WEBVTT - BI Weekend: Coca Cola, Hasbro, T-Mobile Earnings 0:00:02.720 --> 0:00:11.520 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.640 --> 0:00:13.760 with Scarletfoo and Paul Sweeney. 0:00:13.880 --> 0:00:16.680 Concerned about rising crisis spooking investors? 0:00:16.720 --> 0:00:19.000 What does renewables investment look like in the US? 0:00:19.239 --> 0:00:23.079 More power talk coming out of this administration. 0:00:22.560 --> 0:00:26.279 Breaking market headlines and corporate news from across the globe. 0:00:26.280 --> 0:00:28.280 The President wants a lower interest rates, He wants a 0:00:28.360 --> 0:00:29.160 rate cut cycle. 0:00:29.280 --> 0:00:29.680 How do you. 0:00:29.680 --> 0:00:31.640 Broaden out the AI play? 0:00:31.880 --> 0:00:33.599 Are people just looking for someone to worry about when 0:00:33.640 --> 0:00:34.240 it comes to China? 0:00:34.440 --> 0:00:38.880 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio 0:00:39.080 --> 0:00:41.200 Originals and the Bloomberg Business App. 0:00:42.400 --> 0:00:44.640 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.720 --> 0:00:47.000 business story is impacting Wall Street and the global markets. 0:00:47.200 --> 0:00:49.479 Each and every week we provide in depth research and 0:00:49.560 --> 0:00:51.400 data on some of the two thousand companies and one 0:00:51.479 --> 0:00:54.000 hundred and thirty industries are analysts cover worldwide. 0:00:54.080 --> 0:00:56.680 Today, we'll look at why Kraftthein's new CEO is halting 0:00:56.680 --> 0:00:58.800 the process of splitting the company. 0:00:58.440 --> 0:01:00.480 Plus a look at why T Mobile ad and fewer 0:01:00.480 --> 0:01:02.080 mobile phone subscribers last quarter. 0:01:02.200 --> 0:01:04.600 But first we begin with a deal in the energy space. 0:01:04.720 --> 0:01:07.920 This week, deep water oil rigowner Transocean agree to acquire 0:01:08.040 --> 0:01:10.600 rival Valaris in an all stock deal valued at five 0:01:10.640 --> 0:01:11.840 point eight billion dollars. 0:01:12.080 --> 0:01:15.240 The deal will create the world's largest offshore recontractor by 0:01:15.240 --> 0:01:16.120 market value. 0:01:15.920 --> 0:01:18.760 And this comes as offshore drilling has been booming, especially 0:01:18.800 --> 0:01:21.640 in deep waters for more. We were joined by Scott Levine, 0:01:21.720 --> 0:01:23.560 our senior energy services analysts. 0:01:23.760 --> 0:01:26.039 We asked Scott to break down who these companies are 0:01:26.160 --> 0:01:27.480 and the reasons for the deal. 0:01:27.840 --> 0:01:33.160 Two of the bigger names in offshore drilling. Transocean has 0:01:33.200 --> 0:01:38.160 the largest backlog, Valaris has largest fleet. Valaris's name may 0:01:38.200 --> 0:01:40.240 not be that familiar to a lot of folks here. 0:01:40.280 --> 0:01:42.920 It was actually a combination of a two companies called 0:01:43.040 --> 0:01:44.680 Ensco and row In a few years ago. But there 0:01:44.680 --> 0:01:48.240 are two of the biggest offshore drillers, and I think 0:01:48.280 --> 0:01:53.080 that this deal really has both offensive and defensive motivations. 0:01:53.960 --> 0:01:57.920 Offshore drilling is in a little bit of a recovery mode, 0:01:58.040 --> 0:02:02.120 really kind of has been. Most of the drillers went bankrupt. 0:02:02.200 --> 0:02:08.320 Actually during the twenty twenty one downturn. Transotion was really 0:02:08.360 --> 0:02:11.040 one of the only companies that did not go bankrupt. 