The Best One Yet - Quibi’s T-Mobile partnership, Powerbar’s IPO, and the Shampoo Wars

Episode Date: October 21, 2019

The owner of PowerBar jumped after its IPO, so we’re looking into its “convenient nutrition” strategy that it boasts as “asset light.” Unilever took a punch in the Shampoo Wars, so we’re looking at its latest moves on the shower battlefield. And streaming video disruptor Quibi hasn’t launched yet, but it just snagged a major partnership with T-Mobile to take over your phone screen.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 Monday, October 21st. Wow. What are we doing with our lives? We're halfway through the fourth quarter. It's like the holidays already.

I'm stressed. Thanksgiving's coming up soon. Yeah, it's pretty close. What is this one? Is this the best snacks daily we've ever done? It's the best snacks daily we've ever done. Definitely better than Friday. What we got going on today, Jack?

Unilever and Procter and Gamble are in the shampoo wars. Boom. We found another business war to talk about it. Let that one sink in, rinse, repeat. Rinse and repeat. That's key. We'll get to that later. Quibi is launching a streaming service.

is designed for the phone, so it's partnering with a wireless phone company. T-Mobile is all over this thing. Picture a lot of pink on this. Third and final story, the IPO of the day is PowerBarr. Power Bar. Yeah, I didn't see this coming. Power Bar was making power bars before organic mattered. Bars weren't even a thing.

So we're jumping into the S-1 and talking about this IPO. We've got some IPO paperwork together. Now, before we jump into all that, Netflix for chicken wings? I think that means for $10 a month you get unlimited chicken wings at home. Let me repeat this. for chicken wings? It's actually a $75 seasoned pass, not season.

Oh, like seasoned food. You got to add the ED on that one. Nicely done. So apparently it's a 10-week thing for $75. And you get, what is it, 45 wings per week? Yeah, you're getting like for 10 weeks straight. You're paying $75. You're getting a total of 428 wings coming in in weekly batches.

We did the math here. This turns out to be about six wings per dollar. If you're doing less than... 25 cents per wing. You're living the good life over you. I remember they had 10 cent wing days at the silo, Neil Mount Snow in Vermont. Beautiful thing. That was an unbelievable deal, and this is almost that. Buffalo, New York, home of the Buffalo chicken wing, but this is from KFC. Amazing, though, that you can get chicken wing subscription. Snackers, you know that this fits with something Jack and I've been deadly concerned about. When are we going to hit? Subscripturation. There's too many subscriptions.

Your life's packed. Well, he got a new one for chicken wings. I'm on board with this one. It's the other one mean. daily. We spoke to the lawyers and we got to get something legal out the way. Snacks 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. 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 Fenra slash SIPC. For our first story, Unilever and P&G are in.

In the shampoo wars. It's another war. We have to cover it on Snack Daily. We have to do it. Sit back. And Unilever just announced its earnings. It's got some bruises, some casualties of this war. By the way, Jack and I have noticed this.

Is anyone else concerned about how dangerously delicious shampoo sounds lately? Homagranet shampoo. Mango with like a little bit of mint extract? Avocado. I don't even want to go any further. Guacamole. When they start grilling it, then we should get concerned on this. Avo toast.

In the meantime, hair care has become a battleground. The two big players are Unilever and Procter and Gamble. We've covered Unilever before. Right. You know it owns Ben and Jerry's, but it also owns like suave, Axe, Trezime, suave, Swave, Jov, Prove, Prove. Provee. Yeah.

A little higher shell. Not afraid to admit it. Have you used head and shoulders, by the way? I have a bottle. I use it like once a month. I know. More in the winter than in the summer. We're willing to be vulnerable on the next day.

