Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal, Managing editor at Bloomberg Markets, and I'm
Speaker 1: Tracy Halloway, Executive editor at Bloomberg Markets. So, Tracy, it's
Speaker 1: the middle of August and it's about time for a
Speaker 1: fun summer episode, don't you think Yes, I think it is.
Speaker 1: You know, everyone's on holiday, people are thinking about going
Speaker 1: to nice places with beaches and pools. Uh, let's let's
Speaker 1: give the people what they want exactly right. Um. You know,
Speaker 1: obviously summer is characterized by pools, hanging out by the pool, barbecuing, grilling,
Speaker 1: stuff like that. And of course there's always a market
Speaker 1: and economic angle to every story. And so today we're
Speaker 1: going to talk about these things that we take for
Speaker 1: granted in the summer, and uh, talk about some of
Speaker 1: the underlying fundamentals behind them. So this is essentially the
Speaker 1: Markets edition of the Pool Party, or the Pool Party
Speaker 1: edition of the Markets podcast. I should say we're here
Speaker 1: with Polly Masson's who wrote a great story, um for
Speaker 1: Bloomberg recently about pool toys. And before we get into it,
Speaker 1: I think pretty much anyone who goes on Instagram regularly
Speaker 1: sees lots of pictures of people floating in pools in
Speaker 1: these gigantic inflatable doughnuts or inflatable swans or inflatable Floomer goes.
Speaker 1: You certainly see him if you follow Taylor Swift on Instagram.
Speaker 1: And of course there is a huge business behind that,
Speaker 1: a lot of money, and we're going to talk to
Speaker 1: Polly about that business. So, Polly Mawson's of Bloomberg, thank
Speaker 1: you very much for joining us. Thanks for having me, guys,
Speaker 1: I would love to talk about pool toys. Great, let's
Speaker 1: get right into to it. So why why is this?
Speaker 1: How did this become such a huge thing? How big
Speaker 1: is this? Business? Is huge? When I was at the
Speaker 1: New York Toy Fair earlier this year, which was the
Speaker 1: dead of winter, it was snowing outside. Inside the Jabbitts Center,
Speaker 1: they had a huge pool toy display. It was the
Speaker 1: first thing you saw when you walked into toy Fair.
Speaker 1: There was a flamingo that was ten ft high. It
Speaker 1: was beautiful and cost I believe, four hundred dollars, which
Speaker 1: is quite the investment for an inflatable pool toy that
Speaker 1: can pop at any moment. Okay, what think of all
Speaker 1: the likes on Instagram if you have a ten foot
Speaker 1: inflatable flamingo, that's exactly right. So about two summers ago
Speaker 1: you started seeing them come up on Instagram. But it
Speaker 1: really became the thing to have. When Taylor Swift, when
Speaker 1: she was still with Calvin Harris r I p that relationship,
Speaker 1: she posted a picture of her on a really beautiful
Speaker 1: gigantic swan slash Pegasus. It was very regal looking, it
Speaker 1: had golden wings. People were obsessed with it. And that's
Speaker 1: really where a lot of these things took off, and
Speaker 1: you had a couple of company that really became like
Speaker 1: the main go to companies. The biggest one among them
Speaker 1: is Big Mouth Inc. They make about twenty thousand dollars
Speaker 1: a day on Amazon just off their inflatable donut one style,
Speaker 1: twenty dollars a day. Wait, this is the pink doughnut.
Speaker 1: It looks kind of like the ones that Homer Simpson
Speaker 1: used to eat in the TV series, right, and everyone's
Speaker 1: probably seen it at one point or another. That is
Speaker 1: the exact donut. Twenty thousand a day. That's a lot
Speaker 1: of money. Yeah, and that's just off the donut. They
Speaker 1: have some other really popular items their Giant Pineapple has
Speaker 1: been huge for them this year. They have a flamingo
Speaker 1: whose design they've actually copyrighted. It's different from other flamingo floaties.
