The Best One Yet - Chobani’s Greek yogurt strategy, Marriott’s “resort fee” call-out, and Blackstone’s digital “ad-quisition”

Episode Date: July 16, 2019

Chobani whipped up a new line of nut butter Greek yogurts — The Greek yogurt industry is struggling, but Chobani is using Coca-Cola’s spinoff strategy. Marriott has been charging “resort fees�� for years, but now the DC Attorney General has a problem with it. And publicly-traded private equity firm Blackstone just made an acquisition of the mobile ad optimizing startup that’s taking on Google and Facebook’s ad game.Learn 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. This is snacks daily. It is Tuesday, July 16th. Happy birthday, Todd. We said that yesterday. This is the best one yet, even though quarterly earning season started with a whimper. Technically, stocks didn't even budge yesterday.

All right. Three stories for you. First, Blackstone is spending $750 million to buy a mobile ad company that's called Vungle. So we'll explain how Vungle is different than Facebook and Google. We're going to try not to Vungle the story for you, Tuck. Second story, Chobani, the New Berlin, New York-based Greek yogurt legend. Legend. Just released a line of nut butter-based yogurts, so we'll break down the Greek yogurt industry. Spoiler alert, it hasn't been pretty for the Greek yogurt industry.

Third and final story, Marriott Hotels just got outed by an attorney general in Washington, D.C., for ripping people off with the ambiguous resort fees. This one threatens one of Marriott's key profit puppies for resort fee. We've got to jump into that one. Before we hit those three stories, though, we got to talk about an update here on Quibby. Quibi is a company that stands for QuickBites. It's basically Netflix, but you can only. Only watch it on your phone and it's super short episodes. We're talking Silicon Valley meets Hollywood.

They had a baby. That baby's Gen Z, so it's technically mobile first. Quibi is legit, though. They raised a billion dollars last year, and they're putting that money to work by hiring B-list talent. Impressive strategy here, Codd, and let's see if it works. So a new show that they just announced stars the guy from Reno 911. We know what you're thinking.

You're going to Google and be like, oh, oh, that guy. That guy. You'll recognize him. But he's going to play a tech founder who, like, leaves his tech company to start a winery. up north. Extremely charming, extremely relatable. Now, a second show is a superhero series from the guy who created the born identity. And then they're doing a whole varsity blue series for our buddy Mox. We had a movie in the 90s. We need a series in the 2019. James Vanderbeek. Big Snacks listener. Hope he seen on the show. Mox, excited to have you on the pop. Can't wait. In the meantime, listen to these key words and then why our story.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks are about to hear rain 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, Blackstone, the private equity legend is spending reportedly $750 million in pure cash to buy Vungal, a mobile video ad firm. Now we're going to give a context here. Most of the story is about Vungal. True. But I want to start with Black. Can we please

start with us? Well, it's a little awkward and oxymorani. True. It's a private equity company, but as publicly traded shares. Still trying to work through the oxymorani situation. So you might have like a buddy who's trying to make some money flipping houses. True. We all do, Timmy. Blackstone. Blackstone does the same thing, but it's flipping companies. Now, let's talk about Vungle. Can we bring it to Vungle over here. Vungle is a performance marketing ad company working specifically on mobile apps. It's a brutal description. of a company. That's the technical term. Now, the snack's term is it works hard to make ads suck less.

A lot less. And here's how it works. Let's actually walk through, you know, one of their decks actually is a slide that says this on it. We found their deck online. If you have a free mobile app, integrate Vungle and start getting paid by showing 15-second video trailers. You know how it works. If you're not paying for an ad, we've been there. By living through advertisements. And Vungle makes them, like, not horrible. It's a tough experience for everyone out there. So 60,000 mobile apps are using Vungal to monetize themselves through beautiful ads. And you didn't even notice.

We're talking about Pandora, Zinga, even apps from Microsoft. Welcome to the Vungal. We're going to walk you through how Vungle does its magic with a relatable example, Pandora. So let's say you're using Pandora. You're at home, and we know, you're like us, you have the free account. You have the free version. Every fourth or fifth song, you've got to listen to an ad. So you're listening, you're trying to get, you know, just kind of debrief from work.

So you're going to listen to music from the, I don't know, the motion picture cocoa. I love that song. Remember me. It makes me cry every time. Instead of wasting time on an ad while you may be in the bathroom, Vunkle's going to be a lot more strategic. Yeah, it's not going to just squeeze it between track six and seven. It's going to wait until it knows that you're paying attention to your screen and you'll

actually see the video ad between the songs. And it does that when you click on the next song. That's a quick example of like how Vungle does it. It waits until you skip to the next trap because it knows you're paying attention. If you're clicking, you're present. So, Jack, what's the takeaway for our buddies over at Vungal? Vungle finds a way to get you to click that ad without using big data. This is what fascinated us about Vungal, is that it's competing with the biggest of ad companies.