0:02:11.639 --> 0:02:15.200 Valaris did, and so Transition has kind of been saddled 0:02:15.200 --> 0:02:18.840 with all this debt as a result of not having 0:02:18.840 --> 0:02:22.600 their balance sheet wipe during a bankruptcy, and so that's 0:02:22.639 --> 0:02:25.200 been a limiting factor on their growth for quite some time. 0:02:25.440 --> 0:02:29.000 And this deal, which is an all stock deal, will 0:02:29.040 --> 0:02:32.800 accelerate their leveraging process and remove some of that burden 0:02:32.880 --> 0:02:36.480 from them and better enable them to capitalize on an 0:02:36.560 --> 0:02:40.040 upturn in offshore drilling. And the second of the thing 0:02:40.120 --> 0:02:42.200 that's important to note here is that it brings a 0:02:42.280 --> 0:02:47.320 jack up fleet jet. So a jackup fleet jackups are 0:02:47.360 --> 0:02:51.880 basically shallow water rigs okay, as opposed to the deep 0:02:51.960 --> 0:02:57.040 water drill ships or floaters, and Transotion had exclusively been 0:02:57.280 --> 0:03:01.800 a floater fleet. Jackups are to the seabed, the seabeds 0:03:01.840 --> 0:03:05.079 lower and shallow water, and Valaris is one of the 0:03:05.120 --> 0:03:09.680 biggest players there, and so this gives Transition exposure to 0:03:09.880 --> 0:03:13.720 the jack up or shallow water market, which has really 0:03:13.840 --> 0:03:17.720 undergone an interesting phase in that it was a bit 0:03:17.720 --> 0:03:20.160 of a downturn the last couple of years. The biggest 0:03:20.320 --> 0:03:24.359 jack up driller is Saudija Ramco, and a couple of 0:03:24.400 --> 0:03:29.320 years ago Saudia Ramco made significant cuts to their drilling program. 0:03:29.480 --> 0:03:34.440 They essentially Saudi Arabia abandoned plans to increase their oil 0:03:34.480 --> 0:03:37.720 production capacity to thirteen million barrels a day, and what 0:03:37.760 --> 0:03:40.480 we've seen since then is a lot of jack up 0:03:40.600 --> 0:03:44.080 rigs being laid off effectively in twenty twenty four and 0:03:44.160 --> 0:03:49.040 twenty twenty five. Indication suggests those rigs will return this year, 0:03:49.080 --> 0:03:53.680 so that market is bottomed and maybe on the cusp 0:03:53.720 --> 0:03:57.040 of an upswing. So this deal will give Transotion the 0:03:57.080 --> 0:03:59.480 ability to participate in that recovery. 0:03:59.760 --> 0:04:02.040 So in terms of why now, when it comes to 0:04:02.080 --> 0:04:05.040 the timing of this deal, the COEO transortion cited a 0:04:05.120 --> 0:04:08.640 multi year drilling upcycle. Where are we in that cycle? 0:04:08.680 --> 0:04:08.880 Are we? 0:04:09.200 --> 0:04:10.080 You know, first inning? 0:04:12.080 --> 0:04:14.920 It's kind of been an interesting upcycle, so we saw 0:04:15.560 --> 0:04:20.120 an inflection in twenty two and twenty three, and twenty 0:04:20.120 --> 0:04:22.599 four and twenty five, we've seen kind of a plateau 0:04:22.720 --> 0:04:24.040 to a slight pullback. 0:04:24.120 --> 0:04:24.280 Now. 0:04:24.320 --> 0:04:27.400 I do believe we're in a recovery and have been, 0:04:27.440 --> 0:04:28.880 and this has kind of been more of a mid 0:04:28.920 --> 0:04:34.560 cycle pause associated rather than a downturn and offshore drilling. 0:04:34.600 --> 0:04:37.719 So I do think the recovery is intact, but I 0:04:37.760 --> 0:04:43.560 think the cadence has certainly slowed and in fact deteriorated 0:04:44.120 --> 0:04:49.599 and offshore drillers, like energy service companies, have been off 0:04:49.640 --> 0:04:51.960 to the races this year. I think the oil price 0:04:52.040 --> 0:04:55.000 is held in better than expected. Some of that is 0:04:55.040 --> 0:04:58.479 due to some of the tensions in the Middle East. 0:04:58.560 --> 0:05:03.160 I Ran et cetera, Venezuela as well. So the punchline 0:05:03.200 --> 0:05:04.760 really is that we're still in I think a mid 0:05:04.800 --> 0:05:07.320 cycle pause until maybe the second half of this year, 0:05:07.680 --> 0:05:09.960 and in terms of what inning we're in, I think 0:05:10.000 --> 0:05:12.760 we're probably like third fourth inning, but it's been in 0:05:13.200 --> 0:05:15.240 kind of an unconventional recovery. 0:05:15.640 --> 0:05:17.839 Will the regulators allow these two companies to get the other? 