The Best One Yet - “Plant-based sleepover at Starbucks China” — Beyond Meat and Oatly head to China. Local News’ 2 options to survive. DuPont’s diversification pivot.

Episode Date: April 22, 2020

Beyond Meat and Oatly oat milk wanted to hang out in China, so they’re hitching a ride and hanging out at Starbucks’ house there. Local news is feeling more financial pressure than ever as local ads dry up — we have two ideas for how it can be saved. And DuPont is the oldest company we’ve ever covered on Snacks Daily, but its pivot is totally fresh.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 Wednesday, April 22nd. Markets dropped overall. And then two big companies that we kind of love on this podcast announced their earnings, but markets are already closed. Out of nowhere, Netflix added 15 million users. That is double what they expected.

And Chipotle announced it's actually an e-commerce burrito company. Digital sales rose 81% last quarter. Both are fantastic. Both are things Jack and are going to jump into. But in the meantime, we found three perfect stories for today. Jack, what do we got? This is the best one yet. Our first story. Yes. Beyond Me and Oatley have been dying for a trip to China for years. Good news. Starbucks has 4,300 houses over there.

Yeah, so Starbucks is hosting its two alt-food friends at all of its China locations. Beyond and Oli, our thankful Starbucks is being a good chaperon. Our second story, hot off the press. Yes. Local news needs a bailout. This just in. Your neighbor's cat. found safe in a tree. We're looking at all the options to redefine and save the local news industry. We've narrowed it down to two. Really good stuff. Our third and final story, DuPont, is actually its nickname because its real name is really long and really French. It is also the oldest company

we have ever covered on snacks daily jack. One crucial word is saving this 200-year-old company from bankruptcy. Jack, can I buy a vowel? Forget the vowels. I'm going with a D. This is about diversification. God, do you. It's always sneak up on you. Nick, I can officially reject the null hypothesis. This is the best one yet. Yes.

But before we get to those three stories, let's talk Snacks Madness, our March Madness-style bracket for your favorite profit puppy product. Snackers, today's kind of important because today is the final round after an epic semifinals, Jack. What went down? Yesterday, Apple AirPods were beating Tesla's Model 3. This was wild.

We were watching this thing happen in real time, in real life. Our social media guide told us the magic. is over Apple AirPods won. Then it turns out in true Cinderella fashion, Tesla came from behind, ended up winning this whole thing in the final four. Cinderella's carriage didn't turn into a pumpkin. No, it turned into a Model 3. It's a beautiful image.

Meanwhile, on the other side of the bracket, Domino's takeout was taken on Costco's membership program. Turns out the snackers have spoken on Twitter, bulk food beats big pizza. Costco took the whole pie, crunched the box, isn't even recycling this thing, Jack. Nick, and then... Then there were two in Snacks Madness.

Snackers, we've got the finals today. Tesla Model 3 versus Costco's annual membership. There were 32 original contestants, and it's down to these final two profit puppies who are going head to head. Can the house of Elon self-drive its way to a victory without the range anxiety, please? Can Costco earn a 63-gallon, 26-pound pallet of a trophy to take home?

If you can't fit it in the cart, then you can't afford it, Jack. The final matchup is as fair as it gets. It's a vote on Twitter. You vote. There's one winner. You do it today at Robin Hood Snacks on Twitter. Let's get to our three stories.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robin Hood family. It's all informational just so. We're not recommending any securities. It's not a research report or investment advice.

Not an offer or send. about security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story,

Starbucks is launching two big brands in China, Beyond Meat and Oatly Oat Milk. O'MG. Nick, did you hear who Starbucks invited over for a sleepover? I mean, I can't even get over this. Beyond and Oatley, the coolest kids in school. And they get to go travel on vacation. with Starbucks to its house in China.

I am so jealous. But first, let's get into Starbucks's current situation. In the United States, Starbucks is basically leaving maple lattes on the curbs because no one's coming inside. Venti for Jack Kramer, please step away from the venti. In China, on the other hand, it's rebounded. 95% of its stores are back open since the COVID-19 crisis is pretty much under control there. Now they're pretty much like, hey, Chinese buyers, please come in.