Yes, we are flakes that we're vulnerable. But the news here, Unilever announced quarterly earnings last quarter. Sales growth has slowed down, and it's losing market share in the hair care division. And they're giving credit here to their rival P&G, who they said has innovated in the space of hair care. They're giving it credit? They're giving it credit. It was a little awkward. I thought they would blame it. Well, the reason why Jack is concerned here is because when we look back on the history, we were fascinated by this long, nearly 20-year battle over your scalp. These two companies have bred MBA students to like battle for a percentage point of market share

in the shampoo industry. This goes back to 2001 when P&G was sued for millions of dollars for spying on Unilever's hair care division. Unilever has an office in Chicago, Illinois. This is no joke. Yeah, this is true. And Procter & Gamble sent a bunch of interns. I don't know about the interns part. Yeah, we can just run with that.

But they grabbed a bunch of documents from the trash can outside of Unilever's office. We know what you're thinking. This is like 007, the next third version with Daniel Craig. It's freaky. Now, after that, Unilever responded by acquiring a bunch of shampoo brands like Trasome A, V-O-5, and more. But P&G saw this, and they responded to that move. They decided to expand herbal essence and Aussie shampo's international. She's got the herb.

Natural potatoes. Jack, are you thinking what happened next here? Unilever responded to herbal essences with a YouTube channel to show you how to use shampoo. Do we really need that? I don't really know if we do, but I don't know. Those urge to herbal commercials were always kind of scary. And they got mentioned in a Snacks Daily Pot. And then P&G said, you know what?

We're going to respond to those YouTube channels by launching some more alternative shampoes. We're thinking like rose water sulfate-free shampoo. I thought it was rosé water. It probably should be rosé water. Now, for decades they've been fighting. and the current status is Unilever owns 17% of the shampoo market in America. Pretty nice. Procter & Gamble has 14%.

This thing is head in head. It's a true rivalry. So Jack, can you step out of the shower and please let us know what is the takeaway for our buddies over at Unilever? Hair care is the perfect battleground for these brands. And the reason why is two keys. The first one is big profits or high margins. Besides suave, which everybody knows costs like a dollar a bottle. Pretty much.

The rest, you can charge very high prices for shab. shampoo. People are going to pay like $67 if they know the carrot in is like emotionally enhanced to make you feel better. Hair matters, man. Hair matters. The second key reason here why hair care has become a battleground, minor innovations, or as we like to call them, minivations. Minivations like adding a little bit of avocado citrus. Yeah. That's justification to like up the price by a couple bucks. There you go. And you spread that out over the course of a country, that's a lot of good money. And then the third and final one, which is kind of a surprise date. I heard this at business school at University of Michigan. I know what you're thinking. The best trick a marketer ever told.

was adding to the directions on shampoo, wash hair, rinse, and repeat. Double sales. Just adding that word repeat. You could add that to a lot of things. Doubled sales. Twice. For our second story, Quibi has found its first batch of customers. Anybody who has a T-Mobile account.

That's you. If it's you, you're now a potential Quibi customer. Now, one thing I know about T-Mobile, its CEO is not modest. He wears pink and he likes to talk. Let me tell you what he said about this Quibi deal. Talk to me. Of course, Quibi and T-Mobile are working together. two mobile-centric disruptors committed to challenging the status quo and giving customers

incredible experiences. Tell us what you really think, John Laguerre, CEO, T-Mobile. I like how direct he is on that, though. Let's get back to Quibi, though. Talk to me. When does the thing actually come out and what is it exactly? April. A month when, I think, three big news streaming services come out.

Yeah, pretty much. It stands for QuickBite. Quibi. That's what it is. And here's what it's actually in your hand. It's a mobile first show that's like meant for on-the-go life. We're talking eight-minute chapters. That's what each episode will be like.

It's not a 23-minute episode. Right. They're breaking it down so you're not stuck three hours later, still in a Game of Thrones episode trying to figure out what happened three hours ago. You could watch a whole thing on the toilet. And what will make you happen to do that efficiently is that it's a vertical film format. You don't get the old like, uh, moving around. Horizontal. You know, horizontal elbow, you're on the subway.