0:05:18.400 --> 0:05:21.480 Yeah, I think so, And it's a good question. These 0:05:21.520 --> 0:05:23.640 are the two of the largest players that are out there, 0:05:24.440 --> 0:05:29.279 and rig CEO expressed extreme confidence that that will be 0:05:29.360 --> 0:05:32.640 the case. It's a competitive market. There's a lot of 0:05:33.160 --> 0:05:38.279 fragmentation smaller players in the market, and it's generally the 0:05:38.400 --> 0:05:42.800 quality of certain assets that determine which guys win which contracts. 0:05:43.480 --> 0:05:46.600 A lot of it depends on which rigs are capable 0:05:46.640 --> 0:05:49.920 of drilling for which projects, and so no, I do 0:05:49.960 --> 0:05:56.800 think that this should get to relatively quick approval. Certainly 0:05:56.920 --> 0:05:59.400 they're talking second half of this year. That's a much 0:05:59.440 --> 0:06:04.120 shorter time timeline than the last major oil field services merger, 0:06:04.440 --> 0:06:07.360 which was Slumberge champion X that took over a year 0:06:08.080 --> 0:06:11.480 two year and a half to approve and required significant divestures. 0:06:11.480 --> 0:06:13.760 But offshore drilling is a. 0:06:13.560 --> 0:06:16.479 Different market our Thanks to Scott Levigne Bloomberg Intelligence, a 0:06:16.480 --> 0:06:18.360 senior energy services analyst. 0:06:18.240 --> 0:06:21.160 Staying with energy on Bloomberg Intelligence, we often look at 0:06:21.160 --> 0:06:25.680 research from Bloomberg and EF previously known as New Energy Finance. 0:06:25.360 --> 0:06:27.760 So they're the team at Bloomberg that tracks and analyzes 0:06:27.800 --> 0:06:32.320 the energy transition from commodities to power, transport, industries, buildings, 0:06:32.320 --> 0:06:33.640 and agriculture sectors. 0:06:33.880 --> 0:06:36.719 This week we took a look at robotaxis for more 0:06:36.760 --> 0:06:39.440 on this and the state of the automated vehicle industry. 0:06:39.680 --> 0:06:41.920 I was joined by Andrew grant b an EF head 0:06:41.920 --> 0:06:45.000 of Intelligent Mobility. I first asked Andrew to tell us 0:06:45.040 --> 0:06:47.560 where we are with robotaxis and what we should watch 0:06:47.560 --> 0:06:48.920 out for in twenty twenty six. 0:06:49.440 --> 0:06:51.600 So at the end of twenty twenty five, they were 0:06:51.640 --> 0:06:55.280 about eight thousand working robotaxis globally. Some of those had 0:06:55.320 --> 0:06:57.960 safety drivers behind the wheel, Some of the had safety 0:06:58.000 --> 0:07:02.600 drives in the vehicle but a significant number fully driverless 0:07:02.760 --> 0:07:06.160 and operating in various cities around the globe. I'd say 0:07:06.600 --> 0:07:09.040 about half of those eight thousand based in the US, 0:07:09.960 --> 0:07:12.880 but we expect that number in total to more than 0:07:12.920 --> 0:07:14.720 double by the end of the year to around eighteen 0:07:14.760 --> 0:07:16.440 thousand robotaxis globally. 0:07:17.480 --> 0:07:21.320 Who are the players in this business? I names you 0:07:21.320 --> 0:07:23.760 know other than no Tesla, Weimo. How do you think 0:07:23.760 --> 0:07:25.559 about the competitive environment out there? 0:07:26.000 --> 0:07:27.680 I mean, we spend a lot of time looking at 0:07:27.800 --> 0:07:30.800 the actual operations and number of vehicles deployed, so rarely 0:07:30.800 --> 0:07:32.920 you're looking at kind of four companies globally that have 0:07:33.040 --> 0:07:36.160 the biggest fleets of vehicles on the road. So Waimo, 0:07:36.240 --> 0:07:39.000 as you mentioned, alphabet backed and has just raised a 0:07:39.040 --> 0:07:42.080 significant amount of money. But also you're looking at three 0:07:42.120 --> 0:07:47.000 Chinese companies with a big robotaxi fleet and growing so 0:07:47.320 --> 0:07:50.680 Bydou's Apollo, and then we Ride and pony Ai, which 0:07:50.680 --> 0:07:53.760 are robotaxis specialists that are based out of China but 0:07:54.000 --> 0:07:55.200 looking to expand globally. 