Again, we want to be handing you physically. and hugging you when we give you those venti lattes. The context of this story, plant-based brands have wanted to visit China for many, many years. Let's look at Oatley. Still a private company based in Sweden, it's an Oat Milk brand that basically is powering whatever Brooklyn artisan coffee houses around the corner from you. Are they not making almond milk? They're not, they're like anti-almon milk over there. They're just oats. They're only oats, and they're offended that you even ask the question, Jack. I actually cooked oatmeal in oat milk, and it was like a little too much. I basically picture their

factory, it's just a bunch of Swedish women jumping on oats the entire day. So, Oatley sales are 39% in the home of those Swedish women, Sweden. 24% of the United Kingdom, less than 10% in the United States. And there's barely a drop of this oat milk that's even seen the light of day in Asia. Meanwhile, for our buddies at Beyond Meat, this company promised to enter Asia by the end of this year. They better enter Asia because it's rival impossible foods. was just at a Chinese food exhibition, and guess who tasted an impossible burger? Talk to me.

President Xi Jinping. And what she wants, she gets. Now, both companies have basically had it on their map to, like, visit China for years. You know, they get together, where do you want to go in the world? What do you want to do when you grow up? I want to go to China. And now they are on Starbucks's lunch menu starting today. Boom, today.

You can now get an oldly macho latte available at all 4,300 Starbucks spread across China. And Beyond Meat is now included in three lunch items. And Nick, this really shows you how different, like, Starbucks's menu is in different countries. Didn't see this one coming. There are two pastas. Starbucks is serving with Beyond beef. One of them is a lasagna. It's like they consulted Chef Boy R.D.

before they launched this plant-based meat. And plus, Starbucks gets to brag here that it is resource positive while these new friends are visiting because, you know, plant-based alternatives are better for the world than meat alternatives. In case you're running about what resource podcast. Positive means it's an ambiguous term for an ambiguous initiative over at Starbucks to basically do less harm to the world. So, Jack, what's the takeaway for our buddies over at Beyond Meat and Oatley? This isn't just an international expansion. No.

They need to change behavior of customers. Snackers, if Beyond and Oatley wanted to, they could have launched by themselves only through China's grocery stores and just focused on grocery stores. Starbucks wouldn't have been the middleman. They could take the whole profit for themselves and completely control the marketing of these products. But with that type of power, with that type of expansion strategy, there is a lot of expensive responsibility. If Beyond did this on their own, they would need to introduce this completely new product to the Chinese people, convince them to take a try and, like, handle the whole free sample situation in the grocery stores.

I don't even know if that's culturally appropriate in China. People in China be like, why are you forcing us to eat this food? And who are you? The thing about plant-based meats and milk snackers is that they aren't just new brands. their entirely new behaviors for the entire world. With the Starbucks partnership, Starbucks is like a chaperil that can weave these new eating behaviors into the existing habits of its Chinese consumers. For our second story, as advertising is running out, local news needs a bailout. From the government or from big tech. We've got the deputy head of Parks and Recreation Leslie Knope here. She's got to be

held accountable, Jack. Yeah, the Pawnee Times is on it. There's a violation of ordinance, 324B. Not good. And there will be a town hall to discuss whether dogs are allowed to walk on the municipal football fields after dusk or not. I am getting word that the Brattleboro Weekly Gazette is investigating this one. It's intense. Stay tuned. Nick, I've told you a million times my hometown of Brattleboro has a daily newspaper. But it's all wonderful local news.

And that's why brought us to this particular story. It's 2020. And we have a ridiculous surplus of national political news on our hand. You cannot escape this. But in the meantime, you're probably not getting that much local news. And Corona economy is making it worse. Yeah, state and city reporters, they're getting laid off because of the adpocalypse. Think about it.

There's no local business activity going on in America, so there's no reason to place local ads on your local newspaper. It's at such a breaking point that we noticed that to save local news, 240 congresspeople in the United States signed a letter to the president. We're talking like half a Congress here. They have two strong demands to save their local newspapers. One, shift all federal advertising to local news. We're talking like the ads for like the census or public health and you know stuff that the government is sending out an advertising.

