Morning Brew Daily - The Mega Deal Changing Snacking & Elon Musk's 'Demons'

Episode Date: September 12, 2023

Episode 145: Neal and Toby discuss the huge shifts in the packaged foods industry with the latest Smucker's acquisition of Hostess Brands. Will this mean a PB&J Twinkie?? Next, the juiciest parts of Elon Musk's biography that paint a more complicated person than we thought. Plus, North Korea's Kim Jong Un's obsession with an armor-plated bulletproof train that has an interior of a cruise ship. Then, a 'budget Ozempic' that might not be as miraculous as the real one. Finally, two releases that are equally important and market-changing: the iPhone 15 and a Catan Cookbook. Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Excited about entrepreneurship? Check out our other podcast, Founder’s Journal: https://link.chtbl.com/founders Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. I'm Neil Freiman. And I'm Toby Howell. Today's pod, at long last the Elon Musk biography is out, we'll give you the too long didn't read version, and North Korean leader Kim Jong-un is in Russia for a rare international trip. We'll take you aboard the mammoth bulletproof train that got him there. Then Twinkies have a new home after a delectable mega merger between two iconic snack brands, plus a new Catan-themed cookbook is dropping today. So start thinking about a recipe you can make

with ore, wheat, sheep, brick, and wood. It's Tuesday. day, September 12th. Let's ride. Neil, we had a heck of a night last night. It was our first live event with Morning Blue Daily listeners, and you all showed up big time. We had a full theater for our advanced screening of dumb money. The movie was incredible, so it was talking to the producers, Jessica and Lauren. But my favorite part was definitely meeting people and hearing about their listening habits and actually how they stumbled across the podcast. My favorite story was from a listener who said that she was on a run when one of her podcasts ended.

Spotify just recommended us. So I feel like we owe Spotify one. Shout out Spotify for giving us a listener. Who says all algorithms are bad? Yeah, exactly. And yes, it was such a great time. And before we get into our main stories, I also want to mention that the dispute between Spectrum and Disney

that resulted in the blacking out of ABC and ESPN for 15 million spectrum cable subscribers was resolved yesterday. The negotiation was billed as the battle for the future of cable TV. But in the end, the agreement was not really revolutionary. at all. Really the biggest news was that it allowed spectrum cable subscribers to watch an epic Monday night football game between the bills and the Jets. And that also kept me up, which is why I'm on a little less sleep than usual. Aaron Rogers did get injured and is not looking good. Classic Neil. Okay, let's jump into our real top star of the day where we have a good old-fashioned snack merger.

Yesterday, J.M. Smucker, the company behind the famous jellies, Fulgers coffee and other brands, announced it will buy Hostess, the company behind the famous Twinkies, Snowballs, and other brands for a tasty $5.6 billion. If that feels like a lot of money, it is. The deal prices Hostess at $2 billion more than its current market value, but it could end up being a bargain down the line because, Neil, the snack business is booming. Hostess revenues jumped 50% from 2019 to 2022, and for Smuckers, its indulgent snack lines have growing 20% faster than its healthy ones in the last three years.

Neil, I am a big hostess fan and a big Smuckers fan, actually. So this is like an MCU crossover level event for snack lovers like me. Do you think it's a good deal, though? I am not deep in the company's financials, but looking at what analysts had to say, it does seem like they think Smucker may have overpaid for a hostess, $5.6 billion for a brand that may have, have, maturity in terms of its growth trajectory. So, you know, you had analysts at J.P. Morgan being like, you know, this is definitely better for hostess than Smucker. For Smucker, it's like, well,

we're really betting on a snack boom that has happened over the past couple years during COVID, really extending into the future. So putting on my analyst had, it seems like they may have overpaid. Yeah. And there's also some kind of weird synergy asyncrancies. I don't know if that's a word, but it's basically that Hostess has a bunch of snack brands that have a long shelf-like, shelf-stable snacks, as they're called. Remember, the joke is that Twinkies, if the apocalypse happened, Twinkies would still be on shell. I looked it up, though. It's 45 days.

