The Best One Yet - ♨️ “2 parts good coffee, 1 part cheap coffee” — Coffee’s swap-flation. Sonos’ rich David. Authentic Brands’ Reebok reboot.

Episode Date: August 17, 2021

Your morning coffee could get pricer now that coffee bean prices have surged 43%... unless we see some "Swap-flation" (new thing). Sonos sued Goliath, and the judge decided David was right, Google was wrong. And Reebok got sold by Adidas to Authentic Brands for $2.5B — But who is Authentic Brands?$SONO $GOOG $SBUXGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks Daily. It is Tuesday, T-Boy Tuesday, August 17th. I just checked, this is the best one yet. Yeah, this is a TBI-O-Y. Jack, first story, what do we got? The coffee prices.

Yeah. The price of coffee beans are up 43% so far this year. This is awkward for like, you know, everyone. What might come next? A new thing we're calling swap flation. For our second story, Sonos is a very tough company. Despite being based in Santa Barbara. The high-end speaker just sued Google.

And they beat Google. For our third and final story, Germany's Adidas just sold Reebok for a huge loss. But here's what Jack and I think the real story is. The buyer. What is authentic brands? But Snackers, before we hit those three wonderful stories, this is a wonderful mix, Jack. Is it just us or the headlines pretty discouraging this past week? Yeah.

I mean, Jack, I actually got a Sunday New York Times paper. It actually felt heavier yesterday. Physically heavier. We're supposed to be turning hot back summer into a verb right now. Instead, August is like doing too much. Do less, August, do less. First, it was the UN's report on climate change from a week ago. I mean, the world's getting hotter, faster than everyone fear.

Then it was the Delta variant, which is showing huge spikes in infections across the country. Yeah, pandemic isn't over, and that crushed U.S. consumer sentiment last month. Brutal. Then, this weekend, it was an earthquake in Haiti. And that was only weeks after the president of Haiti got assassinate. And finally, it was the gut-wrenching, painful images we've all seen from Afghanistan. But Snackers, here's what Jack and I. thinking, and we were chat about this before the pod.

Our goal on snacks daily, not just today, but every day, is to be a 15-minute break for you from all of that. But sometimes you got to acknowledge the bad headlines. So here's what we're going to do. We're going to make the next 15 minutes the best ones you out. Let's hit our three stories. You're tuned into snacks daily. We spoke to the lawyers and we got to get something legal out the way.

The snacks are about to hear ain't food. It's air candy. They don't reflect the views of the robberhood family. It's all informational just so. You know, we're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security.

Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, your morning coffee is probably going to get more expensive. Look inside your mug. You might soon see some swapflation. I think like 30 seconds ago we said we weren't going to go into like a dark, depressing,

negative territory check. Coffee prices are up 43% so far this year. Brutal. Can we talk about the Arabica situation, Jack? Arabica coffee. First brewed in 1,000 BC. They have origins in the highlands of present-day Ethiopia. Now it's grown all over.

This is the cabernet of coffee beans. It gets better with it. It's top-notch stuff. And Arabica future prices are usually $1.20 per pound of these beans, according to the New York Times. Typically. But not anymore. It just hit their highest level since 2014, since before, like, flat whites worth a thing.

Two bucks a pound. That's going to cost you. And Snackers, if you're curious why coffee prices are rising, it's because every part of the coffee supply chain is getting squeezed from like the farm to your face. Well, let's start in Brazil. The number one producer of coffee beans in the world. Great coffee. They grow 40% of the world's coffee, actually. They do.

Kind of a problem, though, because climate change has caused coffee trees there to suffer from. Get this. a frost, like literally 27 degree temperatures down in the rainforest. And then drought and then wildfires all in one growing season. Okay, so that's like a nightmare situation going on in Brazil. Jack, can we head over to Colombia? Things looking better in Colombia? No.

No. There's political protests there, which have disrupted ports from exporting beans. And Colombia is the number three exporter in the world. Again, we're talking about our buddies, Arabica beans. So you got not enough beans grown. Not enough beans being sent. Not enough beans, period. You might be thinking, I haven't noticed prices surge at Starbucks, and that'd be true, because Starbucks is a very professional organization.