Google, Facebook, Amazon. Amazon is the number three ad company these days. Shocker. Let's see how they all do it. Facebook uses data. Their ads are perfectly tailored to you because it perfectly knows who you are. Google and Amazon, they're using intent. They know what you're looking for and what you may buy.

And so it's going to show you an ad for exactly what you just Google or Amazon searched for. But if you're Vungal and you're looking at these other three companies, like, you don't have data. Nope. You don't have intent. Not exactly. So you got to like find a way. They use timing and design to get you to click that app. Exactly.

That's the key for Vungal. Optimize for timing and optimize for design. It's like an undersized player who's finding a way to play well. It's crafty. It's like James Vander Beaker, Coco. For our second story, Shabani just launched a new yogurt product and reveals a unique growth strategy. Shobani is the ambassador globally of Greek yogurt, I would say.

Inspire the idea from a Turkish entrepreneur who emigrated to the U.S. Yes, and he's a very good business owner in this country. It's a private company, so the stock is unavailable to the retail public. But he's got a great new product that is available to the retail public. They're combining Greek yogurt with nut butters. Take the words right out of now. We're talking almond butter, cashew butter, hazelnut butter. Right, because we all of that friend who, again,

is like almonds are out, hazelnut is in. This is a high protein dense combination. Now, you're wondering where this came from. It's because they've had a store in New York, which is their only retail store. It's their only physical store. And they've been selling these yogurts with nut butter for a while, and they've been doing really well for a while.

So finally, it took them a while to do this, but they gave the people what they want. They're going mainstream. Starting this month, five of these flavors, which combine Greek yogurt with nut butter, are going nationwide to grocery stores. And then this is what Jack gets really excited. about because he's an on-the-go guy. It's totally portable. It's a great meal replacement if you don't have time to sit down and take out the fork. Now, that sounds really exciting. What's not as exciting is when you do a snack style deep dive into what's going on in Greek yogurt and find out about what's happening on a Greek yogurt. If we had this pod in 2013, we would be covering Greek yogurt stories like every other day. We would have been this tall and all we would have been doing is takeaways that related back to Greek yogurt. But the Greek yogurt trend has actually receded a little bit. Retail sales.

of yogurt overall fell 1.8% last year, and that's the third straight year of decline. Greek yogurt sales were even worse. They dropped 7%. Now, Chobani has still managed to find a way to grow. Sales rose by 4% even though it's in a shrinking market. So we decided to look into what specific Shibani trends are actually making this work. All right. One trend that's working is less sugar. The version of Chobani that has less sugar because for some reason added sugar is the default. That is selling high. Then you've got Greek yogurt smoothies from Shibani, which is like gogurt. But you don't get judged when you order it. But respectable.

Very true. And then there's a product, Chobani Gimmies, which is like, just Greek yogurt. Give me that Chobani. But it's marketed to kids. It's in like a- It's probably got a cartoon character. It does. It's adorable. It's in a small pack.

Now, what's not working is Chobani's attempt at non-Greek yogurt. Basic yogurt. The thing it was trying to disrupt. Like basically Yoplay. Original yogurt. It's called Chobani Smooth. And it was, yeah, it was around for two years and now they're getting rid of it. So we've got what worked and what didn't work for Shibani.

Jack, what's the takeaway for our lactose-tolerant friends over Chibani? Product extension is how Chobani is saving growth, even though the market is shrinking. Right. You're probably going to hear about product extensions in like an MBA class because these are basically spin-offs. They're where you tweak or change a product slightly, just enough to attract new users, but you don't change the core product. All right. So when Coca-Cola was running out of sales growth, it tweaked the product slightly. It came out with Coke Zero, which I think is the same thing as Diet Coke.

And when you do a tweak, you've got to make this really strong motion with your left hand that I'm doing it aggressively right now. He's going to break a wrist over here. So Coca-Cola is struggling. Coke Zero, Coke Vanilla, Coke Cherry. They're actually doing well. You could be doing the same thing with Levi's jeans. Levi's jeans is a brand that's used on a lot of jeans. Now they're making outerwear and a lot of other things. And she knows. So if you're wanting to know how a product extension playbook works, look at Shabonis. Two things are going to change. The packaging and the purpose of different spin-off products. But two things are going to stay the same in your spin-off product. The core ingredients and the brand.

The core ingredient being Greek yogurt, the brand being Chobani. For our third and final story, Marriott hotels were just sued for deceptive resort fees going into the weekend. There is one thing worse than a deceptive resort fee. Few things are worse than this. And we know it's a lot of things worse. You're checking out and you're hitting with those fees. I thought one is the ticket processing fee that like ticket master's...

I know you mean because you bought the ticket. You have to use the ticket. Or the delivery fee? The delivery is just me opening my phone. 40% just to get a chicken jarrow. Clearly, Nick and I. are not fans of business models that rely on trickery and deception. We're also not fans of BS fees, aka the hotel resort fee that's highly ambiguous.