45 days, but there was one found that was on a shelf for 42 years and it's still in-tag. That doesn't mean you can eat it. It was not edible. It just means it has some sort of structural integrity. But they were kind of looking at the two brands and they see that Smucker has less, they have more perishable snacks. And so it is not quite the same synergies. Like it's not the same supply chain.

So some of those, you know, usually when we see these snack brand mergers, it's all about, like, building up their supply chain and their distribution network. So there could be some issues on that front here. I don't really get that, though. Isn't peanut butter and jelly? Or isn't like peanut butter? You know, that is a very shelf stable product. I mean, Smokkers has a bunch of brands as well. But yeah, and some of them are in the freezer aisle versus just the snack aisle.

So just some synergy issues. That's all I'm bringing in. That is honestly, that whole grocery store layout is my favorite part about this, about how industry, about how CPG industry people talk about the grocery store. And they said that this deal allows Smucker to move into the center aisles, which I've been growing a lot more recently because especially Gen Z and millennials are just snacking up a storm. They're snacking up 10%.

They're eating 10% more stacks than older generations. So, and I think we should talk about uncons. uncrustables. Uncrustables, it's just an absolute behemoth. Smuckers bought it for one million dollars back around 2000, and now it's on pace to do $650 million in annual sales. They see it as a billion dollar brand going down the line. I love uncrustibles. I would die for incrustables. They're just the perfect snack food in my mind. And they're crushing it. So we'll see whether this pays off for Smucker definitely will take a few years to play out. Our second story, it's Elon Musk Book Day.

The biography of the business mogul by author Walter Isaacson is released today, and in it, Isaacson explores the psychology and motivations of potentially the most powerful person on the planet. Musk effectively hegs up six companies, Tesla, SpaceX, the boring company, Neurrelink, X, and X-A-I that are really pushing humanity in a new direction from the shift to renewable energy to colonizing different planets. So understanding this guy, what makes him tick, why he does. does the things he does is a really important deal. So to learn about the man behind the tweets, Isaacson spent two years next to Musk's side, following him through his Twitter acquisition,

the birth of more kids, and his outsized role in the Ukraine war. Toby and I haven't read the book yet, admittedly, but we have been reading all of the excerpts and interviews, and there are so many juicy tidbits to chat about. Where I want to start is this idea that a single person can change human history, because Elon Musk sure thinks that of himself. He has an epic sense of himself, Isaacson writes, almost as if he's a comic book character wearing his underpants on the outside, trying to save the world. And here's a good example. After SpaceX successfully sent a crew into orbit without a professional astronaut aboard in 2021, Musk reflected about the achievement to Isaacson. Building mass market electric cars was inevitable, he said. It would have happened

without me. But becoming a space-faring civilization is not inevitable. This flight was a great example of how progress requires human agency. Yeah. I mean, he clear. gets drunk off his own Kool-Aid, which you kind of have to do when you're running six companies. I mean, he called Tesla the company doing the most to solve climate change, talking to Bill Gates. And then, yeah, he said he built space X to make us multi-planetary. And then he invented Starlink, which is the internet satellites, just to generate a profit while he's working on this interplanetary goal. So it really was this thing where he has a bold vision for the future and he thinks he's doing very important things for it as well. So those two things combined, form this potent mix to make this man just incredibly ambitious.

And I think the problem with that for the rest of us is that he thrives on chaos. That's what I've picked up in all of these excerpts, is that when things are going well, he gets a little bored and complacent. And that is just a very uncomfortable position for him. And you can see this in the episode about his takeover of Twitter, now called X. It does seem like he did it because things were going pretty well at Tesla. after a few rocky years and he just got he just exercised some stock options that left him with $10 billion in his bank account he loved Twitter and so he called up his friend and was like his banker

friend was like what do you think about me buying Twitter and we all know about the chaos that's that's happened ever since so the problem you know he's extremely ambitious but he does also seem to get you know very antsy when there aren't a lot of conflicts going on which is which which which seems to be a little bit problematic because he's so powerful and when he gets into a conflict there are a lot of ripple effects for the rest of the world.

