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| Hello Insiders!! Today's Business newsletter covers: 🍹 Absolut Sprite canned cocktail launching by 2024
💊 Deep Dive: Rite Aid bankrupt after years of losses
📉 Counterpoint: Global smartphone market slumps If you enjoy reading this newsletter, please share it with your friends and colleagues. Also, Venture capitalists pitch to founders in our live-stream reverse demo day event, "Meet Our Fund 5," happening today.
Check it out! Thank you!! Shriram
p/Shriram | |
| 1 | | Pernod Ricard and Coca-Cola have joined forces to introduce a pre-mixed cocktail called "Absolut & Sprite" in specific European markets such as the U.K., the Netherlands, and Spain, with plans for a 2024 launch. This strategic collaboration seizes the opportunity presented by the rising demand for pre-mixed cocktails in these crucial markets. More: - According to industry tracker IWSR, the pre-mixed cocktails category's value is predicted to rise by $11.6B between 2022 and 2026, while its volume is predicted to climb by 24% over that same time.
- Pernod said, "A typical base for alcohol ready-to-drink goods is vodka, while pre-mixed cocktails frequently include lemon-lime soda as a mixer."
- According to IWSR research, ready-to-drink spirits-based goods, especially those containing vodka, hold a 45% share in major markets.
- More than 50% of customers in these markets are persuaded to buy ready-to-drink products by well-known beer, soft drink, or alcohol brands.
- The new drinks are the latest addition to Coke's growing line of alcoholic beverages during the past few years, including the canned Jack-and-Coke cocktail from 2022.
Zoom Out: - Canned cocktails have surged in popularity recently, with a 2022 report from the Distilled Spirits Council of the U.S. revealing them as the fastest-growing category in both revenue and volume within the spirits industry.
Q: What factors drive the growing popularity of canned cocktails? Join the conversation here. |     | |
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What the numbers say: Rite Aid filed for bankruptcy, and as part of the restructuring plan, it will liquidate some of its 2,100 shops due to opioid-related lawsuits and a debt exceeding $3B, reflecting ongoing financial difficulties with over $2B in net losses over five years. Relevance: Rite Aid's bankruptcy, influenced by its inability to meet costs related to opioid lawsuits, has led to a pause in pending litigation. The business' financial problems, partly due to its size and rivalry with bigger drugstore chains like Walgreens and CVS, have been made worse by earlier purchases and mergers, including a failed attempt to merge with Walgreens. More data: Rite Aid had about $140M in cash before declaring bankruptcy, but its fiscal year ending in March 2023 had a net loss of $750M on $24B in revenue. Rite Aid's bankruptcy poses a risk to about 47,000 employees and results from issues dating back to the early 2000s, marked by acquisitions, operational mistakes, and financial difficulties. In contrast, major pharmacy operators like Walgreens, Walmart, and CVS have agreed to pay over $13B to settle opioid-related lawsuits. | | | |
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| 3 | | Per Counterpoint Research, the global smartphone market saw an 8% decline in the third quarter, hitting its lowest Q3 level in a decade due to weakened demand for major brands like Apple and Samsung in developed markets. During this period, the share of the top five smartphone brands, including Xiaomi, Oppo, and Vivo, dropped to a three-year low, with Apple's shipments falling by 8% and market leader Samsung experiencing a 13% decline in sell-through volumes. More: - With its Mate 60 Pro smartphone employing domestically produced chips, Huawei increased its market share in the quarter despite U.S. sanctions.
- With the industry's overall smartphone shipments up 2% from the second quarter, there is the possibility of an end to the two-year trend of year-over-year declines in the fourth quarter.
- Counterpoint stated, In established regions like the U.S., Europe, and Korea, the arrival of the iPhone 15 series in September is anticipated to spur growth.
- Additionally, they reported that the market would be supported by the Indian festival season, China's 11.11 sale, and end-of-year promotions in all regions.
- The Middle East and Africa, in particular, were the only emerging economies to see an increase in smartphone sales year over year in the third quarter.
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| 4 | | Wells Fargo exceeded third-quarter profit expectations due to increased customer borrowing costs. The bank has raised its 2023 net interest income (NII) forecast by 16%, up from the prior 14% projection, with NII rising 8% to $13.1B in the third quarter, leading to a 2% increase in Wells Fargo shares during premarket trading. More: - Wells Fargo reported earnings per share of $1.48 for the quarter, or $1.39 when excluding discrete tax benefits, and exceeded expectations with total revenue of $20.9B, surpassing the consensus estimate of $20.1B.
- CEO Charlie Scharf pointed out the adverse effects of the economy's slowdown, including decreased loan balances and worsening charge-offs.
- Due to some clients moving their cash into money market funds because interest rates were rising, the bank reported a fall in total deposits from $1.41T to $1.34T.
- The allowance for credit losses increased by $333M during the quarter, primarily due to commercial real estate office space loans.
- Wells Fargo increased its projected expenses for 2023 from an earlier projection of roughly $51B to nearly $51.5B.
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| 6 | | Goldman Sachs is selling consumer lender GreenSky to a consortium of investors, marking a substantial move in its withdrawal from consumer lending. Goldman had bought GreenSky for roughly $1.7B a year before this sale, with the sale price estimated to be around $500M, resulting in a significant loss for the company. More: - GreenSky's primary goal will remain to originate loans for those who are renovating their homes.
- As part of a more significant departure from consumer lending, Goldman Sachs is taking a second look at its credit card agreements with Apple and General Motors.
- From 2020 through the end of the second quarter, the bank's consumer-lending business — including GreenSky and credit cards — suffered significant losses of almost $4B on a pretax basis.
- Many partners and senior executives supportive of Goldman's decision to stop lending to consumers are worried about how it would affect the bank's stock performance.
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- Taylor Swift's Eras Tour concert film set a new record with an opening weekend revenue of $95M-97M, making it the highest-grossing concert film debut and the top-earning domestic concert film release to date, as reported by AMC Entertainment.
- Microsoft's LinkedIn plans to lay off 668 employees in its engineering, talent, and finance departments as revenue growth slows for the professional networking platform.
- Novo Nordisk will acquire the drug ocedurenone from KBP Biosciences for up to $1.3B, with potential applications in cardiovascular and kidney disease.
- Snap's stock surged by 11% following a media report that projected the social media company to surpass Wall Street's expectations with over 475 million daily active users (DAUs) by 2024.
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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