The Best One Yet - 🧃 “The 1st Fruit Juice” — Capri Sun’s pouches. Intel’s design strategy. Boar’s Head’s Boeing Moment.

Episode Date: September 3, 2024

Capri Sun is adding bottles to compliment their legendary pouches… but this German company’s origin story is wild.Intel stock fell to its lowest level in 11 years, so it’s thinking of breaking itself up… and it’s inspired by Nike.Boar’s Head deli meats caused the biggest listeria outbreak in decades… It’s their “Boeing Moment.”Plus, on your 1st day back to the office, there’s 1 big question… Can you wear shorts?$BA $INTC $NKE—-----------------------------------------------------GET ON THE POD: Submit a shoutout or fact: https://tboypod.com/shoutouts FOR MORE NICK & JACK: Newsletter: https://tboypod.com/newsletter Connect with Nick: https://www.linkedin.com/in/nicolas-martell/ Connect with Jack: https://www.linkedin.com/in/jack-crivici-kramer/ SOCIALS:Instagram: https://www.instagram.com/tboypod TikTok: https://www.tiktok.com/@tboypodYouTube: https://www.youtube.com/@tboypod Anything else: https://tboypod.com/  Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. Welcome back. It is Tuesday, T-Boy, Tuesday, September 3rd. And today's pod is the best one yet. It's T-boy. The top three pop business news stories you need to know today. Hey, society, Jack and I don't care that you can't wear white after Labor Day, don't we, Jack? We're both rocking white today. I love it. We're rounding up on this thing. Nothing wrong with a little white after Labor Day. I think it psychologically enhances the summer. It extends the summer, Jack. It also reflects the light. It does. We're helping the fight. We're helping the fight. against climate change. Now, wait, do you see my boxers, Jack? But in the meantime, three stories for today's show. What have we got on the podcast? For our first story, Capri's son is making a huge controversial pivot, from juice pouches

to juice bottles. But Capri's son might actually be the most feel-good story to ever come out of post-war Germany. We're excited to tell it. For our second story, it's Intel. This computer chip company stock fell at the lowest level in 11 years. So Intel is getting inspired by Nike. And our third and final story is Boar's Head.

Boershead. My dad's favorite deli meats is causing the biggest food-based health scare in years. The way Jack and I see it, Boar's Head is having its Boeing moment. I had a couple fumbles. Are we okay? I think you're okay. You fumbled it, but you never really dropped the ball, Jack. But yet he's, before we hit that wonderful mix of stories.

Fantastic mix of stories. Jack's audio bumbles. I am slowing my words a little today. You're doing great. You're doing fantastic. Well, Yetis, welcome back to work. Yeah, welcome back to work. Hello from your office to all the besties out there. The Tuesday after Labor Day is the unofficial start of back to work season, but there's one controversial question at every office cooler. Can you wear shorts?

Shorts. Are they acceptable? For men, for women, for interns, for anyone. Are shorts acceptable office attire? Because it is still technically summer. We're in the middle of a heat wave, baby. It's 100 degrees. It's humid as hell. Even your hair is sweating right now. One sec, Jack, I'm schvitzing.

My shirt is sweating. My shirt is sweating. So, according to the Wall Street Journal, offices are arguing about the acceptability of shorts. Get this. In one LinkedIn survey, 34% of American offices now allow shorts. And according to a Harris poll, companies have dropped their dress code. 50% of them have dropped. drop the dress code since the pandemic.

And Jack, since it's hot as Sirotcha out there, what should be a company shorts policy? If you're Schifzen, are shorts professionally acceptable? We're talking Bermuda shorts, Capri Shorts, or short shorts are shorts professionally acceptable? Your office definitely forbids exposed midrifts. Right. What about exposed ankles? Well, Jack and I jumped in T-Boy style and fashion critic Tim Gunn says no, you cannot wear shorts.

