The Best One Yet - 🍻 “Corona's $900M wounded soldier” — A canceled Mexico brewery. NYT’s pod acquisition. The economy’s “Two Paths.”

Episode Date: March 24, 2020

Constellation Brands brews Corona lagers in Mexico, but its $1.4B investment in a new facility there now isn’t happening, so the stock dropped 12%. Despite all its reporting right now, the New York Times took a break to acquire Audm — doubling its content in 1 move. And the US response to coronavirus is now facing a Robert Frost style “Two Paths” moment: Officials may start weighing the economy vs. human lives.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. And this is Snacks Daily. It is Tuesday, March 24. Snackers, there was a time when a 3% drop from the Dow would have been huge, but yesterday's was like bite-sized. Welcome to the new economy, the corona economy. Jack, what happened yesterday? Well, there was uncertainty about whether the government will rescue the economy with a $1.8 trillion deal or something smaller or something big.

When you get into the trillions, those rounding errors kind of make a difference. You want to hear our first story? Can we whip up the first story, which has to be part of the best snacks daily we've ever done? This is the best one yet. The only story you'll hear all week about Corona that has nothing to do with virus. We're talking about the Brewmaster Constellation Brands. The owner of Corona Beer was building a $1.4 billion brewery in Mexico. Now it's been canceled and the stock fell 11% Jack and I jumped on.

This story is about political risk and lobbying. Second story, what have we got, Jack? The New York Times has some news to report. They just acquired a startup called Autumn. You can read about it in the New York Times. It's all about taking those really long text articles and making them feel and sound like a podcast. And then they throw in like a little bit of a pinch of Hollywood. It's a wonderful thing. Our third and final story, U.S. policymakers are at their Robert Frost moment. Jack, two roads

diverged in a yellow wood. Yellow wood? Is that how it is in Vermont? It's kind of a weird thing. I don't know where Rob was going with that one. Bobby, what's going on? The government policymakers are choosing between saving the economy. I took the one less traveled by. Or saving human lives. And that's made all the difference. By the way, key that you say difference like that when you're reading a Robert Frost poem. Now, Snackers, before we jump to all that, we got to wish a happy T-boy Tuesday to basically everyone who's listening right now. This is the last full week of March, but I got to say, this month didn't feel like a normal March. Jack, I'm feeling you, it kind of felt like unusual March. It was actually the worst March ever, not just because 32, my birthday on March 5th was like a random number that's not special.

That was great. But for other reasons. No, no, you can round that. The key reason March was different this year, there was no March. There was a lot of madness. There wasn't the official trademarked March Madness. No tournament, no brackets, no desperate number 12 seed trying to beat a number five. No spending weeks agonizing if you're going to make sure that the number nine seed beats number eight seed in your bracket because that's always the tough. No inevitable disappointment that Kansas is going to win because Kansas always wins. No joke. It's like a broken

watch right twice every year. If they seem to win every three years, am I wrong? Are we wrong? What's going on? So Snackers, we're serving you up our own March Madness bracket for the Snackers. I whipped up the profit puppy madness. Here's how it goes down. We have 32 teams broken into four divisions. The first, retail and fashion. Then you got tech and media. Then you got industrial and finance. And then you got food and beverage. Jack, can we talk about the unreal matchups within each of those? We got eight companies and eight profit puppies in each of those four divisions. That makes 32 profit puppies total battling against each other for the crowd. You can pick your own bracket and you're going to have matchups to determine like Apple AirPods versus Domino's takeout. PayPal's Venmo versus Casper's Wave

mattress. Yeah, can we talk about matches Tinder Plus versus Ford's F-150 truck? A dating app versus pickup truck. That's a weird matchup. Now, the only things we didn't cover were like energy, health care and like utilities companies in this one, full disclosure. No, those sectors are a little less digestible. There's definitely some like oil and gas commodities trader down in Houston listening to this podcast right now who just threw his phone against the wall when he heard that. Here's the beauty snackers. The winner of the winner. of this March Madness, Profit Puppies edition, is whoever gets the most votes.

We're going to be doing four polls per day on Twitter at Robin Hood Snacks, and you decide which profit puppy wins which match. Right now we have 32 teams. Next week, 16 teams, the Sweet 16, then the elite eight, then the final four, then the winner. Remember, you can vote at Robin Hood Snacks on Twitter. Happy T-Boy Tuesday.