Now, Snapchat has this too. They have vertical format, native video in the app. But Quibi is premium content. Big difference there. First of all, you have to pay for Quibi. Because you're getting the premium content. It's $5 with ads, 8 bucks. without ads. And we know what you're thinking. You're using this term premium content.

It sounds so fancy. Where does this whole thing? Premium business people. Jeffrey Katzenberg of Pixar and Meg Whitman of eBay fame are the co-CEOs, I think. And the big-time actors are getting involved in the big-time premium content that's going to be on your phone. Yeah. There will be shows like Houts of Card status. Or like, handmade's tail, as status. You can just throw an ask on everything these days. So partnerships like this between T-Mobile and Quibi, obviously there are win-win. Both sides agreed to do it. That's why they're hanging out.

But we want to talk about the specific benefits both companies will get. So if you're T-Mobile, you're looking at this, you got 83 million U.S. account holders, and you're thinking, you know what, I'm actually going to have 100 million if this Sprint merger goes through which it's expected. You know what? Quibi's looking at those users, actually. Yes. We'll get a huge batch of initial customers. Anybody who's got a T-Mobile and maybe a sprint account.

But then T-Mobile's looking at Quibi and saying, you know what, we need a competitive edge over Verizon at AT&T. Some of this good old-fashioned premium content, doing air quotes here, sounds like it could be your right fit. Yeah, it could win customers from Verizon because it has Quibi for free. Also, the timing here is important. Oh, this is critical if you're T-Mobile. April of next year, that's also when AT&T launches HBO Max. Because AT&T owns HBO now. Yeah, so HBO Max could come free with AT&T.

T-Mobile wants to have something free too. So, Jack, what's the takeaway for our buddies over Quibi? Bundling for free looks so much better than discounting. T-Mobile strategy is offering things for free, but companies, they can't. prefer to be bundling things with T-Mobile so you actually get more. T-Mobile gives away Dunkin' Donuts on Tuesdays. It gives away a whole season of free Major League Baseball streaming. So instead of just discounting and giving you less, they want to offer you more of something.

Now, we don't know exactly what this deal will look like. We're guessing Quibi will be free to T-Mobile customers, but Quibi costs five bucks a month. So who's going to pay for that? We think part of it will be paid by T-Mobile itself, and Quibi's probably going to offer a discount to T-Mobile for each user. But Quibi does not want to offer. And that's key here. This partnership, though, is basically a discount for T-Mobile customers, but it doesn't look like this.

Instead of the discount, you're getting more. You're not paying less. For our third and final story, Bellring Brands, aka the owner of Power Bar, just had its IPO. Huge missed opportunity on the ticker symbol. Yeah, the stock jump 17% in the first day, but what were we thinking on this thing? Lyft. It could have been L-I-F-T. L-I-F-U-N-D.

Spot. SPOT. I've got to do this for a living. Now, in case you're wondering what's going on here, in the world of, like, protein bars, these days you can get like a Luna and RX bar. They've got like gojiberry, a macha blend. They're using some rare Amazonian tree nut. Yeah, you have very bougie, like virgin nuts. But Power Bar still has mostly peanut butter and chalk.

They're giving it simple over that. Yeah, Bo Jackson probably used Power Barers back in the day. They've evolved a bit. They're doing like a vegan version. They're doing some stuff with, like, sunflower seeds. But let's face it, it's not exactly Goji Berry extreme. Belmering brands, which is based in St. Louis, Missouri, is not just focused. on nutrition. It's actually focused on two trends that are on point right now. Convenient nutrition.