Yeah, they are. And they buy their beans one year in advance. So venty prices haven't jumped there yet. They're going to be okay. On the other hand, then you got your local macchiato spot with like the Willie Wonka drip machine. They are not as on top of their game as Starbucks is on this. Tough situation for mom and pop who don't have a financial forecaster. So their options are keep prices the same for a cup of coffee, because,

Starbucks isn't changing their prices, but then they'd lose profits. If you do like the oatmeal coconut cream situation, it's going to be tough to pay rent after that coffee. But we all still do it. The alternative is pass on higher cost to customers with higher prices. Which leads to our takeaway. So Jack, what's the takeaway for our buddies over in everyone who consumes coffee? Your coffee cup might soon see swapflation. Swapflation. New thing that we just thought off at snacks. So here's the thing, Snackers. Prices are increasing across the economy. That's inflation and some funky stuff can happen when there's inflation. The most obvious one is that prices rise, even though the product stays the same. And as a consumer,

that makes you angry. Okay, so that's inflation. But inflation also has a sneaky cousin who we've told you about called shrinkflation. That's when the prices are the same for a product, but they shrink the size and hope you don't notice. Brutal. Okay. So not fun on one or two. But then we've got a third thing, Jack and I are envisioning, a new way that markets can react to higher prices, and we're calling it swap flation. That's when the price doesn't change. The size doesn't change either, but the ingredients do. Snacker is 60 to 75% of coffee brewed globally is with those arabica beans we just mentioned before. If you're a coffee roaster, you might think, what if I'm mixed in like 20% of my beans with lower cost robusta beans? Well, arabica is

tastier and chocolier and nuttier and snobier. So it makes sense why robusta beans are lower price. Look out for coffee spots to quietly remove that label that used to say 100% Arabica. Arabica was the Cabernet. Robust is more like the Francia. Swapflation. Maybe the not as great tasting solution to coffee inflation. For our second story, a judge just declared that Google is wrong. And Sonos is right. So Sonos stock just hit record high levels on that big patent court victory. Jack, some inventions are unpatentable. You know the ones we're talking about. Like Snapchat stories, you can't protect that with a patent. No, everyone sucks Snapchat story. We're going to, I mean, we're going to, what are we doing

snack stories these days? We got to pull that out of our hat. It's on our 2024. Okay.R. Feels like a good August project. Yeah. But Sonos, they have audio inventions and they are patentable. So they are unzuckable. Exactly. Now, back in 2005, Sonos set up shop along the coast and invented multi-room wireless audio. You have to say it like that. This was huge back then in the age of like drilling holes in the walls for wires to get like the surround sound situation. It's true. You needed a whole construction crew. Instead, you could spend a few thousand dollars on some speakers. Pro tip, throw them on the wedding registry. And then you have speakers all around the house playing the same music with no delay. And of course, it's synchronized down in the

wine cell. It is. If you can't hear T. Swift and the wine cellar, Do you even have a sound system, Jack? Snackers, this is a reference to them being based in Santa Barbara again. They are, which is lovely. And if you go to the About Us page on Sonos website, you see they brag 500 plus patents. Yeah, I mean, this is Sonos putting their own accomplishments on their own fridge. Sonos cares so much about inventing things. Their career page says, help us invent the future.

And this is what Jack and I find fascinating about Sonos. That is why Sonos will be. So mad at Google. Google allegedly stole Sonos' precious inventions. Get this, Snackers, back in 2013, Sonos did a collaboration with Google to get like involved with their Google play music and YouTube products. So you could stream music on a Sonos. And to do that, Sonos gave Google the blueprints to their fancy little gadgets, which then led to an alleged betrayal straight out of season three of Young and the Restless. Google took the blueprints of that fancy Sonos smart speakle and stole the best ideas to launch their own lower priced Sonos killer known as Google Home.

