The Best One Yet - “It’s time for B-commerce (Booze commerce)” — Constellation buys Empathy Wine. Alibaba’s stores from the future. YouTube TV’s price jacking.

Episode Date: July 2, 2020

Last pod before the July 4th holiday (celebrated on July 3rd by Wall Street). Liquor legend Constellation just acquired Gary Vaynerchuk’s 1-year-old wine startup because it wants to go direct to consumer. Alibaba’s Freshippo stores make Amazon’s most innovative ecommerce look primitive. And YouTube TV just pulled a move straight outta the cable playbook: Jack up prices. We think the Great Price Reckoning may be coming.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 Thursday, July 2nd. Happy 4th of July, Nicholas. Wait a minute. What day is the 4th of July this year? Was that a sparkling water?

Do we have a third co-host? That was a sparkling water. Full disclosure. Fourth of July is technically Saturday on a weekend, which brings up the all, you know what I'm talking about, Jack. Is this Friday that we're taking off or is it Monday that we're going to take off? Wall Street had no idea. They flipped a gold coin, decided to go with Friday.

We kind of preferred a Monday. That's right. Markets are closed tomorrow on Friday, which is the federal recognition of this federal holiday, so we're taking the day off too. That means this is the last part of the week, good timing for our best podcast ever, Jack Furstory. Constellation Brands is a liquor legend, and its stock jumps 7% yesterday because of its latest acquisition. Empathy wines, a tiny wine startup founded by Gary V in 2019. Good vintage, good vintage.

Second story, Alibaba and Beyond Meat are teaming up to sell plant-based meat in China. But the way more interesting story we noticed is Alibaba's retail stores that came from the future to actually sell the plant-based stuff. Third and final story. YouTube TV just pulled a move straight out of the cable TV playbook. The whole jack-up prices and annoy customers. So easy. Yeah.

It could be coming, though, to the rest of tech and the rest of the disrupting products that we love. Now, Snackers, before we throw on the tank tops and enjoy the 4th of July holiday, we're all celebrating a little bit differently this year. Well, it's the age of COVID. So outdoor hangouts are. good, but bobbing for apples is bad. Bad, but shared Disney Plus account is good? Yes, reminder to everybody, tomorrow Hamilton comes out on Disney Plus. So if you spent $250 a ticket, I thought it was $250,000. You better brag about that right now because everyone will see

Hamilton starting tomorrow. I had a cousin who knew a guy who killed a dragon. I got to see it in person, no big deal on Broadway. All you need to watch Hamilton is a buddy who's got a Disney Plus account. But if you're not Hamiltoning, probably going to become a verb, a couple snackers are celebrating something a little extra this holiday weekend. Jack, the honors. Getting hitched. Six feet apart. Staying together forever. Beautiful image. On Friday is the Zoom wedding of Snackers Laura Beth and Andrew. We'd love a Zoom like, plus one. Virtual raw bar. Saturday, we got Scott from Scottsdale pledging holy matrimony to fellow snacker, Jordan. Arizona is officially the home of the self-driving wedding registry. We're going to take six forks made out of silver and a Tesla. Laura Beth and Andrew, Scott and Jordan, we are honored that you told us about your matrimonies,

and congratulations to you all. To the rest of Snacker Nation, happy Independence Day to the rest of the country. You're tuned in the snacks daily. We spoke to the lawyers. It's snacks about the hair 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 about security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Jack, throw down the decanter. Constellation brands just jump 7% after its earnings report.

The highlight, though, isn't the earnings at all. It's the fact that Constellation is acquiring Gary V's one-year-old direct-to-consumer wine startup. Snackers, Constellation has been big on the old B-commerce, Jack Translation. B-commerce. We're talking booze commerce. That's right, direct-to-consumer. Now, Snackers, if you don't know Constellation, it's a liquor company with like a thing for alcohol

and a thing for name-dropping. Ballast Point beer, that's Constellation. High West Whiskey? Constellation. Funky Buddha IPA. Know it well. Constellation. Exactly. They've acquired a lot of companies. Let's go back to 2004. Great Vintage. Jack, what happened then?

Constellation wanted to buy a big wine brand. So where else are you going to go but the godfather of Napa Valley wine, Robert Mandevi? They spent $1 billion on that company, Jack. I feel like you got to give a disclosure here. Full disclosure, I'm a member of the Robert Moldavi wine club. I get a box a quarter. Snackers, nothing twangs Jack's palette more than a jammy kianti from Robert Moldavi. I'll tell you, Nick, if it doesn't have reserve on the bottle, I'm not drinking it.