Personally, I don't recommend it. Because your office air conditioning probably makes the place freezing. You're right, Jack. Tim Gumm would say you can't make it work. But we're curious what you think, Yetis. On the first day, back to work. So besties, Jack and I want to know for T-Boy Tuesday. Shorts at the office, yay or nay, bullish,

Aki or Niche, niche. Let us know in the comments. Extra credit if you're wearing zip-off pants that turned into shorts. Cargo shorts, always work. Jack, let's hit our three stand. Fifteen years before this song, two boys from the Northeast men. in the dorm. They had an idea that caused a cultural storm. It's the best one yet, but the best is

an norm. Jack Nick, that's it. I don't even think they need to practice. 50% that's a fat tip. Tea boy city on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show. Start the show. First, a quick word from our sponsor. Our first story. One of the most iconic drinks in history is going through a transformation. And that company is Capri Sun. We're so glad we're covering Capri Sun for the first time. Oh, this was so much fun to research. This company has a lot of innovation and some wild history. Now, yeah, it is to sprinkle on some context here, you could not watch a Nickelodeon episode of Rugrats without six ads for Capri Sun when we were growing up. You could not watch two hours

of the price is right because you were homesick from school and that's all that was on without two Capri Sun's in their hands. Capri Sun, the most 90s, poor product in the history of the 90s. Remember the commercials on TV? Oh, yeah. The children drinking them like became liquid metal, like the bad guy in Terminator 2. Yeah, or like Alex Mack in the Nickelodeon TV shows. If you turn to metal after Capri Sun, you may want to call a doctor, if not your mother.

I haven't had one for years, but you could get a tropical punch juice drink served in a metalish pouch thing. If you didn't have a Pacific cooler flavor on the play date, I was canceling the playday check. The best part was they gave you a plastic straw, which you had to really press. precisely punched through the hole and don't squeeze it too much or it's going to splurge all over you after the puncture is made. Oh, I can't get this dry and I need help. Built's character. But yet he's here's the surprise.

Capri-sun is a bigger business than you realize. Nine factories produce six billion pouches of Capri-Sun every year, generating $2 billion of revenue across 100 countries. Now, Jack, could you sprinkle on a little delicious context over us there for us? That's twice as big a business as vitamin water. It's equally as big as Coke Zero. And Nick, get this? It's half as big as Gatorade.

That's how big Capri's Son is. Sit down, stand up, and, Mom, I still need help with the straw. But here's the news. We mentioned it last week. For the first time, Capri Sun is selling their drink in bottles, not just in their famous pouches. Honestly, we were kind of disappointed when we heard the news. Because the pouch is the product. Yeah, the packaging is the product.

Yeah, the packaging is the product. Being forced to poke the straw through that tiny hole develops your fine motor skills. By the way, those bottles are likely to target adults who think a juice box. They feel childish, although we disagree. Now, Yeti's funny thing, Jack and I are actually really glad for this headline because over the weekend, we jumped in T-boy style, and we learned a lot more about Capri's son's business. They invented the juice pack. Yeah, Capri Sun invented the juice pack. Capri Sun goes way back to post-World War II Germany.

when a man named Rudolph Wilde created Germany's first branded juice company. Now, this Mischdevio saw an opportunity in the market, didn't he, Jack? Portable drinks for kids that you could bring to the playground. Because bringing milk to the playground kind of sucks for everybody. So their innovation was a metallic pouch. It was lightweight, it was durable, and it extended the juice's shelf life, just like canned fruit gets extended in a metal can. And having traveled to Italy, Rudolph Wilde,

decided to name the product Capri. It's named after the Isle of Capri, not the Capri pants, which led itself to some fun island imagery for the kids, but also a nice brand association for the adults who probably did a honeymoon in Capri. So Capri Sun grew for two decades as a European only product, and then the business exploded when America's Kraft Heinz bought the U.S. distribution rights. And get this. Today, Capri Sun now controls 70% of the package. juice market. It's the third biggest juice company in the world. And it's based in Germany where they don't even grow fruit, I don't think. We're talking about a pouch juice company you grew up with and thought it was all-American. It's actually European and Kool-Aid can't even keep up with it.

And this company is still family owned and family held by the wilds in Heidelberg, Germany. They just legally domiciled it in Switzerland for, you know, the tax reasons. For tax reasons. Yeah. German company, named after Italy, based in Switzerland, sold in America. You didn't know that about Capri-Sund, did you, Alex? So, Jack, what's the takeaway for our buddy is over at Capri-Sun? Capri-Sun is a case study in Category Design. Yet he's last year, Jack and I told you about a business strategy of category design. It's a way to beat your competition.

