings expected from: Johnson & Johnson, Lockheed Martin, Netflix, JB Hunt, United Airlines, Albertsons, Hasbro, and Goldman Sachs
Authors of this Snacks own: shares of Amazon, Netflix, Twitter, Uber, Wells Fargo, and Walmart
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