0:07:55.840 --> 0:07:58.760 You know, I think about the just the battery electric 0:07:58.800 --> 0:08:01.200 vehicle market, and I think the exception of the US 0:08:01.360 --> 0:08:04.360 byd and some of these other Chinese manufacturers, it just 0:08:04.400 --> 0:08:06.440 feels to me at this early stage might be able 0:08:06.480 --> 0:08:08.960 to take over the world of electronic vehicles. Is that 0:08:09.040 --> 0:08:11.440 a similar view for robotaxis? 0:08:13.240 --> 0:08:15.440 Yeah. I mean it's interesting how different geographies are going 0:08:15.480 --> 0:08:18.200 to react and different regulators are going to react to 0:08:18.480 --> 0:08:22.520 foreign companies coming in and deploying their technology in those areas. 0:08:22.680 --> 0:08:25.800 We are really seeing kind of a race at the 0:08:25.840 --> 0:08:29.640 moment for new territories. So you've obviously got the US 0:08:29.680 --> 0:08:32.400 based companies, the Chinese based companies that I just mentioned, 0:08:32.440 --> 0:08:35.640 and kind of in the middle, you've got Europe, Middle East, 0:08:35.679 --> 0:08:38.199 Southeast Asia where a lot of these companies are setting 0:08:38.240 --> 0:08:40.480 up roots and looking to deploy and kind of twenty 0:08:40.520 --> 0:08:42.240 twenty six is the year where they're really looking to 0:08:42.280 --> 0:08:47.200 expand those services. So uber has just announced an earning 0:08:47.240 --> 0:08:52.360 score last week that they'll be expanding to Houston, Hong Kong, Madrid, Zurich. 0:08:53.320 --> 0:08:57.679 There's a variety of really competitive battlegrounds across those kind 0:08:57.679 --> 0:08:58.680 of markets. In the middle. 0:08:59.760 --> 0:09:04.480 What's the safety records so far in these early testing stage. 0:09:06.760 --> 0:09:09.079 I mean, it depends how you measure these safety standards. 0:09:09.080 --> 0:09:13.360 It's whether you're needing some type of intervention with the 0:09:13.400 --> 0:09:16.880 safety driver and the vehicle on the whole. These vehicles 0:09:17.160 --> 0:09:21.240 are tending to kind of show safety records that are 0:09:21.320 --> 0:09:24.880 similar to what humans have displayed, and in some cases 0:09:24.880 --> 0:09:27.480 it's far surpassing that. But again, the measuring of these 0:09:27.520 --> 0:09:31.200 standards is kind of a tricky, nuanced subject. That's a 0:09:31.200 --> 0:09:33.240 lot of regulators are digging into at the moment, and 0:09:33.280 --> 0:09:36.520 it's really about companies working with regulators to try and 0:09:36.600 --> 0:09:40.000 figure out and kind of try to prove their safety 0:09:40.040 --> 0:09:42.320 record over time as they expand their services. 0:09:43.480 --> 0:09:48.240 Talk to us about these things are expensive to develop, maintain, deploy. 0:09:48.880 --> 0:09:51.480 Weimo just raised sixteen billion dollars at one hundred and 0:09:51.480 --> 0:09:55.760 twenty six billion dollar valuation. Tesla's committed twenty billion dollars 0:09:55.800 --> 0:10:00.959 in R and D this year. Where's the money coming from? 0:10:01.040 --> 0:10:03.640 I mean a variety of venture backed investors and kind 0:10:03.679 --> 0:10:06.480 of the big tech companies themselves. So you mentioned Wemo. 0:10:06.520 --> 0:10:10.400 A lot of that money is coming from its majority owner, Alphabet, 0:10:11.080 --> 0:10:13.960 and then Tesla is putting a lot of money into this. 0:10:14.000 --> 0:10:16.360 It's just about where they are putting their money. So 0:10:16.679 --> 0:10:19.520 Tesla is going with a strategy of deploying a much 0:10:19.640 --> 0:10:22.160 cheaper vehicle, but they're putting a lot of money into 0:10:22.200 --> 0:10:24.720 the data centers to try and improve their self driving 0:10:24.720 --> 0:10:28.000 algorithms and their self driving system, whereas Weimo has got 0:10:28.040 --> 0:10:30.640 a more expensive vehicle kind of two to three times 0:10:30.679 --> 0:10:33.719 at a minimum more expensive. So it's going to take 0:10:33.760 --> 0:10:36.480 a lot of ney to kind of build out that 0:10:36.600 --> 0:10:39.000 robotaxi fleet and deploy it in the various parts of 0:10:39.000 --> 0:10:41.880 the globe where they want to deploy. They've just announced 0:10:41.880 --> 0:10:44.560 that they plan to launch a service here in London 0:10:44.559 --> 0:10:45.160 in September. 