The Best One Yet - “Sephora doesn’t have 40 shades” — Facebook’s no news down under. Sephora’s Fenty Effect. Nestle’s cat cappuccinos.

Episode Date: February 19, 2021

The biggest food company on Earth, Nestle teaches the power of the Zillennial pivot. Sephora fell to #3 in US Beauty sales partly because it ignored Rihanna’s Fenty Effect. And Facebook just shut down news in Australia... aka Zuck pulled the nuclear option.$LVMH $NSRGY $FB $GOOGOur Editorial Principles: https://robinhood.com/us/en/support/articles/our-editorial-principles/Got a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Learn 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 Friday, February 19th. Stocks barely budged yesterday, even though everyone was talking about stocks. Everyone was talking about stocks, Jack. Let's just get to our first story. Nestle is the biggest food company in the world and just reported its earnings.

If you feed your cat, plant-based cappuccinos, Nestle loves you. For our second story, Facebook just pulled the nuclear option in Australia. Yeah, basically, yes to dog videos, no-to-dog news. third and final story. Sephora just fell to number three in the rankings of U.S. beauty sales. Yeah, classic situation. That's what happens when you ignore Rihanna and her Fenty effect. Nick, let's hit 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 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. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Australia wants Facebook to finally pay news publishers. So Facebook decided to ban news in Australia.

Mark Zuckerberg and Charles Sandberg, they turned the key at the same time. This feels like a de-zucking jack. Now, if you're in Australia, let's say you're in Melbourne right now, you open your Facebook app, you're going to see the adorable baby photos of your friends. You're not going to see the New York Times article, though, on parenting because that's banned. It's a fascinating situation, and it all begins a couple months ago. December 2020, Australia's legislature proposes a bill to help news publishers finally get paid. Nick, for decades, centuries, perhaps, the news industry has made money by surrounding their news articles with advertisements.

Jack, here's how a typical news article looks. You got the headline, you got the byline, you got the article, and then you got mattress, mattress, mattress. Exactly. Now, today, the same thing happens, but with two key differences. Right, here's the first key difference. The articles that you're seeing, they often appear in like a Facebook news feed, not in the original newspaper. And if the news article is in the Facebook news feed, then the ads surrounding that article, they generate money for Facebook, not the news publisher that wrote the article. Now, this is the key part of that equation. Over half of Americans, 52% of Americans, now get their news from Facebook. Ipso facto, 52% of news articles are generating ad revenue for Facebook, not the news publisher.

And that's where this Australian bill enters the scene, which isn't a law yet, but it's expected to pass next week. The bill proposes that Facebook and Google, those two companies, they were singled out. Specifically. They were doubled out. Sorry. They need to sign paid deals. with news publishers if the news publishers' articles are linked in Google or Facebook websites. First of all, Jack, congratulations. I think you coined a new term, doubled out. I like what you did.

Someone should double out the co-hosts of Snacks Daily for an award or something. Okay, I think you're stretching this now, but I like what you're thinking. So the big question here, how did Google and how did Facebook react to this new law? Jack, what was Google's move? Google complied with the law, even though it hasn't even passed yet. They just announced a three-year deal with News Corp. the publisher of Wall Street Journal, which is owned by Australia's own billionaire Rupert Murdoch. Hometown guy. Now, interesting precedent here because other countries may now make the same demand of Google. In other countries, right. But Facebook did the opposite. They decided to go nuclear by banning news publishers,

effective Wednesday, from posting any of their articles on Facebook. They also banned people from including links in your posts if those links include a link to a news article. Your friend Susie studying abroad in Sydney right now may post surfing pictures. Mark Zuckerberg's fine with it. Jack, they're good to go. Susie's fine. She can post those picks. However, if Susie tries to post an article from the Weekly Gazette about the surfing industry, Mark Zuckerberg's artificial intelligence is going to recognize it and make that blue post button disappear. You can't even click it. We just have to emphasize this. There is no news on Facebook in Australia right now. Now, Facebook claims that news publishers benefit more from news on Facebook than Facebook does. That's why they don't want to comply. They haven't claimed this, but what we think is the real reason, they probably want to avoid any precedent of having to pay news publishers in other countries. If Australia succeeds here, then every country would probably happily help their news industry at Facebook's expense. So Jack, what's the takeaway for our buddies over at Facebook? This policy fight in Australia

is extremely convenient for Facebook. It's the perfect one-country experiment. It's the perfect one-country experiment. It's the perfect experiment. Now, Facebook's team has probably been wondering, you know, what would happen if they banned political posts, for example. Mark Zuckerberg said in the latest earnings report that they've heard users are upset that politics dominates their Facebook experience. But then this whole Facebook team's probably kind of nervous that banning political posts would then, you know, incite a whole bunch of hate. Instead of having to make that tough decision, Facebook just got handed the perfect one-country experiment. All right, here's why this is perfect. In Australia, they can run a no-news experiment and then see what happens. It's a whole country.