That's how it came to be. So Sonos sued Google last year, specifically citing the five patents that Google infringed on for Google Home. And Friday, when Nick and I were already done working for the week, the judge made their preliminary ruling. Sonos is right. I'm so glad you brought the tone down because I did not have another octave in my voice to hit the momentum on this story. So a $5 billion company called Sonos beat a trillion dollar company named Google in court. And the results? Yesterday, Sonas's stock surged 10% to close to record levels. Now, there is an asterisk here. The judge's ruling on Friday was preliminary. So there isn't going to be any enforcement until December when the final ruling is made by a different judge. But if it's confirmed,

Google will have to change its Google home product or pay Sonos to license its technology. So Jack, what's the takeaway for our buddies over at Sonos? Sonos took a big risk in suing Goliath. Yeah. Now, it could become rich David. Okay, let's reemphasize this. Google, a trillion-dollar company. Suing them takes a lot of years, a lot of lawyers, and a lot of money.

And also, you invite some potential retaliation because Sonos needs Google to market their products on all of Google's websites. But if this Sonos victory holds in final court, it could force Google to pay a licensing fee for each and every smart speaker. that they're pumping out these days. And it's not just Google who would have to pay that licensing fee. Sonos has the same lawsuit teed up to sue Amazon with with the same allegations. Jack, can you share the wild quote that the ambitious and very excited lawyers over at Sonos said yesterday? This victory against Google is just the tip of the iceberg. Snackers, Sonos took a big risk suing the big tech alliance.

And that could turn it into a rich David. For our third and final story, Adidas just sold off Reebok. to a company called Authentic Brands for $2.5 billion. Who is authentic brands and why do they want Reebok? First of all, we should mention our buddies over at Reebok here. They actually date back to England, 1895. Back when athletics was mostly just running and jumping and running. Yeah, Queen Victoria got her first squat rack from Reebok.

Well, after Reebok's had all that success with the question and the Alan Iverson answer basketball sneakers. Legends. Adidas bought Reebok in 2006. for nearly $4 billion. Fifteen years later, how's Adidas feeling about that, Jack? Adidas is selling Reebok for half that. But the real story here isn't what's being sold or who's selling Reebok.

It's who's buying Reebok authentic brands. They are a brand management firm that has managed to kind of quietly scoop up 30 companies that you may know. Now, they don't focus on the winners of any particular sector. They focus on the losers. On the losers, the dropouts, the JV, the misfits, the ones who kind of got cut from varsity. Interesting strategy, Cotton. They own Brooks Brothers, Forever 21, Nautica.

Let's see if it works out for him. Juicy Couture, Nine West. Jack, can I interest you? And I don't know, a little bit of Aero Postal with the accent. Last time I was in Aero Postal, I bought pants for $7. Yeah, last time I was in Aero Postal, I, um. That's a, you don't have to finish it. Snackers, do you remember that mall scene in the movie Clueless?

Yeah, I know what you're talking about. with the tiles, the white tiles, everyone seemed... Gen X couldn't be happier right now. Authentic Brands owns all the stores in the background from every suit. Oh, but get this, Snackers. It's not just cargo short fashion. Authentic Brands also owns media. They own Sports Illustrated.

That has been sports magazine. Oh, wait. Authentic Brands doesn't just own media. They also own the legacies of late celebrities. They own the estates of both Marilyn Monroe and Muhammad Ali. Oh, wait. They also own like the business activity. of real-life, live living celebrities.

In 2015, they bought the rights to Shaquille O'Neill's future business endeavors, meaning anything that Shaq merchandises or endorses from Icy Hot to Walmart sneakers, authentic brands collects those royalties, not Shaq. They're getting a piece of the Icy Hot. So, Jack, add all this up, take a look at authentic brands. What kind of numbers we're looking at out of this company? They're making half a billion in revenue, over 200 million a year in profits, and they filed to IPO in July.