0:10:46.480 --> 0:10:50.200 Great, some of those little streets, good luck there. What's 0:10:50.240 --> 0:10:52.880 some of the gating issues here? Is it regulatory? Is 0:10:52.880 --> 0:10:55.760 it capital? Is it technology? What's the gating issue here 0:10:56.040 --> 0:10:57.240 for this industry at the moment? 0:10:58.280 --> 0:11:00.040 I mean, it's kind of all of the above, and 0:11:00.080 --> 0:11:02.480 there's improvements that need to be made on all of those, 0:11:02.520 --> 0:11:05.520 but also just finding a business use case for these services. 0:11:05.520 --> 0:11:07.079 I mean, as we've been talking about, it takes a 0:11:07.080 --> 0:11:09.760 lot of money to build them and deploy them. So 0:11:09.880 --> 0:11:13.960 finding a kind of meaningful market for them and completing 0:11:14.040 --> 0:11:16.560 kind of useful rides or meaningful rides rather than just 0:11:16.640 --> 0:11:20.040 kind of being a theme park attraction and driving small 0:11:20.080 --> 0:11:21.800 parts of the city. You actually want to kind of 0:11:21.840 --> 0:11:25.439 get those more lucrative ride heading trips from say city 0:11:25.520 --> 0:11:28.560 center to airports, and that's been a bit tricky for 0:11:28.600 --> 0:11:32.280 some of these robotaxi companies to actually sort out the 0:11:33.120 --> 0:11:35.480 If you look at just about a week and a 0:11:35.480 --> 0:11:38.440 half ago where were announced that they would be opening 0:11:38.520 --> 0:11:42.600 up to San Francisco Airport. But really what you're seeing 0:11:42.720 --> 0:11:45.280 from that is they are doing pickups and drop offs 0:11:45.640 --> 0:11:48.120 at the car rental center, which is kind of a 0:11:48.160 --> 0:11:52.400 fifteen twenty minute journey from there to the actual airport itself, 0:11:52.440 --> 0:11:55.520 so it's kind of compete with curbside dropoffs from ride 0:11:55.520 --> 0:11:57.920 heading vehicles. They still have a bit of way to go. 0:11:58.360 --> 0:12:01.600 Are thanks to Andrew grant, any, head of Intelligent Mobility, 0:12:01.840 --> 0:12:04.000 coming up a look at why Coca Cola offered a 0:12:04.040 --> 0:12:06.480 more conservative full year sales outlook than expected. 0:12:06.600 --> 0:12:09.440 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:09.480 --> 0:12:11.600 depth research and data on two thousand companies and one 0:12:11.679 --> 0:12:12.760 hundred and thirty industries. 0:12:12.880 --> 0:12:15.920 You can access Bloomberg Intelligence via Bigo on the terminal. 0:12:16.040 --> 0:12:17.160 I'm Scarlett Foo and. 0:12:17.120 --> 0:12:19.160 I'm Paul Sweeney, and this is Bloomberg. 0:12:23.520 --> 0:12:28.040 This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney 0:12:28.360 --> 0:12:29.680 on Bloomberg Radio. 0:12:30.440 --> 0:12:32.000 We moved now to some news at the food and 0:12:32.040 --> 0:12:33.600 beverage company craft Hines. 0:12:33.920 --> 0:12:37.120 So this week, Kraft Heins's new CEO, Steve Kaylane, halted 0:12:37.120 --> 0:12:38.560 the process of splitting the company. 0:12:38.880 --> 0:12:41.480 Its decision, he said, was backed by the board of directors. 0:12:41.760 --> 0:12:45.200 Kaylane will instead invest six hundred million dollars in developing 0:12:45.240 --> 0:12:47.840 new products, marketing them and lowering some prices. 0:12:48.040 --> 0:12:50.400 The shift in strategy was the result of Kaylane spending 0:12:50.400 --> 0:12:53.840 the last few weeks immersing himself in Kraft Heeins's vast portfolio, 0:12:53.880 --> 0:12:56.359 including conversations with retailers and employees. 0:12:56.679 --> 0:12:58.800 For more and all this, we were joined by Christina Peterson, 0:12:58.800 --> 0:13:00.320 Bloomberg News food industry reporter. 