Quote unquote, resort fees. So the Attorney General of the District of Columbia sued Marriott last week. And he said that those surprised resort fees you get when you're checking out, they're deceptive. So resort fees used to be a thing. They were used at, you know, resorts. Yeah. And they were there to pay for things like the Hobie cat that you get to take in the bay. A lot of fun.

The climbing wall. You get to embarrass yourself in front of the fans. family. Jacksonville Landlocked State. So any opportunity to jump into a body of salt water over here. And the water slide, because I love jumping in water. Right. Again, fresh water. Now, last year, word got out apparently that like any hotel, not just a technical resort, could whip up a resort fee and charge you. So according to a professor of hospitality at New York University, the number of resort fees paid in America jumped by 400% last year. And what these hotels ended up fitting into this resort fee was stuff like pool access, water bottles, a view. A view from your window.

Like, shocker. So the Attorney General wants two things for Marriott. First, he wants transparency. Yeah, because the CEO of Marriott had a slightly disingenuous interview discussing this topic. Yeah, he claimed that a resort fee is similar to a baggage fee on an airplane. Except big difference here, when you hear baggage fee, you can choose not to bring the bag. You can avoid a baggage fee. You can't avoid a resort fee.

Now, can I put on my Speedo and walk down lawsuit lane with you over here? The Attorney General put together quite a deck, like showing the guilt from... They were very, this is one of those decks that you want to show your significant other. You're so proud of it. So they like, somebody at the Attorney General's office booked a hotel in Las Vegas from a Marriott hotel. It has a lot of time apparently. And in very big bold throughout the booking process, you see $219 per night.

Then you see the ambiguous $30 daily destination fee added to the room rate. Yeah. And that destination fee disclosure, that was in like very barely visible font. Right. In a weird color that you could barely even notice. Very strange. So it was kind of implied that maybe this was a, government charge or some kind of a tax thing that like no one's paying attention to.

And that's because they bundle the resort fee in with taxes and fees. So anytime I paid a resort fee, I thought like the government was charging it. So it's the company. Transparency-wise, the attorney general wants mayor to start baking these fees into the nightly room rate so there's no sneaky fee. There you go, transparency. The second thing he wants is karma, aka revenge, aka the legal term, restitution. Marriott's going to have to repay potentially fees back to guess who it was kind of ripping off. So if you get an email from the District of Columbia versus Marriott International,

no, don't trash it. Open that email because it might have like your $100 resort fee you paid two years ago. Coming back. So Jack, what's the takeaway for our buddies over at Marriott? If Marriott loses in this case, small hotels will win, Airbnb will win, and you and I will win. If the fee gets baked in, you're going to get an apples-to-apples comparison of the prices, finally, so there won't be this like surprise fee situation as you're checking out trying to get into the Uber before you get to the airport.

So small hotels will benefit because they have very few amenities, so like their fee is going to be nonexistent. All right, so Airbnb is going to benefit because you don't really have amenities, so it'll be cheaper. And then you and I are going to benefit because you don't have to have that awkward argument with a concierge as you check out. Jack, can you whip up the takeaways over there for me? Blackstone's next house flipping project is called Vungle. It's buying now, hoping to shaping this thing up and then, you know, flip it. Chobani created the Greek yogurt trend in America, and it's adapting with nut butter mixed in there. Remember the lesson here. Product spinoffs can save your growth.

Third and final story, Marriott might have to stop hiding extra costs in the ambiguous resort fee. And that means it may have to give up its profit puppy for adoption. A lot of takers there. Now, time for our snack factor today. This one was super interesting. It was sent in by great name, Nick Van Dam. Sounds like some kind of a superhero character. Nick Van Dam was traveling in Zambia, and he did a little bit of research snack style. In fact, he directly told us that he, quote, unquote, jumped in snack style when he learned about this. So he learned that in Sub-Saharan-A-A-A-Saharan-A-A-A-Sty. So he learned that in Sub-Saharanaranaran Africa. 10% of all economic activity happens through a mobile phone payment. That is significantly higher than anywhere else in the world, including most of the world where it's just 2% or less. I'm Venmoing someone like once a week for an omelet. I think that's a big deal.

I'm not spending 10% of my income. I'm also using half my mind sharing which emoji to use for like what constitutes brunch on that if I've used the egg one too many times. Mobile payment adoption in sub-Saharan Africa leading the world. A couple other key stories we're covering in our snacks newsletter today. City Bank kicked off second quarterly earning season yesterday. Someone's got it. But it starts off hot today with J.P. Morgan, Goldman Sachs, and Johnson and Johns. Big lineup. Snackers, love to having you with us so far this week.

Send us some snack facts at Robin Hood Snacks. Either way, we'll be with you. Manana. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc. Or any of its subsidiaries or affiliates.

The podcast is for informational purposes only, is not intended to serve as a recommendation to buy or sell any security, and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC member FINRA SIPC.