Yeah, he loves being in fight or flight mode. He loves having his back against the wall and sometimes he'll just manufacture chaos in order to have that feeling. I also loved one of the excerpts that he loves video games and he got obsessed with this strategy war game called Polytopia

which is like this really low-res kind of low-quality video game and he was playing it during meetings, during family gatherings. He was late for some meetings just for this video game. And he said his, his reasoning for why he was so good at it. It was like, I'm just wired for war, basically. So he has this idea of himself as kind of like that wartime CEO. He loves war strategy games, and he sees himself almost as like a general. Yeah, Isaac Sen said that his favorite historical

character is Napoleon. So there's a lot to unpack there. Yeah, no, I definitely want to read this book. Musk is just a hugely complicated, consequential character. for, you know, for our society right now. So it behooves us to, uh, to learn more about him. Big word alert. Okay, moving on to our third story. North Korean leader Kim Jong-un arrived in Russia today. No one knows exactly what he's up to, but U.S. officials expect he's going to meet

with Vladimir Putin and discuss an arms deal that helps keep Russia flush with weapons. As it continues, it's war in Ukraine. It's Kim's first trip outside the country in four years and a sign that North Korea is beginning to open up after it implemented strict COVID measures that made it even more closed off than usual. But here at Morning Brew Daily, we think it's important not to focus on the destination, but on the journey. And the North Korean leader's method of travel for generations is characteristically unique. Instead of taking a one-hour flight from Pyongyang to Vladivistock, Russia, Kim spent 20 hours traveling in his private train. That's because this train is not like

the Amtrak Northeast Corridor. It's a ridiculous 90 cars long compared to Amtrak's typical nine cars. It is extremely lavish. So if you manage to snag a ride, expect to be served French wine and have ultra-fresh lobster dropped in along the way. And it's heavily armored, which is partially why this journey took so long. This bulletproof train reaches a max speed of just 37 miles per hour, which is a snail's pace even by Amtrak standards. The Assela can reach 150 miles per hour. Toby, this unusual train is just another symbol of how deeply strange and isolated North Korea is. There's so many little details about this train that I want to talk about. One that I saw was sometimes two other trains travel with it, one to check the tracks ahead

and one to carry his security entourage behind him. So not only is he traveling on one slow train, sometimes there's three trains on the tracks just covering all his bases. Also, one of the amenities on the train, you mentioned the lobster and whatnot. But they also serve donkey meat sometimes, which is, again, a lot of this is kind of anecdotal because there's so much secrecy and so much mystery around this. And it's coming from like Russian officials who wrote on the train, wow, Kim Jong-il, Kim Jong-un's dad was the leader of North Korea. But again, like, the mystery only adds to kind of like the shroud. It is funny. There are no, there are so few people outside people that have written on this train.

And so every piece on what is on inside this train is just from like two Russian guys that managed to get aboard in like 2001. So it's just shrouded in secrecy. I also want to talk about another method of travel that Kim Jong-un's been seen in. And this caused a major stir in 2019 because people saw his two, he has two armored Mercedes, a Maybach S-600 Pullman Guard and a Maybach S-62, which cost between 500 to 3,000. thousand and one point six million dollars each. And the international community was like, uh, how did he get that? Because the UN has imposed sanctions, uh, for decades on North Korea getting luxury goods. So you had all these investigative teams, exploring how these two Mercedes vehicles got into North Korea. And it's a big deal because

if a Mercedes can get into North Korea, then there are a bunch of other luxury goods that could get into North Korea. And also very, you know, a lot more important things like weapons and things like that. So there was this whole scramble to find out what happened that led to these Mercedes getting smuggled into North Korea when there were all these sanctions in place. And it was a crazy journey from like Rotterdam to Netherlands to China to Japan to Russia and then flown in. So probably took a train.

Probably took a slow moving armored train to get in. All right, Neil, before we jump into our next story, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill. Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th.

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Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. All right, Neil, we are back with another edition of Toby's trends where I, a devilish and dubious Gen Zier, educate you a solemn and sapient millennial on a trend I've had my eye on recently.

And today's trend is all about laxatives and their growing popularity. They're so popular, in fact, that drugstores across the country are actually running out of brand names like Mirralax. So are people just more clogged up than ever? Well, kind of. There is an actual health reason for this shortage. Some gastroenterologists are pointing to what they call post-pandemic bowel dysfunction as a reason for the rise in sales. Essentially, people ate worse, exercise less, and had more anxiety during the pandemic, which can all lead to bowel dysfunction.