0:13:00.600 --> 0:13:03.560 We began by asking Christina to explain Kaylane's thinking with 0:13:03.600 --> 0:13:04.040 the pause. 0:13:04.559 --> 0:13:07.160 He's only been on the job since January first, so 0:13:07.200 --> 0:13:09.120 I think this came as a surprise to folks that 0:13:09.200 --> 0:13:12.160 the split was called off about five months after it 0:13:12.200 --> 0:13:15.920 was announced or paused. There is no end date to 0:13:16.000 --> 0:13:18.079 the pause, so we don't know if it will at 0:13:18.080 --> 0:13:22.280 some point rezuom. But the CEO, Steve Kahlene, said that 0:13:22.840 --> 0:13:25.200 he came on the job knowing that there had been 0:13:25.440 --> 0:13:29.520 levels of under investment in Kraft Heiness's brands and decided 0:13:29.520 --> 0:13:31.760 that after reviewing all of them, that there were brands 0:13:31.760 --> 0:13:34.599 that would respond to more investment. So they announced that 0:13:34.640 --> 0:13:37.480 they would be putting six hundred million dollars into things 0:13:37.520 --> 0:13:41.800 like R and D marketing and lowering some prices in 0:13:41.880 --> 0:13:45.319 hopes that that would bolster the entire company and that 0:13:45.320 --> 0:13:47.440 that would be in a better position put them in 0:13:47.440 --> 0:13:50.120 a better position to evaluate whether they should move forward 0:13:50.160 --> 0:13:50.680 with the split. 0:13:51.559 --> 0:13:54.439 So what if most investors want? Did they you think 0:13:54.440 --> 0:13:56.800 they want the split up? Sometimes split ups work, a 0:13:56.880 --> 0:14:00.400 lot of times they don't. What if investors been saying 0:14:00.400 --> 0:14:01.560 over the past months. 0:14:01.960 --> 0:14:06.240 There's clearly been some anxiety among investors since the news 0:14:06.240 --> 0:14:09.360 of the split was announced. I think that the new 0:14:09.480 --> 0:14:13.880 CEO was seen as there were hopes that he would 0:14:13.920 --> 0:14:16.400 do what he had done with the Kellegg Company, which 0:14:16.400 --> 0:14:19.560 split into two publicly traded entities and then where both 0:14:19.840 --> 0:14:22.720 both of those companies were bought by privately held entities. 0:14:23.400 --> 0:14:26.160 So there was some speculation that the same thing would 0:14:26.160 --> 0:14:30.400 occur at Kraft. Himes and Kaylaine said basically, not yet. 0:14:30.640 --> 0:14:33.680 Really, there's another twist to all of this, which is 0:14:33.680 --> 0:14:37.240 that Kraft Times biggest shareholder is Berkshire Hathway and Warren Buffett, 0:14:37.280 --> 0:14:39.720 who runs Berkshire Hathway until he handed the rains to 0:14:39.760 --> 0:14:42.960 Greg Abel, said he was never a fan of that 0:14:43.080 --> 0:14:45.080 idea to split up the company. I mean, he was 0:14:45.160 --> 0:14:47.560 kind of the mastermind behind Kraft Hims becoming the behemoth 0:14:47.640 --> 0:14:49.720 it was and that didn't work out so well. But 0:14:50.000 --> 0:14:51.840 he made clear that the split was not a good 0:14:51.840 --> 0:14:54.480 thing in his mind. Do we think that has anything 0:14:54.520 --> 0:14:55.680 to do with this about face? 0:14:56.840 --> 0:14:59.360 I don't know. It is clear that he had publicly 0:14:59.400 --> 0:15:03.160 expressed a appointment in the split, and his successor had 0:15:03.200 --> 0:15:06.200 said in a filing that Berkshire Hathaway was taking steps 0:15:06.240 --> 0:15:09.240 to sell its twenty eight percent stake in Craft Times, 0:15:09.800 --> 0:15:12.760 So clearly they were nervous about this and not fans 0:15:12.800 --> 0:15:13.640 of the news. 0:15:13.880 --> 0:15:16.320 So do we have any idea how long this pause 0:15:16.920 --> 0:15:20.880 will last? I mean, is he trying to turn stuff around, 0:15:20.960 --> 0:15:23.280 make it maybe better? So if when they do split 0:15:23.320 --> 0:15:25.200 it up be worth more? What do we know? 0:15:26.280 --> 0:15:28.640 They clearly are not going to make the decision this year. 0:15:28.800 --> 0:15:31.360 They talked about returning to growth in twenty twenty seven, 0:15:31.600 --> 0:15:34.440 so it seems like this is a month's away decision. 