2015, Constellation then spends $315 million for Miomi's wine brand, a company doing a million cases of wine a year. But that's not it. Constellation, which is a publicly traded big booze stock, decided this week to buy Empathy wines, a one-year-old startup that's only selling 15,000 cases of wine a year next. Yeah, and they're doing $4 million in revenue. That's like a single olive garden over a single hour in a single town. It's a tiny company, but it's got big implications.

Now, Snackers, let's talk about empathy. empathy wines here, a company co-founded by Loud Jets fan and media personality Gary Vaynerchuk, aka Gary Vee. I'll be honest. I don't know why Gary Vee is famous, but he has a podcast, and now he started a wine company, and it's kind of a buzzy wine company. His first entrepreneurial success, we looked it up, was growing his dad's wine biz from like $3 million to $16 million in sales, and then he did some other big things. According to my buddy, Nick, he founded a company called Rezzi, which helps you get table reservations. Good point, Jack. Now, here's what's Wild Snackers. Constellation isn't just buying Empathy the Wine brand.

It's buying an entire business model. Direct to consumer. It hasn't really happened yet in wine, but you can get a subscription and then get like a box of wine every month. Exactly. That comes from empathy, and it's going to be either like white or red or rosé.

They're keeping it like Henry Ford style here. They're keeping it like that restaurant in my cousin Vinny, which only has breakfast, lunch, or dinner on the menu. Not too sweet, not too dry, but definitely not too sweet, not too dry. Empathy Red pairs with a delight. range of wide food, that's because it's just red.

Actual quote from the website, Super Tuscan, Schmupor Tuscan over there. So empathy is not a vineyard. They don't grow grapes. They're simply buying up red, white, and rosé wine and slapping a label on it and selling it online. But here is why Constellation was so interested. Turns out 90% of Constellation's business comes through restaurants and bars and wine stores. Right, we're talking middlemen. It doesn't have to come through middlemen, though, because 46 states allow alcohol to be shipped directly to your door through e-commerce. So empathy's looking at the situation. They're trying to cut out the middleman, dollar shave club style,

but with booze subscriptions. We checked out the website. It's like 60 bucks for three bottles. Do you want red, white, or rosé? Those are the only options. Be commerce, booze commerce. So Jack, what's the takeaway for our buddies over at Constellation and Empathy? In a fragmented industry like alcohol, brand matters extra more. Snackers, we saw this in mattresses. How How about this? Sealy, Serta, Sleepy's, Sleep Number, all the mattress brands, and that's just the S's. Back in 2011, when I just graduated, I walked into a mattress store and my one goal, I remember, not get ripped off because I have no idea what mattresses are good and which ones are. Boom, then Casper came around, built a brand you could trust, and went completely direct to consumer. And think about it, wine is the ultimate fragmented industry. Most young drinkers can't even remember a single wine brand and they're lost in the wine aisle. You can't even pronounce half the vineyards anyway. That's what the fat juice saw when he created the white girl rosé brand a few years back. And spoiler, white girls trusted that brand. Yep.

And he was able to sell it for $100 million to Budweiser just last year. So Gary Vee, he's not in the fields picking the pin out. No. He's just a celebrity who created a label. And the direct-to-consumer model builds your relationship with that label. For our second story, YouTube TV is better than cable TV. But its prices have doubled in the last three years now. Snackers, we're talking about a story that's driven by an industry that treats customers horribly.

Cable TV, which is an infamously pros before Co's industry. Jack, I'm so glad you said a classic pros before Co's put in the profits before the customers. We see it. We got to call it out. First, they make you sign up for a 12-month contract and then they jack up the price when that promo promotion is over. Oh, you're trying to cancel? That's a $500 fee. Oh, you canceled over the phone. That's $6.95 because he did it not on the web. I don't want to cancel on the phone. You're making it. me cancel off of the phone. This phone call's gone for four minutes. That's an automatic four-minute reduction fee. Then they're going to charge you $10 a month to rent their terrible equipment, which is mandatory, plus another $10 broadcast TV fee, whatever that is. But then after you

canceled, they're going to call you in one month and say, oh, 50 bucks. By the way, the re-uping is happening automatically in September. Snackers, if you're thinking about, like, connecting the cable cord again, like I just was, whatever price they quote you, you might as well just double it after the feast. Jack just lost a blood cell over there. Now, Snackers, you hear the word gig thrown a lot these days. That's like number one word up here in Silicon Valley. But Jack, what's number two? Cod. Let's talk about the dictionary of cord quarters out there in the economy. All right. So you got the cord cutters, who are those who cancel cable, they use Netflix instead, and they love telling you, yeah, we just cut the cord. And then you got the cord nevers.