But there is also, of course, a TikTok angle to this too. People are treating laxatives as a budget ozempic in taking them every day. The hashtag gut talk has over 1.1 billion views as people show off their concompetive. auctions of some sort of fruit juice and smoothies combined with the laxative that they drink every day to feel skinnier. Suppliers are noticing younger and younger people buying up stock, which has led one company, Halion, to start selling gummy versions of its products that appeal to young adults. So, Neil, these two trends have combined to form some surprisingly empty shelves in the drugstore aisle. What does the medical community say about that? They are not

happy with it because obviously there is a little bit of a dark side to this trend because some eating disorder specialists, have seen a sharp rise in teenage patients abusing laxatives because apparently, like, people like the empty feeling that they get and they associate that feeling of lightness with weight loss when in reality, that's not actually how weight loss works at all. So definitely the health community is not super proud of this. Also, another thing is we've seen kind of like this crossover into the girl dinner world. Remember how we talked about that trend where people are using that sound, but just showing them drinking laxatives. So there is a little bit of an unhealthy feedback cycle here on TikTok especially.

But it was interesting to see people are still pointing to the pandemic as a reason for the rise in laxatives where all of our gut biomes got so messed up. Well, what was our first story on, the rise of snacks? You're like, everyone's eating much unhealthy here. All these companies are buying, you know, sugary snack companies. And they think this is the main growth area in the food industry. And then later in the show, we talk about this. But when you first started talking about this story, you're like,

like, oh, there's a shortage of laxatives. I was like, okay, finally, a Toby trend that doesn't have to do with TikTok. There's always a gut talk angle. Yeah. There's also a psychology angle to it as well. It's a classic case of wanting a quick fix over any long-term, like, behavioral changes. And so a laxative, again, makes you feel empty and full and skinny on a day-to-day basis, but it's not actually a good long-term fix.

So I don't know. It's actually a very interesting trend that captures a unique moment in our psychology. as a nation, honestly. All right, let's move on to our next story, which actually combines three big passions of ours, board games, cooking, and talking about things like board games and cooking. I am, of course, talking about the Catan cookbook that is dropping today. Inside, lovers of Catan can find 77 recipes inspired by the game,

including dishes like Forest Dwellers Dip, tavern ale pie, and fireside banana boats. This is a real cookbook, Neil. Cassie Vogel, Vice President of Editorial at Ulysses Press, the publisher, told the AP that there are recipes in here that you can and should definitely make. It's not just a gimmick or a gag gift by any means. It's coming out at the right time, too, Neil. The Caton U.S. National Championships happened in just a few days in Minneapolis, Minnesota. Plus, Catan is still riding a high from a surge in popularity during the pandemic as people look to stay busy while in quarantine.

I can't think of anything more in our wheelhouse to discuss than a board game that was turned into a cookbook. Would you buy this as a prolific home chef yourself? Absolutely not, but I would buy it for these recipes do not sound good. Oh, come on. They don't. Homemade fudge bricks, brick smash burger, chicken under a brick. I think it's a little forced overnight oats with K. I like that one.

They're punny. I mean, I take my food a little seriously. So I don't know if I would do this, but I knew you would say no. I know. It doesn't sound good to me. It's all like medieval food. Yeah. But I do think this is a genius gift.

I was just thinking like this is going to, if I had any content friends, which I have plenty of, I will definitely give this to them for Christmas. Seems like a really good, a really good gift. Yeah. And if I just want to put my marketer hat on for a second, they're doing a lot of things right. One, they're putting it out in tandem with the U.S. world or national championships, which is a big, like, flagship event. And then two, it speaks to kind of the core of the product,

which is gathering your friends, having good time, food and board games actually go together very nicely. And then it's also augmenting their existing product where you could totally cook a recipe from this book while playing Catan. So I do think it hits a lot of things that, and it's this passionate community too, so I could see it having a great holiday season for sure. All right, we have to talk about this spurred a bunch of conversation

within the brew about what other board games would have really good cookbooks. What do you think? Do you want to go first or do you want me to go first? You go first. Okay. I was thinking a little bit about expanding the scope beyond just board games to a cornhole themed cookbook where it's all just variations of different handheld dishes you can hold