Speaker 1: So you can imagine how much money they're pulling in
Speaker 1: off of these floaties during the summer. Okay, so with
Speaker 1: large amounts of money often comes controversy and conflict and
Speaker 1: competition is other people try to get in on the act,
Speaker 1: and the donut in particular seems to have attracted some
Speaker 1: degree of conflict. Walk us through that. Yeah, so big
Speaker 1: Math think which is the big Uno floaties. They have
Speaker 1: found people infringing on their copyright, specifically on the donut,
Speaker 1: and they found this on Amazon. They started ordering competitors
Speaker 1: donuts that they were trying to sell off as big
Speaker 1: mouth products, and when they arrived, they were flimsier material
Speaker 1: and perhaps most offensively, instead of having twelve colors of sprinkles,
Speaker 1: they only had four. Oh my god, that's terrible, terrific
Speaker 1: it is to instagram myself with a donut without twelve
Speaker 1: colors of sprinkles and the sprinkles weren't even shaded in
Speaker 1: so they didn't look three d oh my god. Yeah,
Speaker 1: So what did they do? When they discovered this, well,
Speaker 1: this was part of two lawsuits that they filed, one
Speaker 1: against an Amazon seller called Floating Panda and another against
Speaker 1: Amazon seller Solo Fleet. They didn't have their real identities,
Speaker 1: so they just filed two suits in Connecticut against these
Speaker 1: Amazon identities, and the lawsuits that big Mouth brought basically
Speaker 1: focused on copyright infringement and a version of fraud. They
Speaker 1: were claiming that these Amazon sellers were selling big Mouth
Speaker 1: counterfeit products under the big Mouth cereal code on Amazon,
Speaker 1: so they were trying to just slip them in as
Speaker 1: real products after they actually infringed on their copyrighted designs.
Speaker 1: Now does Amazon have any responsibility here? I mean, it's
Speaker 1: one thing if the donut looks like another donut, but
Speaker 1: if a if a competitor, as big Mouth claims, is
Speaker 1: using their cereal code, is Amazon a totally neutral party here? Well,
Speaker 1: Amazon does have fraud protection in place, but they have
Speaker 1: to have really student fried protections that kind of are
Speaker 1: a process, because otherwise you'd have a bunch of people
Speaker 1: that are just filing complaints against their competitors because they
Speaker 1: don't want them selling a legitimate product that was vaguely similar.
Speaker 1: So they have to have the product ordered, they have
Speaker 1: to prove that it's counterfeit and then they can file
Speaker 1: a valid complaint with Amazon and Amazon can take away
Speaker 1: those products, and big Mouth did do that, but they
Speaker 1: finally were very fed up after these two competitors had
Speaker 1: taken their by box on Amazon, the buy boxes, when
Speaker 1: you go to check out on Amazon, you press by now,
Speaker 1: and there's always a default seller, So there can be
Speaker 1: you know, ten different companies that sell the same floaty
Speaker 1: that's vaguely similar, but whoever has that buy box is
Speaker 1: the one who's getting all the sales. And if Floating
Speaker 1: Panda started undercutting big Mouth by just one penny on
Speaker 1: the price instead of the twenty float, they would take
Speaker 1: over that buy box. And that's what happened, and that's
Speaker 1: when big Mouth started losing twenty dollars a day on
Speaker 1: the donut. So this is where I think it gets
Speaker 1: really interesting because we talk a lot about the importance
Speaker 1: of Amazon right now, the dominance of Amazon in markets
Speaker 1: and in business, and the idea that people's business is
Speaker 1: built around what goes into the bye box and they
Speaker 1: can win or lose so much money just based on
Speaker 1: one Amazon algorithm is pretty significant. Is cost the only
Speaker 1: thing that Amazon looks at when it comes to the
Speaker 1: buye Box. It's more elaborate than just cost. There's ratings
Speaker 1: that go in there, and there's kind of a secret
Speaker 1: Amazon formula they're never going to disclose in full. But
Speaker 1: it is also based on what kind of seller you are.
Speaker 1: You know, if you had all one star but you're
Speaker 1: selling products, you're probably not going to make it into
Speaker 1: the buye box. But if you look like a fairly
Speaker 1: legitimate seller and you're selling a less expensive product that
Speaker 1: Amazon believes to be the exact same thing, you might
Speaker 1: find yourself in the buy box and then you're getting
Speaker 1: a ton of sales all at once. So what's happening now?