We're talking Gen Ziers, who've never even considered paying the $100 a month for cable. They're probably watching a vlogger on YouTube, right. You show them what a cord they literally think it's a snake. Real thing, we've tried it. And then you also got Cord Forever. We're talking to the people who love switching on the TV, can't imagine coming home without immediately turning on SportsCenter. Something creepy about like the surfing culture, that they just love seeing what else is a potentially on Discovery Channel.

But cord replacers is something you don't talk about quite as much. They're the ones who want cable TV, but they want to be treated with respect. Jack, beautiful transition. Enter YouTube TV and Hulu Plus live TV. TV. Pretty much cable TV, but through the internet, and they're not harassing you with fees. So Snackers, if you're not with YouTube TV, here's how it goes down. They offer you 85 channels, and they're all live. You can watch through your smart TV, through your Roku, through your Apple TV, whatever is connected to the internet. Peanut, macadamian nut, walnut, chestnut.

Nick, does this thing have live sports? Yeah, check. 24-hour cable news? Check. HGTV. Check, that all sounds incredible. it was only 35 bucks a month back in the day. It launched in 2017 at that incredible price, which was probably humiliating to the cable companies, offering a worse product that like triple the price. Xfinity didn't even like acknowledge their existence, not a thing. You couldn't even say it there. But then came the news this week. You two TV has raised prices again. Again. And now they're up to $65 a month. $65 a month. Still a big improvement from like the 108 bucks a month that the average cable user was paying.

But Nick, it's only been three years, and they are very close to doubling their prices. Feels like three years you shouldn't be doubling. This isn't like my puppy river who's growing at that faster rate. You can't sustain this thing, but apparently they can. So, Jack, what's the takeaway for our buddies over at YouTube? The price reckoning of our favorite tech products is coming. Snackers, big tech eventually has to stop losing money on things like this. And that means having to raise prices.

Think about it, Snackers. So many innovations we love. have been making losses for the companies that own them or barely making a profit. Uber, Netflix, Harry's Razors, any company that SoftBanks invested in, the whole list. Investors have subsidized products, especially SoftBank, to let themselves are an incredibly low price. Case in point, e-scooters, $1 a ride, they're basically a charity organization for urban high-income millennials. Eventually, a price reckoning will come to E-Scooters because the companies need to at least try to make a profit. For YouTube TV, it's already here.

For our third and final story, Alibaba usually trails Amazon in everything. But the Amazon of China has 200 futuristic stores that make Amazon look primitive. Snackers, we've got to bring on a journey through Jackson Mize heads. We saw a headline yesterday that made us jump, so we jumped on it. It said Beyond Meat was entering China through Alibaba's partnership with a brand called Frippo.

Now, we're Beyond Meat shareholders, so we were curious about why Beyond got added to this Chinese grocery store list, which we dug further on. We decided the Beyond story wasn't worthy of this pod today. No. But we stumbled into some details about Frippo. And we had to tell the Snackers. Frischipo, the retail chain owned by Alibaba. Now, you've heard of Amazon Go, futuristic stores with like no cashiers and no humans. Alibaba's Frippo stores, I like Amazon Go if they got bitten by a Spider-Man spider. Ali Baba launched for Shippo back in 2016 to pioneer a new thing they called, get this, new retail.

They had a tagline for it. The boundary between online and offline disappears. So Snackers, each of these 200 locations serve as both stores and warehouses. And that's important because 60% of purchases at for Shippo happen online and for delivery. And it's good to have a lot of warehouses to distribute from. And this is wild. They're guaranteeing 30-minute delivery if you live within one 1.5 kilometers of a Frischippo. 30 minute delivery? That is truly insane. You think of the item, boom, it's in your closet already. Now, if you live further than 1.5 kilometers from this distribution site, let's say up to 3 kilometers, they guarantee it in 60 minutes. Yeah, because 3 kilometers is like