It's a whole continent. And with less news means probably less politics. And they can blame Australia's politicians if users don't like the experience. And then get this, if no news helps their profits in Australia, then we can expect Facebook to expand that concept to more countries. If no news hurts profits in Australia, we expect Facebook will probably give in and pay the news publishers like Google already has decided to. It's the perfect tech experiment. For our second story, Swiss food giant Nestle just announced sales jumped in 2020. Nestle's earnings show us how successful a millennial pivot can be. Okay, you know Nestle. You know Nestle, but did you know, Nestle is the biggest food company in the world, the artist that brought us Stoufers?

I actually did know that. It's been based in Switzerland for 155 years. It originally was called Nick. the Anglo-Swiss condensed milk company. There's a good name change. That was a good switch they made. But the stock itself, it's been kind of flat over the last year, so it doesn't seem that impressive, but everything is relative. Nestle's sales grew almost 4%.

Not that great, but that is double the growth of Nestle's European rival Unilever, which only grew 1.9% last year. And pretty solid when you consider it is the biggest food company on Earth. Now, let's talk about what powered this huge company to a relatively huge quarter. Okay, so Jack and I jumped in snack style to the earnings report.

Basically, it came down to the three peas, Jack, the pets, the plant based, and the capuchinos. I prefer the three Cs, Nick, cats, cauliflower, and coffee. Jack and I discuss this at length beforehand. This three Cs is definitely the better option on this one. You've got to just let go of the peas, man. Yeah, I know.

I'm really forcing it. The biggest food company in the world, though, its best products were for animals, not humans. Pet care sales surge by 10%. Nick, if you put food in the bowl on a floor, a Nestle product manager grows its wings. But Jack, how about their other double-digit growth over at Nestle? Plant-based foods also grew by double digits last year. Jack, how about their coffee growth over the last year? Get this, Nick. Nestle is the company that actually produces Starbucks-branded coffee like full bean or ground that you can find at the grocery store. So Jack, what's the takeaway for our buddies over?

Nestle. The portfolio reveals the target customer. Okay, Snackers, funny thing about the biggest food company on earth, one-fifth of its portfolio has turned over in just the last four years. And that's one-fifth of a big number. Nestle owns over 2,000 brands globally in 150 countries. This is fascinating. We repeat, one-fifth of Nestle's huge portfolio has been sold, shut down, or bought since 2017. That's 400 brands, and it's mostly been baby food brands, candy brands, and bottled water brands. Yeah, it's replaced all those things with some pretty nifty acquisitions. In 2017, Nestle acquired a majority of Blue Bottle, the fancy coffee company. Yeah, it's a mortgage-worthy lottees. In 2019, they launched Awesome Burger, which adhered to

the plant-based name formula of hyperbole. And then last year, its Purina pet brand acquired a pet food brand in the United Kingdom. And it's all because Zellennials want pets, plant-based in cappuccinos, or the three Cs, not candy, kids, and plastic bottles. Four years ago, Nestle aligned its portfolio to target Zellennials, Gen Z and Millennials. Today, Nestle's reached that target customer. For our third and final story, Sephora, missed the Fenty effect. And this highlights both a huge problem and opportunity for the beauty industry in America. Okay, you know, Sephora.

You've seen the black and white striped bad. It's a good bag. They're expensive bags, I would say. They are. Some people would just buy the bags. But Sephora itself, it's actually owned by the $400 billion luxury giant LVMH. It's a French company, and it's a publicly traded stock. It was also doing $6 billion in sales a year leading the cosmetics industry.