Speaker 1: They filed these complaints, They filed these suits. Has Amazon
Speaker 1: done anything yet? Or can? I are the competitors to
Speaker 1: big Mouth still right there? Well, in this particular suit,
Speaker 1: they didn't file it against Amazon, so Amazon did definitely
Speaker 1: help them with taking down pictures that they thought were
Speaker 1: being used to sell products that more in actually big
Speaker 1: mouth products. Amazon has replied to the complaints, but legally
Speaker 1: they don't have to do anything here. What did happen
Speaker 1: is that one of these Amazon sellers came back to
Speaker 1: big Mouth after receiving the lawsuit and said, give me
Speaker 1: a week to sell through my product and you'll never
Speaker 1: hear from me again. And big Mouth said, you know,
Speaker 1: that's not a bad deal. They because their whole goal
Speaker 1: here is to make this problem go away. They don't
Speaker 1: want to fight every single person who's selling floaties on Amazon,
Speaker 1: and they understand that competition is out there, and they
Speaker 1: certainly don't want to bring these lawsuits. I mean, they've
Speaker 1: had to actually put two people on staff out of
Speaker 1: a person office just to police Amazon. So for them,
Speaker 1: they just want this to go away, and that's really
Speaker 1: the next legal step here. So what happened with the
Speaker 1: other company. They have not replied to the lawsuit, which
Speaker 1: isn't surprising. They don't believe that these sellers are in
Speaker 1: the United States. It's a little harder to track them down,
Speaker 1: and from there a judge can make a ruling on
Speaker 1: the case, but you never know if there's actually gonna
Speaker 1: be any money collected, especially when this is a four
Speaker 1: million dollar collection of lawsuits. I kind of love that
Speaker 1: response from the one company, which is basically like, yeah,
Speaker 1: you're right, we're kind of ripping you off. But let
Speaker 1: us just be in business one more week so we
Speaker 1: can clear out our inventory and make back our costs,
Speaker 1: and we'll leave. It's like a very sort of free
Speaker 1: market cocy in response to dealing with a legal problem,
Speaker 1: and it is kind of win wind seems much better
Speaker 1: than a long protracted legal fight. Absolutely, and you don't
Speaker 1: really want to be left with a warehouse full of
Speaker 1: float ees, right. I can't blame them, but think of
Speaker 1: the Instagram potential. That's true warehouse full of flamingos and donuts.
Speaker 1: Before we go, there's a fascinating story. What's the big
Speaker 1: what's the big floaty this year? I think the big
Speaker 1: floaty is the Swan. This one is a really big deal.
Speaker 1: It's beautiful. I personally enjoy laying on my Swan. I
Speaker 1: have like five floaties. I feel somewhat biased writing this
Speaker 1: story because I'm really into floaties. Are they all the
Speaker 1: big mouth brand float is? They're not. They're They're a
Speaker 1: variety of floaties, including I bought one an Amazon that
Speaker 1: was kind of crappy, but it was like seven dollars,
Speaker 1: so you know you have to have a weird one
Speaker 1: in there. Polly must Ends from Bloomberg. Thank you, very much.
Speaker 1: That's fascinating. I don't think I'm ever going to be
Speaker 1: able to look at an Instagram pool floating picture ever
Speaker 1: again in the same way. Thank you guys for having
Speaker 1: me well, Tracy. So that was half the summer. Half
Speaker 1: the summer is about spending time in pools, and as
Speaker 1: we said in the beginning, the other half of the
Speaker 1: summer is about grilling and barbecuing. Of course, of course
Speaker 1: it is uh so what's essential to grilling obviously meat.
Speaker 1: And the good news is that at least in the
Speaker 1: US this year, there is a meat mountain. There is
Speaker 1: so much meat out there that the price of ribs
Speaker 1: and beef and pork and everything else has plunged, making
Speaker 1: it really cheap to uh to do barbecue this summer. Okay,
Speaker 1: so summer has essentially gone on sale because we have
Speaker 1: inflatable pool toy makers trying to undercut each other, and
Speaker 1: then we have super cheap meat prices. I love it,
Speaker 1: the summer on sale. It's like, I think that should
Speaker 1: be the time in this episode. Alright, So with us
Speaker 1: now to discuss the meat mountain and super cheap meat
Speaker 1: products is Lydia mulvaney. She's a reporter here at Bloomberg
Speaker 1: who covers agriculture. Lydia, thank you very much for joining us.
Speaker 1: Hi thanks uh so, Lydia. Why is there a mountain
Speaker 1: of meat? Oh, there's so much meat. Um, it's because
Speaker 1: there's been a kind of a perfect storm where like
Speaker 1: chicken producers and hog producers and cattle producers, they're all
Speaker 1: expanding their herds at the same time. And uh, there
Speaker 1: were some record prices for those um for meat a
Speaker 1: couple of years ago, even last year for beef, and
Speaker 1: those high prices just made everyone, um go crazy and
Speaker 1: and expand there and expand their flocks and herds and
Speaker 1: so um, now we have um, like all three important meats,
Speaker 1: you know, a lot of it at the same time, aime.