That's right. Snackers, authentic brands is targeting a $10 billion evaluation. So basically all these celebrities, all these mall brands, and all these people would be worth half a lift. Soon, you can finally wear juicy sweatpants and own a piece of juicy stock. And do it while walking through an abandoned Forever 21. So, Jack, what's the takeaway for our buddies over at Authentic Brands? The brand can be worth more than the product. Snackers, authentic brands isn't just scooping up basement deals on the bankrupt.

icons of your youth. They know that these brands have a special place in your heart. Okay, so here's the authentic brand strategy, their new business model. They're going to try to harness customer nostalgia for a company like Reebok. And then they're going to tell a new version of the Reebok story. Same logo. And then sell shoes online and through social media. Now, here's the key. Authentic brands doesn't make the product. They don't make the Reebok shoes. They license all that out to a third party manufacturer. They pretty much just have the right to upload the Reebok PNG file logo into like some third party website. Authentic brands think that you care more about Reebok's brand than the quality of Reebok's shoes. Authentic brands is finding value in brand over product.

Jack, can you whip up the takeaways for us over there? Your morning coffee could get more expensive real soon. Or could just get diluted with cheaper beans because swapflation. For our second story, Sonos stock jumped 10% because it beat Google in court. When you take on Goliath, you could become a rich David. This is not litigation advice. No, it's not. But I don't know if you know, you know. For our third and final story, Reebok got sold last week to authentic brands for just

$2.5 billion. Because authentic brands thinks brand is worth more than product. I feel like this coffee thing is going to hit you personally, Jack. I'm going to start growing my own beads. By the way, on my way back from visiting you last week, I stopped in a town of Vermont and bought like the best copy I've ever. had, it was a maple latte. Didn't they steam maple syrup? Yeah, that was it. There was actually no coffee in the entire thing. It was incredible. Snackers, time for our snack fact of the day. This one

tweeted in by David Crogey from a lovely Des Moines, Iowa. Disney and McDonald's have a shared history going back over a century. Yeah, get this, Snackers. Back in World War I, Disney's founder, Walt Disney, and McDonald's founder, Roy Kroc, were both living outside of Chicago doing logistics. Both lied about their age to enlist in the army. And then both ended up in training in Connecticut. And then both became friends. And then both went their separate ways, but both launched huge businesses after the war in Southern California. No word on whether they rekindled that friendship.

There actually is word. Apparently they did. They were like still friendly after. But I kind of like ending with that mysterious finish. Snackers, you look fantastic today. The best thing you can do to spread snacks is share your snacks and. Ask people, H-Y-H-Y-S-D. And singer jingle for all to hear.

Have you had your snacks daily? Nick and I'll see you tomorrow. Can't wait. If you know, you know. And before we go, happy birthday to snacker Adam Hendrix all the way down in Auckland, New Zealand. And happy birthday, Elena Lomeli

in Guadalajara, Mexico. And Sergio Gomez over in Belmont. And Nirav Patel in Midland, Michigan. And Anish Katara in San Francisco. Happy birthday, Kaili in San Francisco. And Nathan, also down the street in San Francisco. Happy birthday to Derek Kubach. Morehead, Minnesota. Great name. And Ali Hardinstein, happy birthday over in New York City.

And Teddy Campbell, the big state of Utah. Virginia Myers, congrats on moving to San Francisco. Enjoy the Nopa Burger. We know you like the November. Good luck with the move to Denver, Shelby Sukup. And Lainey Mitch, last day of the internship, celebrate the wins. Go Gators to Michael Katz, who just graduated from the U of S. And Tom and Christina Fitzgerald just had their first baby, already a snacker in lovely Ohio. If you're celebrating something today, make it a T-boy. Celebrate the wins. This is Jack. I own stock of Amazon. Robin Hood Snacks, newsletters, and podcasts reflect the opinions of only the authors who are

associated persons of Robin Hood Financial LLC and do not reflect the views of Robin Hood Markets, Inc, or any of its subsidiaries or affiliates. They are meant for informational purposes only and are not a recommendation to buy or sell any security, cryptocurrency, or investment strategy in any account. This is not an offer or sale of a security, not a research report, and is not intended to serve on the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robin Hood Markets, Inc., Robin Hood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk, including loss of principal and past performance, does not guarantee future results. Robin Hood Financial LLC,

member FINRA, SIPC. If you can't hear T Swift and the wine cellar, do you even have a sound system?