Not anymore. Not anymore. Alta Beauty, competitor, Alta Beauty, pulled ahead to be the number one company in sales in the beauty industry. Bath and Body Works swooped into number two, and Sephora. has fallen to number three. Now, Sephora looked internally and did some research, and they found that lately they've been suffering from a unique combination of product

and experience failures. First, Sephora has been accused of racial bias in stores, including by R&B singer Siza, who tweeted that she was racially profiled and followed around in one of the Sephora stores. Then you've got an issue where some associates reportedly can't do dark makeup, and they sometimes

ask customers of color to bring your own foundation. Racial bias, it's a sad part of retail, and is definitely there in the beauty industry. Meanwhile, while all this has been happening over at Sephora, the Fenty Effect has been happening elsewhere. Rihanna's Beauty for All campaign. Yeah, Fenty. That's her brand. And she developed something back in 2017 called the Fenty 40. 40 shades of skincare foundations for people of all skin care colors, it like immediately sold out when it debuted in 2017. And that sellout, that was called the Fenty Effect, Cover Girl, Revellant,

smashbox, all these other beauty brands, they cut. copied Fenty with their own 40 shades. All those other beauty brands zucked Rihanna's Fenty brand. Yeah, they did. Could we call this a good zucking? Feels like a good zucking, Jack. Now, Sephora meantime, Sephora completely missed the fenty effect.

Today, just eight of Sephora's 300 different beauty brands that they sell in their stores are black-owned businesses. And according to their own Sephora study just last year, two out of three Sephora shoppers still think they have an unfair assortment of skin care. So, Jack, what's the takeaway for our buddies over at Sephora? MBA programs teach their students that what gets measured gets managed. They always say it. But we think what gets money gets made.

All right, Snackers, following last year's Black Lives Matter movement, there was like a corporate wide focus on diversity. We saw it across the S&P 500. We're seeing a new trend, though, that they're not just tying corporate diversity goals to like a percentage, but they're tying them to compensation. Gason point just yesterday. Jack and I were literally working on this Sephora story, and then McDonald's announced they're going to start connecting money to diversions.

15% of executive bonuses at McDonald's will be determined by how well they're doing on meeting inclusion goals. Okay, complete chance here on the numbers, but Sephora just joined something they call the 15% pledge. Different. That pledge requires 15% of a retail store's shelf space to have black-owned brands on it. Makes sense because 15% would be proportional to the black population in the United States. 15% of shelf space for black-owned brands. That is the goal Sephora is measuring. we think Sophora should tie that goal to the money and performance reviews. Jack, can you whip up the takeaways

for us over there? Facebook doesn't want to pay publishers any time their news articles are linked to on Facebook. Banning news articles, the perfect Facebook experiment. For a second story, Nestle experienced relatively strong earnings last quarter. Yeah, they're targeting Zellennials with the three Cs. By the way, the

portfolio is the customer. For our third and final story, Sephora's joined the 15% pledge to get 15% black-owned representation in stores. What gets measured, gets managed, but what gets money gets made. Now, time for our snack fact of the day. This one tweeted in by Tiffany Schmidt,

I think this is the hat trick, this is their third, from lovely Ann Arbor, Michigan. Greyhound, the dog, not the bus company. It has a particular type of blood that is pretty universal among dogs. Yeah, get this, 85% of greyhounds have a blood type

that allows their blood to be used in all other dog breeds. That's why Greyhound dogs are highly sought after when it comes to doggie blood banks. Did you make that last part up or is that a real thing over there? I assume. Okay, we'll go with the assumption on that. It's an assumption. By the way, quick correction to yesterday's pod when we mentioned Starlink. Starlink beams down broadband internet and it's the router on planet Earth that sends out the Wi-Fi signal.

Elon tweeted us, we thought we should make the correction. And before we go, happy birthday to Brett Thorne in lovely Chilicothe, Missouri. And happy birthday, Christel Mena in Honduras. And Grayson, Le Highline in Bellingham, Washington. And Mary Ryerson in Aspen, Colorado. And Ariana Robel in Rochester, New York. And Peter Collins in Brooklyn, New York. And Ryan Kalin in Los Angeles.

And Daniel Paul in Astoria, Queens, New York. And Kazanova, Robel in Deerfield, New York. And Ariel Sanchez, New Haven, Connecticut. And Ryan Forup in Danville, Kentucky. And Ronnie Alfaro in Tehran. Iwana, Mexico. And Jacob A. Pelt in Clarksville, Tennessee. Happy birthday, Lisa Chobin in Morgantown, West Virginia. And congrats, Anastasia Bird, who just launched a new podcast in Syracuse, New York. Congratulations to Laura and Brandon for getting hitched in Boston Mass. And congrats

Tom and Christina Fitzgerald on their new son in Northfield, Ohio. And happy anniversary to Santiago Califa and Marcella in Monterey, Mexico. And to anyone else who is celebrating something today, make it a tea boy. Celebrate the wins. We hope you enjoyed the four-day week. We can't wait to see you Monday. Get some relaxation. We'll see you then. 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 and 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 a security. the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.