Convenient nutrition. That's what a power bar is. Right. They're obsessed with this concept of RTD. Ready to drink. Right. Stuff that's ready to drink, ready to roll in your bag, in your back pocket, you've got to go in everywhere. There's also RTA, right? Or RTE, ready to eat. Yeah, I'll go with whatever you said right there. Shakes and bars make up 82%. This is the stuff you put in the locker room after you're working. 82% of Bellring brand sales. The rest is like protein powders and some stuff like that. stuff that's in the locker room. And then a wild stat, Jack and I noticed in the IPO paperwork, get this. 47% of

Americans snack, not once, not twice, three times a day. Snacks daily. Three times a day. It makes sense. It's a healthy thing. We're pro snacks all the time. So the S-1 is the document that Bell Ring Brands issued because it's IPOing, and you know the S-1 covers everything about the company. Right. It's covering the risks and the opportunities. But there's one

opportunity Bell Ring brands mentioned in particular that stood out for Jack and I. BRB bragged that it was Asset Light. Asset light. That means they outsource the manufacturing of their food to like random factories that do the manufacturing for you, package it up and slap the Bellring Brands stickers on it. So Bellring Brands is actually like kind of showing this off.

Like, hey, that lets us focus on our quote unquote core in-house capabilities. Which includes sales and marketing, brand management, customer service, and research and development for whatever the next flavor of Power Bar is going to be. So basically what this Power Bar owning brand does is they're focusing on marketing and sales and a few research labs. They're not making the actual food. No. They're not packaging it either.

A few other examples out there like this. Apple. Think about Apple. It's designed in California, as you can see on the back of your iPhone, manufactured in China by a totally separate company, Foxcon. Very similar situation over with Nike, which is manufacturing. And it's manufacturing. Nike doesn't own any manufacturing. On the other hand, you can also be pretty asset heavy.

Car companies. Exactly. General Motors has like over hundreds of thousands of employees and plants. everywhere. Meanwhile, Bell Ring Brands, the Power Bar owner, is focused on staying lean. So, Jack, what's the takeaway for our buddies over at Power Bar? That strength, Bell Ring being lean is actually also its weakness. Very true. It constantly was pointing out Bell Ring brands in its IPO paperwork that it's part of the health trend. Convenience and nutrition, I mean, that's why I go to Project Juice for an Asai, you all, every Saturday morning. I see Jack there. One of us

gets the granola, one doesn't, it doesn't matter. It's a beautiful thing. But that asset light thing, The fact that they don't control their own manufacturing, that does lower costs. It might boost profitability, but it removes the company from the food process. It means they're a little less farm to table, which also is a trend right now. Yeah, if you're a customer and you want organic only and you want to know where your food came from, yeah, want to have some integrity in the food you're eating, then Bellring Brands is like, I don't know, that factory is doing it for us. Right, because Bellring's a little bit more focused on the performance,

and that's why they drop the term protein 315 times in the S1 report. Power Bar and Bellring Brands is kind of the underarmor of health food. Yes. Tons of aath. Totally. Not much leisure. True. Jack, can you whip up the takeaways for us over now?

Unilever's epic battle for your flow continues with Procter and Gamble. Hair care is both companies' profit puppies. T-Mobile and Quibi are teaming up probably to offer the mobile streaming service for free. Bundling in something for free looks awesome. 50% off looks kind of desperate. Bell Ring brands just IP out and it hopes its asset light power bar biz is on trend. It's convenient nutrition, but it's not exactly farmed to table. Snackers, time for our snack back of the day.

This one sent in by great fellow warden classmate, Gabriel Garza Martinez, from Mexico City, a snacker for a long time. Gabriel pointed us to Derek Thompson, an author for The Atlantic, who points out that if you sleep on a Casper mattress, then work out on a Peloton before breakfast, and then take an Uber to your desk job at WeWork. I'm following you. And then get DoorDash for lunch. Take a lift home and order dinner through Postmates. You have interacted with seven companies that collectively this year lost $14 billion. Let that sink in because we're all probably using those brands right now. All those unicorns that make urban millennial lifestyles wonderful, they're loss-making companies.

This pod was like recorded on a Peloton at this very moment. Gabriel, thanks for sending that one in. Snackers, we also want to hear from you. The creators of the TV show Billions are about to make a show about Uber. and we want to know who, what actor should play Travis Callahan. It's got to be someone who can get super pumped. Hit us up at Robin Hood Snacks on Twitter. In the meantime, Jack and I'll catch tomorrow.

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.