| |
| Here’s your daily business briefing. - 🥤 Food giants chase fizzy profits
- 🌲 Deep Dive: Plastic pines surge
- 📦 FedEx plummets on demand slump
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks for reading!! Shriram
p/Shriram | |
| 1 | | Fast-food chains are tapping into the lucrative beverage market by enticing consumers willing to spend on drinks. McDonald's introduced CosMc's, a new takeout-oriented concept emphasizing customizable drinks, while Taco Bell experimented with blended iced coffee featuring unique flavors, and Jack in the Box introduced drinks with tapioca pearls. More: - Starbucks has witnessed unprecedented sales of novelty drinks, with syrups, foams, and additives bringing in $1B in sales annually in the U.S.
- Several establishments, including Dutch Bros and 7 Brew, are capitalizing on the trend of beverages by providing cold brew and colorful energy drinks.
- Specialty beverage, snack, and coffee establishments saw a 14.3% increase in sales in 2022, outperforming restaurant concepts with a food focus.
- According to Morning Consult, 62% of Gen Z reported consuming a new beverage the previous month, demonstrating their particular interest in trying new drinks.
- Targeting Gen Z consumers, the CEO of McDonald's established CosMc's to capitalize on the trend and see the beverage sector as a huge opportunity.
|     | |
| 2 | | 
What the numbers say: Imports of artificial Christmas trees to the U.S. have doubled in the last decade, with 90% originating from China in 2021. The real Christmas tree industry has experienced a slow decline over 40-50 years, particularly after the economic downturn in 2008, resulting in a 27% decrease in Christmas tree production in the U.S. between 2002 and 2017 and a reduction in tree farms in Oregon from 1,590 to 490 between 2005 and 2020. Relevance: The shift to artificial trees has steadily impacted the natural Christmas tree industry, with a notable surge in imports in 2021 amid supply chain challenges. Economic downturns, especially in 2008, led to decreased live Christmas tree sales, affecting tree farmers and worsening industry challenges, while Christmas tree imports from Canada increased, reflecting the decline in domestic production of natural Christmas trees in the U.S. More data: In 2022, 77% of Americans chose artificial Christmas trees, impacting the natural tree industry. Oregon, a leading U.S. tree producer, faces sales declines, with an 80% drop for small farms and a 45% decrease for the largest farms between 2005 and 2020. Despite challenges, some farmers, like those growing noble firs in Oregon, remain committed. | | | |
| |
|
| 3 | | FedEx shares dropped 12% as the company adjusted its revenue forecast, citing weakened demand impacting sales. The revised outlook expects a low-single-digit decline in fiscal year revenue, down from the previous projection of flat year-over-year sales, marking the second consecutive quarter of a reduced sales outlook. More: - The company's largest division, Express, had difficulties throughout the quarter due to decreased demand, surcharges, and customers switching to less expensive alternatives.
- Despite fiscal 2024's continued revenue challenges from economic volatility affecting customer demand, FedEx foresees improved operating income through cost-cutting measures.
- For the three-month period ending Nov. 30, FedEx reported revenue of $22.17B, less than expected, and adjusted earnings per share of $3.99, missing $4.18 per share.
- General Mills also stated in its earnings report that the company's issues with Bisquick and Dunkaroos are worsening due to weak demand and price pressure.
| | | |
| 4 | | The U.S. and EU have agreed to prolong the suspension of tariffs on U.S. whiskey until March 31, 2025, preventing the imposition of a 50% tariff on U.S. whiskey exports to Europe in the coming year. This tariff initially emerged from a more significant dispute between the U.S. and the EU involving steel and aluminum. More: - According to the Distilled Spirits Council of the U.S., American whiskey exports to the EU declined 20% from $552M to $440M due to a 25% tariff between 2018 and 2021.
- Once the levy was halted in October 2022, exports increased by 29% to $566M.
- The EU's tariff suspension extension is positive for American whiskey makers but hinges on the U.S.'s reciprocal extension of steel and aluminum tax suspensions.
- The tariff disagreement impacts American whisky exports when whiskey's appeal to American consumers wanes, with tequila and mezcal becoming more popular than whisky.
- The $5.1B U.S. whiskey industry primarily serves the domestic market, but around $1.3B worth was exported in the previous year, constituting 62% of all American spirits exports.
| | | |
| |
|
| |
| 6 | | Chinese retailers are moving toward affordable goods and services to appeal to budget-conscious consumers, potentially introducing deflationary pressures to the economy. This strategy of price cuts, expanding discount stores, and offering more affordable products could reduce profit margins, affecting wages, jobs, and consumer spending, resembling Japan's "lost decades." More: - Companies are cutting prices to hold onto market share in the face of fierce competition, contributing to declining consumption.
- Examples include the introduction of more reasonably priced goods by Moutai, infused with its signature liquor, and the development of lower-priced locations by Haidilao, China's largest hotpot restaurant chain.
- A "value for money" trend among consumers is being fueled by a pricing war between Alibaba's Freshippo and Walmart's Sam's Club, which is slashing prices on popular items.
- The average selling price of many product categories, such as dairy, cosmetics, skincare, and vitamins, has decreased due to the quest for cost-effectiveness.
- The rise of bargain stores such as Lingshi Henmang (expanding to 10,000 stores in 2025) and Hotmaxx (expanding to 5,000 outlets in the next three years) indicates a wider tendency toward affordability and value in retail.
| | | |
| 7 | | Quick Hits: - Stocks come with voting rights that can yield an extra 5% each year. Get started on Shareholder Vote Exchange to start earning today.*
- Panasonic, a supplier to Tesla, announced on Wednesday that it has chosen not to establish a multibillion-dollar electric vehicle battery plant in Oklahoma.
- China, the world's primary rare earth processor, has banned the export of technology for extracting and separating these strategic metals to maintain its dominance in the sector.
- FMC, a fertilizer and chemical manufacturer, has launched a global restructuring plan, attributing it to a decline in the global crop protection market.
- Social media platform X, formerly Twitter, faced a global outage, impacting over 77,000 U.S. users at its peak, with international users reporting access issues to both X and X Pro, previously TweetDeck.
- Scheduling meetings takes significant time and energy out of your day. That's why 20 million people automate scheduling with Calendly. Sign up free.*
*This is a sponsored listing. | | | |
 | 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 | |
| |
| |
|
 | Secure investor calls fast with an investor-worthy pitch deck made on Elevo - start building now. | |
|
| |
