Hey Snackers,
Our panic-buying ways have evolved to a more elevated plane of existence: instead of toilet paper hoarding, we are now ravaging the baking products aisle — US frozen cookie dough sales are up 454% from last year (and good luck finding yeast).
Markets fell again as oil continued its slide. Then US lawmakers agreed on an additional $320B in loans and grant relief for small businesses (since the original $350B package has already run out of money).
Starbucks brings its alt-milk and alt-meat stars on China tour: To Oatly and Beyond
They're soooo alternative... Starbucks' thought process when it picked Oatly and Beyond Meat from the "influencer friends to bring on China trip" list. Now that 95% of Starbucks' China locations are re-opened, Starbucks decided to lure customers back in with some plant-based menu surprises. Enter Starbucks’ alt-crew: alt-milk superstar Oatly and alt-meat icon Beyond Meat...
- 4.3K Chinese Starbucks locations are now serving Oatly vegan-friendly matcha oat milk lattes and Beyond beef lasagna.
- Starbucks wants to capitalize on shifting nutritional preferences in China's giant consumer market, which has increasingly been moving toward "healthier" options.
The trip of a lifetime... China is the world's 2nd largest economy, and Beyond Meat and Oatly have been wanting to roll up for while:
- Oatly: It's the Swedish, pleasingly-packaged oat milk brand that artisanal coffee shops run on. But almost all its sales come from Europe and the US — Asia is a big opportunity.
- Beyond: Meat is a major staple of the Chinese diet — Beyond wants to be the major alt-staple. And its CEO committed to being there this year.
This is middleman marketing... Beyond could've made its big China debut in grocery stores. That would've given them better control of their profit margins and China marketing — but it would also have meant massive spend to get noticed in a new market. Starbucks already boasts 4,300 stores in China — now it's Beyond and Oatly's chaperone that can weave new behaviors into existing habits of its Chinese customers.
Materials giant DuPont surges on mask sales — diversification is its middle name
Sounds like the love interest from an 18th century French novel... DuPont de Nemours is actually a massive materials, ingredients, and electronic company. Founded in 1802 to make gunpowder, DuPont now produces everything from industrial enzymes to military vehicle armor. DuPont probably made the protein in your snack bar and the gelatin in your soft capsule pill. But now it's winning in one timely area: masks.
- DuPont makes the materials used to produce masks and other Personal Protective Equipment. It repurposed its engine-protecting tech to be used as a filter in N95 respirator masks, and has been pumping out 9M PPE garments/month.
- Demand for masks and other PPE equipment has skyrocketed to fight COVID-19, boosting DuPont's sales. The materials/chemical giant brought in an estimated $5.2B total sales for the quarter, higher than what was expected pre-corona.
But it's not all sales and sunshine... DuPont's auto and industrial materials division isn't doing too hot. Car makers aren't buying DuPont's auto materials since demand has seriously slumped. So DuPont shut down some of its transportation/industrial manufacturing plants and asked banks for billions more in credit lines.
Diversification is key to survival... DuPont is a golden example of product/sector variety — its full name might as well be DuPont di Versification. It might take you years to comb through its entire "Brands & Products" offering.
- This diversity is helping DuPont survive while its auto/industrials sector is being pummeled by coronavirus. When one division struggles, the other thrives.
- Conversely, "one-product" companies are in big trouble if they're adversely virus-affected — Carnival Cruises has no N95 masks to fall back on.
Local news is in (serious) need of a bailout — 2 options can save it
This time hits different... Ad-pocalpyse 2020 is hitting every ad-reliant business, from Big Tech to Instagram influencers. Stores, restaurants, and travel are shut and over 22M are newly unemployed = people are spending way less. When companies know you're not spending, they're not going to waste their precious marketing dollars trying to sell you a lobster dinner or the new Spring lip gloss with an ad.
- Less ad spending means less money coming in for ad-reliant media companies like news agencies.
- 2020 is a year of big, national news. That's partly why big, national newspapers are more protected than small, local papers.
- Local news has been hit much harder — now that many local businesses are closed, the small newsrooms which run on ads for these businesses are getting $0.
Hitting the breaking point... The situation has gotten so bad that 240 Congress members drafted a letter to President Trump urging the White House to save local newsrooms. Some of their requests:
- Prioritization of local outlets: Federal agencies spend around $1B/year on advertising — Congress wants these ad dollars to go to local news outlets, first and foremost.
- Additional relief for local papers which were already struggling pre-corona, but are now near collapse. The $2T package passed last month partly covers local newsrooms, but some are saying it won't be enough to save them.
This could be a re-defining moment for the news biz... Between the ad dominance of Google and Facebook and the prevalence of "free news," we see two options to save local news destruction:
- A) Government subsidies: NPR gets some in the US, BBC gets them in the UK, and some in Congress are proposing that local news get some too.
- B) Big Tech: Australia is now forcing Google and Facebook to pay news agencies when their posts create ad revenue for them. Since 45% of Americans get their news from Facebook, Big Tech sharing ad profits with news outlets could be a game-changer.
What else we’re Snackin’
- Flixing: Netflix adds nearly 16M paying subscribers — almost double the 8.2M expected for the quarter.
- Collapse: Virgin Group's airlines are on the verge of collapse — Richard Branson is offering his Caribbean island as collateral to get the UK gov to bailout Virgin Atlantic.
- Flat: Coca-Cola's global sales have plunged 25% this month — the closure of movie theaters, restaurants, and sports venues is hitting its biz hard.
- Bubu: Walmart sells its on-demand streaming service Vudu to Comcast-owned movie-ticket site Fandango (still around and apparently thriving?).
- Looney: Alphabet's moonshot company Loon sends its internet-connected balloons into the Kenyan sky in its first commercial service launch.
Wednesday
- Earnings expected from AT&T, Delta, PayPal, Canon, Credit Suisse and Boston Beer
Disclosure: Authors of this Snacks own shares of Beyond Meat, Starbucks, Walmart, and Delta
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