0:15:35.040 --> 0:15:37.120 Oh, the investment bankers who had that on their deal 0:15:37.120 --> 0:15:38.400 sheet for twenty twenty six. 0:15:39.040 --> 0:15:40.720 But they get paid in the meantime for the work 0:15:40.720 --> 0:15:41.640 that they've done right now. 0:15:41.640 --> 0:15:42.800 You don't get paid to the closes. 0:15:42.880 --> 0:15:44.600 Oh really, you can't build them along the way. 0:15:44.920 --> 0:15:47.720 We're not lawyers. Okay, we get paid. We take out 0:15:47.760 --> 0:15:50.040 of the I like how you still say we yeah, yeah, 0:15:50.080 --> 0:15:50.880 exactly because you. 0:15:50.840 --> 0:15:53.040 Feel for these guys. Y. 0:15:53.120 --> 0:15:55.520 What's the company want to do now? Is as a 0:15:56.160 --> 0:15:57.120 standalone company. 0:15:57.400 --> 0:16:01.440 Well, they've talked about releasing some healthier products. They are 0:16:01.560 --> 0:16:06.280 launching a Kraft Heinz Mac and cheese PowerMac with proteinage. 0:16:06.280 --> 0:16:08.080 I knew iber, I knew it. I knew it. 0:16:09.280 --> 0:16:11.920 And they will be lowering prices. They talked about the 0:16:12.040 --> 0:16:17.000 opening price points being important for low income families. So 0:16:17.040 --> 0:16:18.520 those are some of the areas that they're going to 0:16:18.520 --> 0:16:21.920 be focusing on, some healthier options, more affordable price points. 0:16:22.480 --> 0:16:25.760 Our thanks to Christina Peterson, Bloomberg News Food industry reporter. 0:16:26.080 --> 0:16:28.880 We move now to the beverage giant, Coca Cola. This week, 0:16:29.000 --> 0:16:31.720 Coca Cola reported weaker than expected quarterly sales. 0:16:32.040 --> 0:16:34.800 Soda maker also offered a more conservative twenty twenty six 0:16:35.080 --> 0:16:38.000 for your sales outlook. Then expected. Shares of Coca Cola 0:16:38.080 --> 0:16:39.040 fell after the news. 0:16:39.200 --> 0:16:41.920 The outlook points to the challenges faced by the incoming CEO, 0:16:41.960 --> 0:16:44.880 Henrique Braun, as the company works to win over shoppers 0:16:44.920 --> 0:16:46.960 with its widening portfolio of beverages. 0:16:47.320 --> 0:16:51.080 For more, we heard Kencha Bloomberg Intelligence, senior consumer products analysts. 0:16:51.200 --> 0:16:53.680 We first asked Ken to tell us what's concerning investors 0:16:53.680 --> 0:16:54.760 about Coca Cola. 0:16:54.920 --> 0:16:57.960 I think what maybe concerning the mark a little bit 0:16:58.000 --> 0:17:02.520 about Coke is that the mix was not as favorable 0:17:02.560 --> 0:17:05.000 as it had been. Also, the company over the past 0:17:05.040 --> 0:17:07.960 couple of years had been relying heavily on price mix 0:17:08.119 --> 0:17:09.920 to boost the top line. 0:17:09.960 --> 0:17:10.440 Is it was a. 0:17:10.359 --> 0:17:14.280 Considerable slowing in the quarter. Having said that, there's always 0:17:14.280 --> 0:17:16.080 some noise in the fourth quarter. It's hard to draw 0:17:16.160 --> 0:17:19.240 too many conclusions from the fourth quarter. But I think 0:17:19.240 --> 0:17:22.160 the market is also being spooked a little bit by 0:17:22.320 --> 0:17:25.679 the guidance for next year, which came in a bit 0:17:25.720 --> 0:17:29.600 a little bit light. The company's long term algorithm is 0:17:30.000 --> 0:17:33.679 to generate about four to six percent organic revenue and 0:17:33.800 --> 0:17:37.399 from that it can generate high comparable EPs growth, and 0:17:37.440 --> 0:17:40.360 it did that in twenty twenty five, in twenty twenty six, 0:17:40.440 --> 0:17:43.480 other saying four to five percent top line and four 0:17:43.520 --> 0:17:47.920 to five percent EPs growth, And so that's EPs growth again, 0:17:47.960 --> 0:17:53.200 that's excluding currency effects. It's not only below their long 0:17:53.280 --> 0:17:57.120 term algorithm, but