Madison Square Park to Columbus Circle. It's a good amount of terrain right there. So if you live a Madison Square Park to Columbus Circle distance from one of these for shippos, you're getting whatever you order in 60 minutes. That's impressive. This makes Amazon Prime's 2.000. day delivery, look like a camel cross in the Silk Road. It really does. 60 minutes versus two days. Now, that's for Shippo's online option. But for Shippo offline, their physical stores are insane. Those 200 locations we're talking about that also distribute for online sales, their physical experience is like a Disney ride at a futuristic Epcot Center. They literally have restaurants that are run by robots who deliver you food. I watched a video of somebody

order an online sandwich from the subway. And then they get off their stop and in a rush to get to work. So on their way past for Shippo, they check out Locker 231, scan it with their phone and their hot sandwiches waiting in there. They don't even enter the store. Jack's right, you'll walk in, you see a thing of corn, you can scan the barcode on that corn, decide if you want it to be delivered to your home or take it out with you, and then you walk out of the store, they scan your eyes, you paid for the whole thing. Again, it's like Amazon goes humanless, contactless stores, but the superpower version of that. Kicked up 12 notches. And get this, it has 200 locations already that come in,

six different sizes. You got the 500 square foot bodega size store so that they can thrive in urban inner cities. But then they hired like Stark architects to come up with 40,000 square foot mall size stores with schools, movie theaters, 60 retail stores and a kid zone in there. And that bigger version can thrive in China suburbs. By the way, Nick, did you say Stark attacks? Yeah. Like Tony Stark? I did. I think it's a thing. Beautiful portmanteau. Really a good one. So Jack, what's the takeaway for our buddies over at Alibaba's for Shippo? Alibaba hasn't made it to the U.S., but its Chinese customers and its stock are available in the U.S.

That's because it has 960 million active customers, their word, mostly in China. Okay, so to get 9601 million active customers, they could compete against Amazon and Walmart here in the United States. But they're like looking at the geography here and they're like, you know what, we'll just target the other 700 million other Chinese we have here in China. Yeah, that we haven't got to yet. So Alibaba isn't coming to the United States right now, but they are letting American businesses sell their products on Alibaba.com and China.

It's also letting Americans buy its stock, which IPOed in New York in 2014. The stock, by the way, is at a record high right now. So Baba's stock could be priced too high and it could fall. That's a real thing, real reality could happen. But we think Alibaba is truly the Amazon of China. Frischipo solidifies that. Jack, can you whip up the takeaways for us before the three-day weekend. Constellation Brands is a big booze stock, but they just bought a tiny wine startup.

In a fragmented industry, brand matters extra. YouTube TV has nearly doubled its prices in under three years. And this could be the start of a price reckoning in tech. Alibaba showing the world what the future of retail looks like. It's just not happening in the USA quite yet, though. Now, time for our snack fact of the day. sent in from Nick at Loeffley Berry College in Georgia. Delicious. Okay. Nick points out that Ford Motor Company was the last American car company to go public

with an IPO way back in 1956 until Tesla, which IPOed in 2010, and is now worth more than all three of the big three, Detroit big three car companies combined. Tesla is also, as of yesterday, the most valuable car company in the world after passing Japan's Toyota. Oh, and by the way, while we're throwing out medals over here, Tesla's now worth more than ExxonMobil, which was the most valuable company in the world when Tesla had IPO. Jeez, I'm crow. I don't know if we have to edit that out because it's a curse word. I don't even know what that was, Jack.

I love it. It's a Vermont thing. Now, before we go, happy 30th birthday to Anthony DeAngelo of Tom's River, New Jersey, which I think is most famous for winning the Little League World Series twice. Way more than once. also had birthday to John from Portland, Oregon, because, you know, we mentioned the Pacific Northwest, like, daily now. Happy 39th birthday to Rick Dog in Chicago. Real ass name on that? And then happy birthday to Snacks Newsletter writer Rebecca Moretti celebrating in Italy. Rebecca, the third snacker, I don't know how to say happy birthday in Italian. I think it's bon compliano or anniversary, but let's just go with something and ends in a vowel check. Snackers, if you see a buddy across the grill this weekend who doesn't snack, please ask them H-Y-H-Y-S-D. They'll be confused, so then you'll have to say,

Have you had your snacks daily? We'll see you Monday. Have a great weekend. If you know, you know. By the way, Snackers, this is Nick, and Jack and I both own shares of Beyond Meat, Jack own shares of Amazon, and I own shares of Alibaba.

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.