Plus, Jeep expects 50% hybrid SUV surge by 2024
| For June 04, 2024 |  |
| Here’s your daily business briefing. - 🛠️ Intel launches new AI chips to rival Nvidia, AMD
- 🍽️ Deep Dive: Cava raises outlook as diners spend more
- 🥤 Dr Pepper, now the second-largest soda, beats Pepsi
Thanks for reading! Shriram
p/Shriram | |
| 1 | | At the Computex Tech Conference, Intel unveiled new Xeon 6 processors that enhanced performance and power efficiency for data center workloads. This announcement coincides with Nvidia and AMD's recent launches in the AI chip market, with Nvidia introducing "Rubin" chips and AMD outlining its Instinct accelerator roadmap until 2026. More: - Intel revealed reduced prices for its Gaudi 2 and Gaudi 3 AI accelerators compared to competitors.
- The company disclosed architecture specifics for its forthcoming Lunar Lake processors, which are anticipated to compete in the AI PC segment.
- Intel seeks to narrow the gap with Nvidia and AMD in the AI market after being relatively inactive during the AI boom.
- Intel's foundry business faced a $7B operating loss in 2023, yet assistance from the Biden administration could aid its semiconductor manufacturing and R&D endeavors.
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What the numbers say: Cava Group Inc. raised its annual same-store sales growth outlook to 6.5% from 5%, with first-quarter sales growing 2.3% above expectations. Despite a 92% share gain this year, Cava's stock fell 5.4% in extended trading after the announcement, following a 3% price increase in January with no further hikes expected. Relevance: Cava's strong performance and optimistic outlook mirror trends in fast-casual restaurants like Chipotle and Sweetgreen, which are thriving despite inflation. This success highlights a consumer shift toward fast-casual dining for its perceived value and healthier options, with the narrowing price gap making it more appealing despite tighter budgets. More data: Cava is launching a new grilled steak option on June 3, expected to boost sales as consumers choose premium proteins. Despite a first-quarter decline in traffic due to the cold January weather, spending on extras like pita chips and beverages increased, with consumer spending remaining resilient across all income brackets. | | | |
| 3 | | According to market share data from Beverage Digest, in 2023, Dr Pepper overtook Pepsi to become the second-largest soda brand in the U.S., commanding 8.3% of the market share by volume, while Coca-Cola maintains its lead with a 19.2% share. Dr Pepper's rise is credited to its distinct flavor profile and positioning as a spicy cola alternative, with its origins predating Coca-Cola and Pepsi, dating back to its founding in Waco, Texas, in 1885. More: - Dr Pepper gained national popularity in the 1970s by promoting its distinct flavor to a wider audience.
- Introducing new flavors like Dr Pepper Strawberries & Cream proved highly successful for the brand.
- Dr Pepper has embraced trends such as "Swicy" (sweet and spicy) products, aligning with broader food and beverage industry shifts.
- Pepsi's emphasis on its zero-sugar products and extensive food business may have detracted attention from its flagship Pepsi brand.
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| 4 | | Jeep aims to boost U.S. sales of plug-in hybrid electric vehicles (PHEVs) by 40% to 50% in 2024, projecting a target range of 160,000 to 170,000 units. This initiative is a strategic move to bridge the divide between conventional gas-powered SUVs and fully electric vehicles, with PHEVs serving as a transitional phase to accelerate consumer acceptance before the transition to all-electric models. More: - Jeep's 2024 PHEV sales goal exceeds Stellantis' total PHEV sales in the U.S. for 2023, which amounted to around 143,000 units.
- PHEV sales are expected to surpass industry projections, with an estimated segment growth of 27.5% for the current year.
- With Wranglers and Grand Cherokees leading the way, Jeep's PHEV sales in 2023 reached 113,113 units.
- Stellantis will debut range-extender electric vehicle (REEV) models, starting with the Ram Ramcharger pickup, offering an alternative to traditional hybrids and fully electric vehicles.
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| 5 | | Amid low crop prices, U.S. farmers are planting more soybeans over corn to minimize losses due to lower production costs and marginally better profitability. The U.S. Department of Agriculture forecasts that 86.5 million acres of soybeans will be planted nationwide, with expectations for further increases. More: - Agricultural economists in Illinois project negative average returns for corn and soybeans, with soybeans incurring smaller losses.
- Despite lower fertilizer costs, declining crop prices, and borrowing rates, these factors impact farmer profitability.
- Soybean plantings are expected to rise by 3.5% this year, while corn plantings are projected to decrease by 4.9%.
- Weather delays and soybeans' relative profitability could increase plantings by up to 1 million acres beyond USDA forecasts.
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| 6 | | Americans expect an 8% rise in summer electricity bills to an average of $719 from June to September, driven by higher usage amid rising temperatures. The U.S. Energy Information Administration predicts a 2.9% increase in average summer electric bills to $519, with the mid-Atlantic, Pacific, and Midwest regions seeing the highest spikes. More: - Heat-related deaths rose to over 2,300 last year from 1,600 in 2021, with health emergencies hitting record levels last summer.
- Federal utility assistance decreased by one-third this fiscal year, with LIHEAP funding falling from $6.1B to $4.1B, potentially affecting about 1 million fewer households.
- In December, approximately 21.2 million U.S. households were behind on their utility bills, an increase from 20.1 million the previous year, with arrears totaling $20.3B.
- According to an April Household Pulse Survey, nearly 1 in 5 households reported maintaining unsafe or unhealthy temperatures in their homes at least once within the past year.
- Only 17 states and D.C. offer summer power shutoff protections, but regulations are often inadequate, triggered only by extreme temperatures or heat advisories.
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 | 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 Shriram Jeevakumar | |
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