Speaker 1: And so they're all kind of competing with each other
Speaker 1: at the store and and the result is really um
Speaker 1: big discounts compared to previous years. And actually a lot
Speaker 1: of them are at like multi year lows with the prices.
Speaker 1: I love it. I mean, you know, it's the cliche
Speaker 1: and commodities right that high prices are the cure for
Speaker 1: high prices. We saw it obviously with the multi year
Speaker 1: oil boom, and then there was so much expansion of
Speaker 1: drilling and exploration, and then the price of oil crashed.
Speaker 1: So it sounds like the essentially the same thing happened here,
Speaker 1: except with the meat. Yeah, but I don't think that
Speaker 1: they necessarily all happen at the same time, where it's
Speaker 1: like chicken, pork and meat doing this at chicken pork
Speaker 1: and beef doing this the same time a bit. At
Speaker 1: this point, you know, it's all three markets, and so
Speaker 1: the total meat supplies are going to be a record
Speaker 1: for sure this year. And then um so, there is
Speaker 1: really cheap grain prices right now too, so so it's
Speaker 1: even cheaper for producers to produce meat. Um So, there's
Speaker 1: a lot of people out there saying that this isn't
Speaker 1: going to stop. It's just gonna it's gonna go for
Speaker 1: a couple of years. There's going to be this expansion,
Speaker 1: and so should have pretty good barbecue prices next summer too,
Speaker 1: and maybe even the next one. I remember, you know,
Speaker 1: just a couple of years ago, we were talking about
Speaker 1: global demand for meat really taking off, especially in places
Speaker 1: like China, and it's kind of surprising to see that
Speaker 1: supply has been raised so much that it's offsetting what
Speaker 1: was supposed to be a big increase in demand. Yeah.
Speaker 1: So um because of the prices in the US, uh,
Speaker 1: meat consumption grew the most in forty years or some
Speaker 1: some very large number. Uh. In so Americans are pretty
Speaker 1: close to like keek meat eating. So we can't actually
Speaker 1: eat all the meat that's going to be produced in
Speaker 1: this country. UM. So it really needs to go to
Speaker 1: these other countries. Um. And yes there is like rising
Speaker 1: meat consumption, but you know there's other producers that work
Speaker 1: that you are competing with the U s so um uh.
Speaker 1: I think it needs to be seen what happens. I
Speaker 1: mean basically, if if if you know, China and other
Speaker 1: emerging countries aren't going to absorb you know, the overflow
Speaker 1: from the US, that's just gonna mean it's going to
Speaker 1: back up here and be even cheaper. So Joe mentioned
Speaker 1: a potential parallel with the US shale boom in terms
Speaker 1: of supply rising really quickly to take advantage of higher
Speaker 1: prices a couple of years ago. Was there any technology
Speaker 1: involved in the supply growth in meat? I don't think
Speaker 1: it's a specific technology, but producers are always working on
Speaker 1: you know, breeding more efficiently and getting the genetics right. Um.
Speaker 1: I think for for pigs, like, pigs have way more
Speaker 1: piglets today than they used to. So Joe is a
Speaker 1: very keen barbecuer. Can you recommend one specific meat that's
Speaker 1: the best bargain at the moment that you could be
Speaker 1: grilling next weekend? That's a great question. Best bargain? Well,
Speaker 1: so in terms of things that were expensive last year
Speaker 1: but cheap this year, right, Like what's really I should take?
Speaker 1: Could be beef? Beef is really what are we talking about?