Instead of advertising on Facebook, advertise on the ponny time. Second, they want to incentivize advertising with local news from companies that are now accepting bailout funds from the government. If you accept taxpayer funding for your pizza joint, you better advertise for that pizza joint in your local newspaper. Now, Jack and I want to sprinkle a little context on this story. and that's why the adpocalypse is only the latest chapter in what's gone wrong for the news industry. Historically, classified ads were actually the biggest revenue source for local newspapers. Dutch Evan for sale, like new, made in Western Pennsylvania, $50 OBO. Willing to negotiate on that $50.

Now, those classified ads pretty much got replaced 100% by Craigslist. Now, those classified ads were the business model for local news, but more recently, they focused more on just advertising. in general. Like Bud's Roller Derby, where you can get a skate, a date, or a figure eight. It's a wonderful thing. Now, those have gone to Google and Facebook because their data allows advertisers to target aggressively. Facebook can make sure that only the right people see that ad for Bud's Roller Derby. If you're Bud's Roller Derby, you'll only want to target 18-year-old single skaters who happen to love 80s music. It's understandable. So true. Now, another option for local news to make money is subscriptions. But those subscriptions are pretty tough because we've all pretty much been trained to get

content and especially news for free, and now we're just taking it for granted. So pretty much every way local news was supposed to make money is gone. Add that up, half of America's newsroom reporters have been laid off since 2008. And then adding like some aggressive injury to some personal insult, local news is suffering so much, they're basically being treated like charity cases. Google and Facebook have donated hundreds of billions of dollars to the local news industry. Which is, cool, but also sad. So true. So Jack, what's the takeaway for our buddies over in big local news? This is the time for news's business model to be redefined. Snackers, we've looked at this thing. We brought out that whiteboard, even though we're both working remotely. So there are two

whiteboards. And we found two key options to save local news from the internet that basically destroyed its business model. Option A. Yes. Government subsidies. NPR already gets them. BBC already gets it in the UK, so why not extend this to local news? Option B, make big tech pay for it because big tech has lots of money and benefits from local news. This one is particularly interesting right now. We notice that Australia recently passed a lot requiring Google and Facebook to pay news agencies when they have posts that they get ad revenue from that were originally news stories by those news agencies. Think about it. According to the Pew Research Center, 45% of Americans get their news from Facebook.

I feel like Pew is just a person. I think at this point we could just say, according to our buddy, Pew, he's friends with Timmy. But, Nick, Facebook makes money by surrounding that news on Facebook on your wall with advertisements. And Australia thinks that that actual news

should get an actual cut of the ad sales that Facebook or Google's getting right. News's business model needs to be redefined. And Australia's model could set a precedent. Snackers, if you're running a Snacks challenge, time to turn around because we're a little past halfway done. And watch out for that puddle. Oh, man. In the meantime, for our third and final story, chemical icon DuPont just gave us a really early update on what it's up to.

It's making face masks, and that is the best thing that's ever happened to it. We're talking about not just DuPont, we're talking about E, I, DuPont, de Nemort. It's a French character and a Jane Austen novel, am I right? I'm sorry, Mr. Darcy, I can't get engaged. I've committed myself to Mr. DuPont. Wonderful, pride and prejudice rendition right there, Nick. Now, this is the oldest company we have ever discussed between Jack and I on snacks daily. Bring me back to 1802, the pride of Wilmington Delaware at DuPont was making gunpowder. A few decades later, they ended up supplying half of the gunpowder to the entire Union Army during the Civil War.

Unbelievable, this company, but today they're making everything from enzymes to the military of vehicle armor. Jack, I know you're like me. You're kicking things off every Wednesday with an assayee bowl. How about the probiotics in that thing, where they come from? Made by DuPont. Oh, right. How about the Lycra in that athleisure wear khakis that I know you left to squat in? Made by DuPont, worn by me right now. Jack, how about the Kevlar in a bulletproof Batman suit, Mr. Wayne?

Can you tell us what's in that? You're kidding me. That can't be DuPont. It's DuPont. And then how about Styrofoam? Styrofoin kind of doesn't really fit in that group there. It doesn't. And yet the brand and the trademark both owned by DuPont.