also below consensus expectations going in. 0:17:57.880 --> 0:18:01.080 What's the You know, we always talk a lot of 0:18:01.119 --> 0:18:03.760 your companies, the consumer products companies and staples companies that 0:18:03.800 --> 0:18:05.639 you think about him as kind of GDP maybe a 0:18:05.640 --> 0:18:07.600 little bit GDP plus kind of growth here. Is there 0:18:07.640 --> 0:18:10.280 any secret sauce to the Coca Cola story or is 0:18:10.280 --> 0:18:11.600 that the way we should think about it? 0:18:12.680 --> 0:18:15.480 Well, there's a lot of truth of that, Paul, because 0:18:15.560 --> 0:18:17.720 Coca is in the two hundred markets around the world. 0:18:17.880 --> 0:18:20.879 You know, I guess the way for growth is lunar 0:18:20.880 --> 0:18:24.000 at this point. I mean, they're everywhere. But I think 0:18:25.480 --> 0:18:27.600 there's gonna be a new CEO on March thirty first, 0:18:27.880 --> 0:18:30.520 Henry Barraun. He's a long time veteran at Coca Cola 0:18:30.600 --> 0:18:33.600 who was the COO used to head up Latin American operations. 0:18:33.760 --> 0:18:35.760 I think there's a lot of confidence in his ability 0:18:36.040 --> 0:18:40.000 to take the reins here, and I think what he's 0:18:40.040 --> 0:18:43.000 going to spell out in his vision next week at Cagney. 0:18:43.160 --> 0:18:44.959 That's when they oh usually do it. 0:18:45.000 --> 0:18:45.600 That's where you'll be. 0:18:47.000 --> 0:18:51.119 Yeah. Well, I think he's gonna say that they need 0:18:51.160 --> 0:18:54.200 to step up their marketing and innovation here to boost 0:18:54.280 --> 0:18:56.800 that top line growth. And I think they're going to 0:18:56.960 --> 0:19:01.320 talk a lot about functionality that we talked about with PepsiCo. 0:19:01.880 --> 0:19:04.800 What I mean by functionality, well, well, consumers want more 0:19:04.840 --> 0:19:07.440 from their beverages than just taste good and hydrate them. 0:19:07.840 --> 0:19:11.720 They want to not only have zero sugar, but if 0:19:11.720 --> 0:19:15.040 they wants to have more electrolytes in their water, it 0:19:15.080 --> 0:19:17.800 wants to have more protein in their drinks. Particularly the 0:19:17.880 --> 0:19:22.600 JLP one crowd, they want to have fiber coke offers 0:19:22.640 --> 0:19:25.800 in its probiotic sodas like simply Pop. So these are 0:19:25.800 --> 0:19:27.240 the kind of things they're going to talk about in 0:19:27.280 --> 0:19:31.080 terms of product innovation, I believe next week. In addition 0:19:31.119 --> 0:19:32.640 to that, I think the company's going to spend more 0:19:32.640 --> 0:19:35.520 in marketing digital marketing to get the message out to 0:19:35.680 --> 0:19:37.080 new young consumers. 0:19:37.440 --> 0:19:39.000 I guess the idea is to just have your drink 0:19:39.080 --> 0:19:39.919 or place your food. 0:19:40.359 --> 0:19:41.040 I guess. 0:19:42.560 --> 0:19:46.120 Zero sugar actually was a standout right with Coca Cola 0:19:46.200 --> 0:19:49.399 Zero sugar posting double digit volume growth in the quarter. 0:19:49.640 --> 0:19:51.159 When you say that they want to focus on the 0:19:51.160 --> 0:19:53.280 innovation and get the word out, what does that mean 0:19:53.320 --> 0:19:56.160 in terms of spending on marketing? What does that mean 0:19:56.200 --> 0:19:58.520 on in terms of capital expenses? 0:20:00.000 --> 0:20:03.199 Think broadly speaking, more social media advertising. I mean on 0:20:03.240 --> 0:20:06.040 a purview basis, that's a lot more cost efficient and 0:20:06.119 --> 0:20:09.080 the you know traditional ways like television, Paul, you would 0:20:09.080 --> 0:20:12.040 know that right media analyst days. So it's more of that. 0:20:12.240 --> 0:20:15.359 It's also working more closely with their bottlers in terms 0:20:15.359 --> 0:20:18.880 of co marketing ventures. That could be a wide range 0:20:18.920 --> 0:20:22.280 of things, not only digital marketing, but perhaps coming out 0:20:22.320 --> 0:20:25.719