Let's hit our three stores. You're tuned in the snacks daily. We spoke to the lawyers, and we got to get something illegal out the way. The snacks are about to hear rain food. 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. 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. This is a wild mix of stories today. For our first story, Constellation brands plummeted 12%. Because it's $1.4 billion Mexican What's the status of this thing? It's not happening. It's not happening. No, it's not happening. Nick, this story's got a lot of corona. So true.

No virus. Only one you're going to see out there today like this. Jack, can you kick it off for us, please? We got two players in this beer pong showdown of the story. All right, you got Constellation Brands, which is the third biggest U.S. Beer producer in the U.S. And you got Mexico, which is the world's biggest beer exporter in the entire world. Not too shabby.

It's number one of imports for the United States, number one for China, and number one for UK. not Germany who's winning that competition with Bex, and it's not Canada with Labat. They are far behind Mexico. No, no, no, no, no, no, no, no, no, no, no. Mexico is winning with Takate, Modelo, Corona, and Pacifico, which is shipping all over the world. Shockingly, none of those companies have the letter X in their names. I feel like usually with Mexican imports, that's the case. Shockingly, they all taste better with a wedge of line. Now, Snackers, if you're wondering what Constellation brands is, because its name is highly ambiguous and sounds like a Harry Potter character, it's because it's because it's, It's basically the company controlling your parents' liquor cap.

It owns High West Whiskey. It owns Robert Mandevi wine of Napa VAL. Get the Pino out, Jack. It's got Svedka vodka. And, Nick, that's just page one of like a 50-page alcohol menu, that Constellation Brands own. Just want to make that clear, guys. Jack had a bad experience with Cabernet. He is definitely a Pino guy.

Nick, despite my highly acclaimed career as an Olive Garden waiter, great career. I'm not the guy who picks the wine. But the profit puppy, when it comes to Constellation Brands, is its Mexican beer labels. You probably know Constellation brands best from Corona and Modelo, the two Mexican beer brands that Constellation sells in the United States. And those are so successful for the company that half of their workers are based in Mexico.

So, Jack, let's travel to Mexico for the rest of the story. Well, the conflict is over a new Constellation brand brewery. It was trying to build in the Mexicali Valley of Mexico. Great name Mexicali. By the way, that brewery was going to get 750 jobs to the area. and it was going to cost $1.4 billion to build the whole. Basically, this brewery would brew all the future beach beers that you're going to drink this summer, and they would all get exported to the United States.

Yeah, that's where they were going to come out of. But the problem was that local farmers claim was going to hog up all the local water, which, you know, is kind of important if you're going to feed everyone in the Mexicali Valley. Yeah, kind of an awkward situation. All that Mexican water would be converted into Mexican beer in the brewery, which would be sent to the United States for Americans to drink. doesn't really add up or make sense. Now, the issue managed to find its way to a ballot so that Mexicans could actually vote directly

on the decision, whether or not to even have this plan in the first place. The vote was a referendum, went down this weekend. 76% of the Mexicans voting voted no. They do not want the brewery to happen. Consolation stock had dropped 12% on the news. That's because it already poured $900 million into this facility that's getting the kibosh, right? Someone in accounting is going to have a horrible week. Now, Jack, what's the takeaway?

for our buddies over at Constellation. Shocked this up as a huge failure by Constellation Brand's lobbyists. Snackers, imagine spending on a wedding cake, a wedding band, the food, the venue, the RSVPs, the person who licks the envelopes for the RSBPs, and then the venue contract

never got signed. The place is actually booked. Do you think the wedding's tomorrow? The place is booked. You forgot to sign the venue. You gotta fire that wedding planner and you better do it kind of yesterday. That's kind of how it feels

with the lobbyist at Constellation Brand. who let them build a factory halfway done when it wasn't approved. 64% of the plant was paid for. Marcus had already ordered like the ribbons and the cakes for the celebration when they cut the thing and open it up. Now, we don't know if Constellation Brands can salvage any of the 900 million that was spent on this factory. No. But it's the lobbyist job to look at what permits are needed. Yeah.

Run some ads to make sure the thing gets approved. Tell your congressman to say Cita Cerva would have been boom, a whole campaign that would have won the whole thing over. The lobbyists should have been all over this election and made sure they got it approved so that Constellation brand can build this brewer. Whether or not the brewery should have happened, the bottom line, the lobbyists are the ones who drop the ball. And it costs $900 million. For our second story, Jack, and you awkwardly fold that thing over to page B32. Those four-fold papers are brutal. You need to tag teams. This New York Times just acquired an app that reads articles to you.