Speaker 1: Like still expensive compared to like pork, but it's way
Speaker 1: cheaper than it was last year. So if you're looking
Speaker 1: for that discount, that would be it. But I guess,
Speaker 1: you know, chicken and pork are just really they're really
Speaker 1: down there. Maybe maybe ribs, Yeah, I've been I've been
Speaker 1: smoking a lot of ribs this summer. I need to
Speaker 1: actually take a ribbs break. Actually, you know, like pulled pork,
Speaker 1: because everything that's not a barbecue, I'd never mind. No, no, no,
Speaker 1: no, no no, definitely maybe you can put like pulled pork
Speaker 1: on your burger. I don't know, I don't know what
Speaker 1: people do before we go. How much of just I
Speaker 1: realize we haven't hit it, how much of a disc
Speaker 1: a price crash are we talking about specifically from the
Speaker 1: wholesale perspective? How much have prices gone down? Okay, so
Speaker 1: so for for beef, it's about from last year, and
Speaker 1: pork is about the same. Chickens about cheaper on the
Speaker 1: wholesale like chicken breasts, um, so you know, and that's
Speaker 1: from last year. And there's you know, for for pork
Speaker 1: and chicken, like they've been going down for like a
Speaker 1: couple of years. So this is actually after some pretty
Speaker 1: significant um discounts. So those and those are like multi
Speaker 1: year lows, they're like five six year lows for the price. Well,
Speaker 1: it seems pretty clear that this is a good summer
Speaker 1: to have gotten into doing barbecuing, and with any luck,
Speaker 1: perhaps not for the farmers. Uh, the summers ahead will
Speaker 1: be inexpensive as well. Yeah. Well, Lydia Mulvannia, Bloomberg News,
Speaker 1: thank you very much for joining us and telling us
Speaker 1: the good news about meat price. So, Tracy, you know,
Speaker 1: obviously the theme of that episode was summer, but as
Speaker 1: you pointed out, another one of the themes was falling prices,
Speaker 1: and we sort of explored multiple ways in which the
Speaker 1: FED is being challenged and trying to hit its inflation target.
Speaker 1: One is about technology and how new market to make
Speaker 1: price competition extremely easy and liquid, and the other is
Speaker 1: just about falling core commodity prices and these gluts that
Speaker 1: we're seeing all over the world that don't seem to
Speaker 1: be going away anytime soon. Well, you're taking this episode
Speaker 1: very serious. I didn't expect to. I thought I'm going
Speaker 1: to talk about the floats and which one I was
Speaker 1: going to buy. You can talk about that, No, no, no, Well,
Speaker 1: the thing I was very interested in was um. Well,
Speaker 1: the inflation aspect of it is a big, big question,
Speaker 1: especially in light of technology. And actually here we go, okay,
Speaker 1: just to link the two. I wonder a lot about
Speaker 1: the role of a company like Amazon in inflation, because
Speaker 1: it seems in some respects like Amazon is really a
Speaker 1: benevolent um monopoly for consumers. Right, it's super cheap, it's
Speaker 1: very efficient. We can buy cheap inflatable pool toys. We
Speaker 1: can even buy groceries and meats now days off of Amazon.
Speaker 1: And that's great for consumers. But it means low prices
Speaker 1: obviously low inflation. And I wonder about the I suppose
Speaker 1: challenges for businesses in that environment. Totally. I mean, if
Speaker 1: you could theoretically gain a quasi monopoly by dominating the buybox. Uh,
Speaker 1: if the one cent decrease in price. Now, obviously, as
Speaker 1: Pouli pointed out, it's not quite that simple, but if
Speaker 1: just this minor price cut can create this radical competition
Speaker 1: dynamic the likes of which you would you know, if,
Speaker 1: if you're talking about physical retail, one cent price cut
Speaker 1: isn't enough to make you go to a different store,
Speaker 1: it's hardly never would have existed years ago. So it
Speaker 1: is really fascinating, Um, the dynamics there. And I'm also
Speaker 1: fascinated by the extent to which something like Instagram can
Speaker 1: have a whole new category of industry which people would
Speaker 1: have never I mentioned. Um, absolutely I would. I would
Speaker 1: go long Instagram process at this moment in I'm right, yeah,
Speaker 1: I'll keep I'll keep watching out on Taylor Swift's Instagram
Speaker 1: to see what the next big thing that she posted with. Okay,
Speaker 1: all right, are you barbecuing this weekend? I am, And
Speaker 1: I don't know what I'm gonna do yet, but I'm
Speaker 1: thinking pulled pork actually, so uh, next episode I'll talk
Speaker 1: about how that goes. Excellent, all right, well, this has
Speaker 1: been another edition of the Odd Lots Podcast. Thanks everyone
Speaker 1: for listening. I'm Joe wi Isn't There. You can follow
Speaker 1: me on Twitter at the Stalwart and I'm Tracy Alloway.
Speaker 1: I'm on Twitter at Tracy Alloway. Thanks you listening.