Instead of competing in a space where you're one of many, build a new space where you're the only one. Well, as a juice company, Capri Sun would have had to compete with Tropicana and Minutemade and all of those huge juice companies in the market. But as a juice box company, Capri Sun didn't face any competition for years. Yeah, Capri Sun, they still made the same product. They just created a new category for that product. Fruit Juice Boxes. So, by pivoting to the pouch, Capri Sun used category design to make it the third biggest juice company in the world.

Even though they're based in a country that doesn't even grow fruit. Octia. For our second story, Intel's stock hit its lowest level since 2013, so Intel is considering a bold move. Intel's considering doing what Apple, Nike, Nvidia, and Hasbro are doing, which is having no factories. Yet is last week you were probably at a tailgate. A tailgate for the hottest earnings report on earth. It was invidia. And honestly, they showed the fattest profit margin that Nick and I have ever come across. Invidia, for every $1 of sales they bring in, they turn into 50 cents of profit. That's a 50% profit margin. Unheard of. No, it's never been heard of. And its gross profit

margin is even better. 75%. Now, the big reason why Nvidia is such a profitable company, what is it, Jack? They don't manufacture their own chips. Yeah, Nvidia, the ultimate chip company of our generation just designs the chips. And then they send that chip design to a company like Taiwan semiconductor who actually makes the chips and ships them to customers. So what Jack and I are saying Yetis is that Nvidia has no cost associated with the sale of their legendary computer chips. They only have revenue associated with the sale of a chip, which becomes pure profit. Now, that context is really important for what Jack and I are about to tell you, right, Jack? Intel, the iconic American computer chip company wants what she's having.

Yeah, straight out of Harry Met Sality, I'll have those chips. How are you having them? Intel's operating margin is less than half of what InVidio's is, and Intel didn't make any profit at all last quarter. Well, the reason partly why is because Intel designs and produces their own computer chips. Intel does not outsource the manufacturing, like so many super valuable tech companies do. Now, the fact that Intel has factories, which employ a lot of Americans, that has made it the love of the United States government. The Biden administration loves Intel because it's trying to make chips here in the United States. And that's why Intel is getting $8.5 billion in federal subsidies to build more factories in places like Ohio.

But that strategy of building and owning your own factories for Intel, it's just not working. Intel stock, it's down 60% this year to an 11 year low. Maybe Intel is so distracted with new factories in Ohio that they're not focusing on the key thing, designing cutting-edge chips. Like, Jack, Intel may be too inside the factory right now to be focusing on the right thing that they should be focusing on right now. They should be focusing on chips for AI. But honestly, they're completely missing the boat on that. So, Basties, here's the latest update. Intel has a new plan to reverse this troubling situation. According to reporting from Bloomberg, they're thinking about... splitting the company into two. One would be a high profit design company and the other would be a low

profit manufacturing company. It's not confirmed. They might not end up doing it. But if they do, Intel would be following a trend. And if they do, Intel would be inspired by Nike. So Jack, what's the takeaway for all our buddies over at Intel? Asset light means profit heavy. Yeties, it's interesting that the most valuable hotel company, Airbnb, actually owns zero hotels. And the most valuable taxi company, Uber, actually owns zero taxis. In fact, if you broaden out from just the tech industry, with few exceptions, the most profitable companies in America don't actually produce stuff themselves. Nike, for example, they own zero factories. They outsource all of their shoe production to third-party factories in low-cost countries. Apple's hardware is designed in California, but made in China by Foxcon a different company.

Even Hasbro has 100 different third-party factories they use to make the toys. Oh, that Stretch Armstrong toy you got the other day? Wasn't made by a Hasbro factory. The result of all this outsourcing of the manufacturing, fat profit margins that investors love. And those fat profit margins are easiest to produce when you don't produce physical things. That's why asset light so often means profit heavy. And Intel investors, they want in on that. Now a quick word from our sponsor. For our third and final story, America is facing its worst Listeria outbreak in over a decade. And it's all because of one company, Boar's Head Deli Meets.