It pretty much takes really long articles and turns them into delightful podcasts. Yeah, we thought the New York Times reporters were like busy covering pandemics and they had them. But then you got a whole floor full of lawyers that are crafting an airtight acquisition contract. And that's because the New York Times acquired Autumn, which is a small media tech startup that happens to be able to do a magic trick. Snackers, they turn long-form journalism that's like 17 pages. Not too shabby. Into Hollywood quality audio for $8.99 a month. Now, autumn was founded by a couple of Columbia grads back in 2014 because the pair happened to have noticed a problem.

observation number one, you only read the New Yorker cartoons because the long articles are way too long in the New Yorker. You love being able to tell people you get the New Yorker, but reading the New Yorker is a whole different story. Anyone could take a reservation. The challenge is to hold the reservation. Observation number two, you're listening to more and more podcast every year. So Odom's solution is to transform really long articles into audio articles, which are pretty much just podcast, right? Basically podcast. But Jack and I noticed something fascinating about the company here. Autumn added a dash of Hollywood because they had to differentiate themselves in their tech crowd. So at first, essentially they needed people to read articles into a microphone.

Yeah, they needed voices. So they pretty much went on Craigslist, and they're like $10 an hour if you come and read articles into a microphone for us. Boom, Siri, Alexa, what are you doing these days? Actually, that's even worse, Nick. They might even get robo voices like Siri and Alexa to, in an automated way, read like a robot. Today is August 18th. Mongolia's shopping cart manufacturing industry continues to grow. It gets bad from there.

Exactly. So Autumn version 1.0 simply solved the problem of being too lazy to read a 14-page magazine article. Then they had the creative solution to add in some entertainment, and that's what separated them from the rest of tech doing text to audio. This was brilliant. They've hired celebrities to read the articles into the microphone, which is way better than the voice in your head or the Syrian Alexa Robo voice plan. Quick note, you're not going to get like Samuel L. Jackson snakes on a plane style reading you that article, though.

No, Odom says they have award-winning narrators. So think like David Attenborough from Planet. And that's why, boom, too long to read articles suddenly become hilarious podcasts when you do them with autumn. So we expect the New York Times to take Autumn and basically podcastify more of its long articles. Then monetize that for $8.99 a month. And then maybe become a platform for other magazines and other newspapers to do the same. and the New York Times can take a tiny cut of magazines like The New Yorker. It's like a circle of life and text to audio. So, Jack, what's the takeaway for our buddies over at Autumn and the New York Times?

The New York Times just doubled its content load with one small acquisition. Snackers, Jack and I have mentioned this before. He could stick it on a t-shirt. Media comes down to two factors. Content, that's one bicep, distribution is the other. And I think it's safe to say the New York Times already dominates the content part. Cock off. Pulters, poultrys.

They have like 75 million Pulitzer Prize. They got a Pulitzer I heard the other day because they have so many of these things. But this acquisition was all about adapting to the modern preferred distribution channel of our generation. Cough, cough, podcast, podcast. So Autumn essentially clones existing New York Times content into another distribution. No jokes, Nackers.

Jack and I like rehearse that coughing thing about seven dozen times before we hit this pod. It's repackaging content that already exists in the text medium for an audience. on a new medium podcast. It's a super lean strategy that lets the Times double its content with one small acquisition. For our third and final story, the economy is about to face its Robert Frost, a.k. Bobby Frost moment. We got two paths, one path you save human lives, the other path, you save the economy. Happy quarantining, by the way. We know many of you have been indoors since Monday of last week, California, we feel you, we know it's been the longest for it. California was leader, there are now 14 states as of Monday afternoon at 6 o'clock Eastern time. Boom. That have

ordered stay at home for all non-essential workers. Jack and I like toss two more up on the whiteboard. Welcome Indiana and Virginia. It's very warm in here. We hope you enjoy. Now, we've all been tagged on Instagram by like 58 friends with some sort of a fitness or food challenge while while working from home. You've probably responded to between zero and two. Now, this was not the order of the White House, though. All of us having to stay at home. No. In the United States, though, all of us having to stay at home. Instead, their order was a little bit more vague, a little bit more broad, 15 days to slow the spread. I think there were like five key rules. One of them was wash your hands like every second.