while playing cornhole. I feel like that would be very functional for kind of the summer months. I also thought about a Djanga cookbook where I guess every dish is just shaped in the little jango blocks and you have to play with them. Because I've seen like potatoes kind of. put into a block form, so I could see that working. And then obviously a Monopoly cookbook as well, where every recipe just takes so long to finish that by the end, you're just like, should we just get takeout? What about you? I have a bunch of ones, but I'm just going to

focus on one, which I have to admit was the brainchild of my brother as we were talking about this. And it would be Scrabble, where the recipes are only dishes that have very high scores. So basically it would all just be variations of zucchini, gazpacho, cumquot, quiche, jerk chicken. That, oh, I think that'd be a really big thing. That is legitimately a good idea. I know. So, Stephen, Stephen, it's a really good idea. All right, our last story. Later today, Apple will hold its big annual hardware event where it will unveil the iPhone 15 and updates to its other gadgets like the Apple Watch. Ahead of the event, I just couldn't resist preparing some iPhone trivia for Toby, who considers himself a bit of an Apple historian. So I've got six questions for him

on the history of the iPhone, and I hope you all will play along too. All right, question one, what new feature debuted on the iPhone 4S in 2011? Oh, two things immediately came to mind. I guess one, my first thought was the iPhone Jack went away, but I guess that's not a new feature. So it must be a software. I think it's Siri, right? Okay. Correct. That was the beginning of the end for Apple's like AI you play because it's all been downhill since there. All right. One out of one. Great job.

What was the question number two? What was the first iPhone without the headphone jack? Oh, interesting. Well, it's not the four, I guess. So is it beyond then? I'm going to say the six. Close. iPhone 7 in 2017 was the first without the headphone jack.

Okay. Our third question, right now you're bad in 50%. What of the following I, which of the following iPhones is not real? the iPhone 12 mini the iPhone XR the iPhone 5C and the iPhone 9s oh my gosh okay I know the minnie's real okay there's no way there's an XR right what would that even stand for man the Apple fanboys listening to this right now that's wrong in you there's no there was never an iPhone 9 okay it went from 8 to X sorry I'm yalling at you oh man I do remember that now okay I should have What are you? One for three? Still a major league successful batting average here.

All right. Question number four, what was the first iPhone that Tim Cook presented as CEO? Oh, my God. These are hard questions. You say I'm an Apple historian. I should have brushed up on it. Okay, let's think about, was headphone jack him? Maybe I can use the other questions to inform myself. So let's go to iPhone 7. iPhone 4S in 2011. He's been out the helm for a while. All right. Our final question, I'm going to skip the last one. We have five questions. This is our final one. Let's end it on a high note. I'll give you this. You can be within $50 here. How much did the original iPhone cost in 2007? Oh, I know this answer, actually. $499. Let's go. Okay. I knew that one. Okay. So maybe I did it on a high note, two at a five. Wait, what was the last question? Just so I can just say 50 percent. All right. It's not really an iPhone question, but of the top five free apps in the app store right now, two are owned by the same company. Can you name them? Okay. I'm. I'm either thinking it's meta, bite dance, or maybe Google. So it's one of those three.

It is one of those three. Okay. Cap cut and TikTok. I don't think CapCuts up there anymore. All right. I'm going to go out of limb here and say it's Google, which is YouTube and Gmail. So close. You got the right company, N1, YouTube and Google.

Oh, Google's an app there? Yeah. All right. I'm actually pretty awesome. That was very impressive. Let's go. All right. We have to end our show right there.

Have a wonderful Tuesday, everyone. I hope you enjoy the Apple event. And if you pick up your book, if you pick up your Elon Musk book, I hope you get started on that as well. If you have thoughts on the show, but only if they're nice, write into Morning Brew Daily at Morningbrew.com.

Let's roll the credits. Samantha Velas is our editor and producer. Uber Batista and Raymond Lou are associate producers. Isabel Wynn is our technical director. Billy Minino is on audio, hair and makeup called in sick after making a recipe from the sorry cookbook. Devin Emery is our chief content officer

and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package.

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