Boar's Head is having its Boeing moment. Now, Jack, before we jump into this story, I think it's important that you share your go-to-dellie order. What are you hidden at the bodega these days? Or before. Lightly toasted sourdough. Not too toasted because I don't want to scratch the top of my mouth. Yeah, I can tell this is a long order already. Turkey, iceberg lettuce for the crunch. Pickles. I like texture. Manas. Salt and pepper. Longer than your skincare routine. Maybe some banana peppers if I'm feeling feisty. I was going to say pastrami and melted twist and then I'm out of there. Yet he's boar's head meats. Pretty much the only brand. in cold cuts has been the hottest company in cold cuts. It's also the only logo with a tongue sticking out.

Yeah, yeah, which I know disturbs you, Jack. Besides the Rolling Stones. Jack and I jumped in T-boy style to the company, and Borishead is doing about $2 billion in annual revenue. And they have 50% of the deli meat premium market. Now, that's a big deal, because the cold cut industry goes actually back to the Roman Empire when, like Julius Caesar would require meats to be smoked and prepared. What is a cold cut? What Julius Caesar liked to eat, Jack. But Boar's Head was actually founded in Brooklyn in 1905. And they've been branding their huge hunks of Deliham with the Boershead Lugwaters since.

And I mean branding literally. Literally. But here's the news, yetis. Boershead is now the source of the largest Listeria bacteria outbreak in 14 years. Lestaria, it's serious. A food-borne bacterial illness that can be lethal. Now, this outbreak is mostly on the East Coast, and as of last week, there have been 60 hospitals. and nine deaths, sadly.

It's become lethal. So, if you have Boershead or old country branded meat in your fridge, you got to toss that turkey. It doesn't matter which one you have. Toss that turkey in the trash. But Yetis, we've been covering business for a while. And we have food outbreaks, recalls of defective products, they happen. You hope as infrequently as possible, but it is a part of business. But the wild part about this story isn't just the scale.

It's the drama around specifically Boer's head. We've never seen a report like the one the USDA wrote about Boershead's factories. All right, Jack, can you share some of the details from the USDA report of that factory? Regulators found green algae growth, mold as big as a quarter, which just sounds gross. The USDA inspectors even described ants crawling up the wall at the Boershead Meat Factory. It sounds like a literal garbage dump, and it's a place that's making our food. Now, the other shocking element is that the USDA had been warning Boershead's. for months to clean up their act at this Virginia factory.

But apparently they didn't. So that Virginia factory led to a recall of 7 million pounds of Boershead products. In fact, doctors actually trace the bacteria in one sick patient to a Boar's Head liverwurst made at that factory. So for Boershead, they depend on you saying, I want Boershead turkey, not that unbranded turkey. That is literally what their advertisements are about. This huge dent to their reputation could be existential. So, Jack, what's the takeaway for our buddies over at Boershead? There's a new way to describe this crisis.

This is Boershead's Boeing moment. Yet is a huge business story this year, the fall of Boeing, once America's world-leading top-trusted airplane company. Then came multiple Boeing crashes, a door blew off mid-flight, and recently they even had that failed space mission, Leaving astronauts up in space. Behind it all, countless reports of a company

whose culture had rotted from the inside so we didn't see it from the outside. Until more recently. Boeing represents a company that was number one in the industry, number one in sales, number one in brand reputation. But they lost it all

after they became complacent, they cut corners, and they put short-term profits over long-term quality. It feels like what's happening to Borough's Head is the exact same story. Yeah, it does. Just like Boeing,

Boar's Head now appears to have gotten complacent, have rested on their industry-leading laurels, and have cut corners and let that culture decay. And it took a disaster for us to realize how bad it's gotten. So yet is the way Jack and I see it, there's now a new way to describe this exact kind of crisis. Boar's Head is having its Boeing moment. Jack, can you whip up the takeaways to welcome us back from the weekend? Capri Sun is reportedly adding bottles to the lineup to target adults in addition to their famous pouches. Capri Sun's founding was the perfect example of category design.

They created a new category, not juice, the juice box. For our second story, it's Intel. They're reportedly considering splitting the company in two. One high-profit chip design company, one low-profit manufacturing company. And this would be following a major trend in American capitalism. Asset light to become profit-heavy. And our third and final story. America's biggest Listeria outbreak in a decade,

originated at a dirty Boershead meat factory. This is Boris Head's Boeing moment. But Yeties, this pod's not over yet. Here's what else you need to know today. In the most awkward menage a twawe we've ever seen, three of the most valuable companies in the world are all clawing to invest in OpenAI. Open AI, you know it as the leader in artificial intelligence.