The other was stay six feet away from people. The other was don't go to work if you're sick. If it didn't have a number associated it, then you couldn't really do it and it didn't really mad. But the 15 days to slow the spread is almost over. March 31st is the end of the 15 days. Now the White House is signaling what comes next, and that's why we are now at two roads diverging within a wood. Which brings us back to our buddy. Bobby Frost. Robert Frost. By the way, who owns Robert Frost, like Vermont, New Hampshire,

or Massachusetts? It's unclear. It depends on the season, kind of. I'm going with like the regional play that the New England Patriots do. You just go with the broader area in this case. The funny thing, though, both of the paths are less traveled. That's nice. And they're both really bad paths. Really bad paths for how we can handle the coronavirus situation. So let's start off with really bad option. Option A, Jack, what we got in the box? Option A is pretty much what 14 states have decided to do. Aggressive social distancing. Let the disease pass, minimize infections, and minimize the number of deaths. Downside to Option A, we badly wound the economy.

There's a great recession potentially, and things could get worse material. Yeah, things are looking bad, and we're kind of doing Option A right now. But Option B is the new one that Trump is kind of hinting at, which is less aggressive social distancing than we're doing now. We quarantine just those the most vulnerable, like the elderly, and those with pre-existing conditions. We keep the people at home who are like, seriously, lives in danger if they encounter coronavirus. But those who are young and healthy can keep working so that we keep the economy going. Downside to option B, you get more infections and you'll probably get more deaths. And if option B goes badly, we might have to revert back to option A, social distancing

for everyone, and that would stink. It's like we make a U-turn, go back from option B, start again at the same roads, but this time we know we've got to do option A. So Jack, what's the takeaway for our buddies who are staring at this road who are policymakers? What is more valuable? Human life or a strong economy. Snackers, it sounds aggressively profound, and it's this type of uncomfortable question that economists love. And everybody else pretty much hates, but we have to decide this right now. Clearly, we want to avoid deaths. Everyone wants to avoid deaths, but at what cost are those deaths coming? The cost for coronavirus to the economy could be very, very bad, according to statements this week from the president of the Federal Reserve in St. Louis. 30% unemployment, 50% smaller GDP. All that

happening beginning in the next quarter. Thursday this week, we learned how many people got laid off last week, and Goldman Sachs thinks two million Americans have already been laid off because of the shutdown in the corona economy. We're talking big numbers here. And econ damage isn't technically death, but if like a thousand people lose half of their income, then how many lives of damage is that actually equal to? That's why the economists love this kind of thing. That's why everyone else hates this kind of thing. And we'll see what Trump and his advisors recommend on my March 31st. Jack, can you whip up the T-Boy Tuesday takeaways for us, please? Constellation brands already built 65% of a brewer in Mexico. Now it has to stop. Jack, can we call this the biggest

wounded soldier ever? Also, blame the lobbyist on this one. Just blame the lobbyist. Second story, the New York Times has incredible content, but it's mostly in the form of really long articles. So it acquired a company that transforms articles into podcast, text to audio. Third and final story, the Trump administration's 15 days to slow the spread is almost almost over. And now we're facing two paths in a poetic way. Both are less travel. Save lives or save the economy. Now, time for our snack fact today that Jack and I, not going to like, this thing reads like a history thriller. It's sent it by Soraya Hernandez. Soraya is from Chicago, Illinois. Great town. In 1893. Oh yeah. Caleb Davis Bradham. Great name. Created something called

Brad's drink. Now again, this is 1893. Sounds like the kind of thing that would spin off into a direct-to-consumer company like last year and get $50 million in venture funding. What are you talking Brad's drink? Brad's drink is a lot of potential here, I'm just saying. Well, Brad's drink was a mix of sugar, water, caramel, lemon oil, nutmeg, and some other natural additives. Oh yeah, that's always a red flag. But in 1898, Caleb chided to change things up, renamed his drink, get this, Pepsi Cola. And he believed that this drink was actually healthy, not horrible for health, like we know today, claiming that it helped deal with indigestion, which is actually, actually. And he believed, actually called Dispepsia.

As nobody knows, except for your one friend who still claims they took Aladdin in high school, Dispepsia has something to do with indigestion. The name Pepsi, like Pepsi call it, it actually has meaning. Snackers, loved being with you for T-Boy Tuesday, but now we got to see you over on Twitter at Robin Hood Snacks. Yes, March Madness, Profit Puppy Edition. We need your participation to see what is the best profit puppy. Can AirPods be an F-150 truck?

What's going to happen? Chipole Lanes, a lot of craziness. We'll see you at Robin Hood Snacks on Twitter. 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, 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.