DuPont was the largest chemical maker in the world until it merged with Dow Chemical Company, which was also a huge company. True. And then the corporate finance people immediately split them up into three different companies. The old, it's one plus one equals three actually scratch that entire math thing. One plus one and then divide it by three. Now, if we're looking at DuPont right now, now, it's all about one thing, personal, protective equipment and making one really big pivot.

DuPont was making filters for heavy-duty diesel engines. But since diesel engines aren't getting made these days, that resource is going straight to N95 masks and hazmat suits. The good old polyethylene. You can't touch it, but it'll save your life. And they just gave us an early update on how the first quarter is going. Turns out DuPont is making 10 million PPE. That's personal protective equipment garments a month. And it's using factories across nine different countries.

And Nick, thank you for clarifying. what PPE stands for because I've read it like 50 times in the past month, but didn't actually know what it was until you just don't. Whenever I heard that term, it always reminded me of some scary thing that used to be in bug spray that our moms were like freaked out about. Yeah, you don't want to be near PPEE. You don't want Pee and we can't buy it if it is PPP. So Jack, what's the takeaway for our buddies over at DuPont? DuPont is a case study in the power of diversification. Snackers, DuPont's auto and industrial division is doing horribly right now because you're not driving

anywhere and you're not buying a car. But its material sales for things like N95 masks are soaring. Lucky for DuPont, it owns not just a couple, not just a few, not just a bunch, but an insane variety of different operations in a whole different bunch of sectors. We didn't need our buddies at Pew to figure out how many industry product lines and brands DuPont has. We checked out their website and we counted 32 and then we had to like click next page for next results. This shows how aggressively diversification is getting this company to survive. When one division for DuPont is down, the other division is up. On the flip side of diversification, Carnival Cruises has cruise ships, and they are in the business of cruises. And doing just cruise ships, it can't even get a bell out for its one business,

cruise ships. Carnival could be bankrupt bound. DuPont is pulling the pivot. The power of diversification. Jack, and you'll whip up the takeaways for us over there and our buddies at Pew. Only and beyond me are coming to Starbucks's 4,300 Chinese locations. When your new product is a new behavior, it's good to have Starbucks as your chaperone. For our second story, local news is incredibly important during this crisis, but it's also struggling to make money. So we see two ways to save local news, government subsidies or big tech. Our third and final story, DuPont's automotive materials business is debt, so it's focusing all its attention on N95 masks. Diversification. It's like a downturn insurance, so you don't go bankrupt. These guys are a case-stead.

Now, time for our snack fact of the day. This one sent in by Matt Lowe from Boston, Massachusetts, who got a birthday shout out on this pod lady. Matt let us know that Alex, his twin brother, actually gave us the shout out, which means it was also Alex's birthday. We're not doctors, but we're pretty sure these twins have the same birthday. So Matt responded to our request for a snack fact

before the Red Sox kicked off opening day. Turns out the wave was allegedly started, created in Fenway Park. Back in the day, seating was so packed in Fenway that when someone stood up to like order a beer, everyone in the row had to stand up. And then everyone behind them had to stand up to see Mani a noma hit a homer. And then the rest of the section would stand up and everyone in Boston who's a sports fan is like notoriously on edge. So that made even more frustration happen. This created a domino effect with section after section standing up, rhythmic fashion looking like away. Kumbaya, it all worked out. By the way, shout out to

principles of marketing class at Yeshiva University. Yeah, your next exam, it's about companies adapting to the corona economy. So study up because the next exam will be a T-Boy Hart. Oh, and do not show up to class more than two minutes late. Do not test your professor. Do not do that. Quick shout-out to everybody else. Vote for the winner of the Snacks Madness Brackett, Tesla Model 3 or Costco annual membership. It's at Robinette Snacks. We'll see you tomorrow. This is Jack. Nick and I both own stock of Beyond Me and I own stock of Carnival. This is Nick. And extra disclosure, Jack had Beyond Meat meatballs last night with spaghetti, and I had Beyond Meat and a chili. Mine were leftovers. They're better as leftovers. Also, this is Nick and I own shares of Chipotle.

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.