They made ChatGPT and they're 49% owned by Microsoft. But now Apple and Invidia are now trying to participate in OpenAI's next fundraise. Which means Microsoft and Apple would co-own a company, even though those two kind of hate each other. It's like Spider-Man and evil Spider-Man teaming up to fight the same enemy. We've never seen this before. And second, another piece of data shows us that inflation is cooling down. Last Friday, the Personal Consumption Index showed that prices are up 2.5% in this economy

compared to last year. That's not far off from the 2% of the 2%. that's considered the sweet spot for healthy economic inflation. And it's another sign that the Fed will feel comfortable finally cutting interest rates this month. Do you remember the 17th night of September? And finally, during our recording, Elon Musk's X got banned in Brazil by the Brazilian government. Elon ignored court orders to suspend certain accounts. He did so on free speech grounds. And Brazil even seized assets of SpaceX, another Elon Musk company, to pay for the

finds that they levied against Elon's X. It's a highly unusual situation. You basically have the president of Brazil in a public spat against the president of X, Elon Musk. And in the meantime, if you're in Rio, you cannot tweet from the beach. Now, time for the best fact yet. This one whipped up by Jack and me because we noticed it in our Capri's Sun research, and we couldn't wait to share it with you. Hans Peter Wilde, the descendant of R.

Rudolph Wilde is now the owner of Capri's son, the company we're just talking about. His father invented the Capri's Son juice packs, and now he owns the company. As a sign of appreciation for the U.S. Army winning World War II and freeing Germany from Hitler's grip, he made a $16 million donation to the United States Marines. That's right. The German owner of Capri's son donated $16 million to the U.S. Marines for liberating Germany. Kind of a cool detail about Capri-Sone. It is a cool detail.

That is. Actually, it wasn't even our only cool detail about Capri-Sone. There's a lot of cool details about Capri-San. Oh, also, I just looked it up. Germany does grow some fruit, mostly apples and berries. Germany, apparently you can't eat more than pretzels and beer and chocolate. Yeties, you'll look fantastic on your way back to work whether you're wearing shorts or whether you're not wearing cargo shorts. Let us know if you think shorts should be worn in the office and then let your office mates know about this show.

Tell your best coworker buddy, H-Y-H-T-B-O-I, that's how we grow T-Boy. Have you had the best one yet? If you know, you know. Nick and I'll see you tomorrow. Can't wait. And before we go, congratulations to Yeti's Emily Osborne and Robert Norris in Lodi, California, who just got married over the weekend, guys, let's see some of those picks. Happy two-year wedding anniversary to Rima and Sean down in Atlanta, Georgia.

Celebrating the Great Smoky Mountains and Dollywood. and a 40th birthday to Nirov Patel in Cupertino, California, his seven-year-old son, Virage, is listening to T-boy right now. Happy birthday to Veronica Lynn in San Francisco, who's a Yeti since 2021. Yeah, it's a hat trick baby, and Martina Montemorrow in Milan, Italy, has got a new job, brava and complimenti. Happy 18th birthday to Owen in Boulder, Colorado, who's the president of his business club.

This is an entrepreneur in the making. Owen, let's get your. re-elected next year. And Caden Ma is turning 17 in Los Alas, California, organizing her first ever high school investment competition. And they're probably up right now. I imagine their investments are up. What a bunch of go-getter yetis. This is amazing. Happy 30th birthday to Matt Beyer in Houston, Texas. Now, Matt won't admit it, but his girlfriend did get him into T-Boy. She's the one who sent him to the link to the podcast. We should point that out. He didn't find it organically himself, apparently. Sorry, Matt. We've got to give the girlfriend all the credit on this one.

to anyone else who's celebrating something today, make it a team boy. Celebrate the wins. This is Jack. I own stock of Intel. Nick on stock of Nike, and we both own stock of Apple. I don't know if someone's going to fact check me on that fruit thing, but I'd be surprised if Germany grew serious fruit. Yeah, I think it's like a baronation at most. Ain't no citrus above that Bavarian border.