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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: I will say BUCkies is maybe the most confusingly amazing

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Speaker 2: place on the planet.

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Speaker 3: Right it is. It is a mind boggling experience.

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Speaker 4: Sam is telling us a story about BUCkies.

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Speaker 3: I heard.

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Speaker 1: Why was it? Hey, Sam? Why was it? Insane? I

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Speaker 1: gotta know? Wait are we recording?

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Speaker 4: We're recording right.

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Speaker 1: But wait, you guys started without me. Well yeah, okay,

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Speaker 1: so this is off the record.

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Speaker 4: I did a deadlift one, Jimmy.

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Speaker 1: Okay, uh barges.

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Speaker 4: This isn't After School Special, except.

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Speaker 1: I've decided I'm going to base my entire personality going

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Speaker 1: forward on campaigning for a strategic pork reserve in the US.

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Speaker 4: Where's the best with imposta?

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Speaker 1: These are the important question? Is it robots taking over

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Speaker 1: the world? No.

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Speaker 4: I think that like in a couple of years, the

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Speaker 4: AI will do a really good job of making the

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Speaker 4: Odd Lots podcast and people to say, I don't really

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Speaker 4: need to listen to Joe and Tracy anymore.

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Speaker 3: We do have.

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Speaker 4: The perfect welcome to lots More where we catch up

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Speaker 4: with friends about what's going on right now.

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Speaker 1: Because even when Odd Lots is over, there's always lots More, And.

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Speaker 4: We really do have the perfect guest.

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Speaker 1: Oh, Joe, did you see did you see PEPSI results

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Speaker 1: from last week?

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Speaker 4: You know what, Okay, I'm gonna admit something. I haven't

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Speaker 4: been paying that close attention to earnings.

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Speaker 1: This season, which I actually had that feeling that you weren't.

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Speaker 1: But why is that?

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Speaker 3: Uh?

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Speaker 4: I don't know, like I think I'm like like paying attention.

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Speaker 4: I don't know, like looking I have no justification. Maybe

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Speaker 4: I just think you like too much about the FED

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Speaker 4: and trying to read monetary policy stuff. And you're right,

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Speaker 4: I have no I have no defense. You know, wait,

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Speaker 4: how did you know I had a How did you

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Speaker 4: have this feeling that I've been slacking at the job?

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Speaker 1: Because I was about to say something sarcastic. No, because

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Speaker 1: I can, I can tell I think. You know, it's

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Speaker 1: funny after we've done the Odd Lots podcast for I mean,

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Speaker 1: it's actually coming up for ten years in twenty twenty five. Yeah,

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Speaker 1: it is actually disturbing that we tend to think of

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Speaker 1: the same questions. We tend to be on the same page.

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Speaker 1: We tend to not actually have to like tell each

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Speaker 1: other that many things. That's right, Like we can just

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Speaker 1: say one sentence and we both immediately know like what

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Speaker 1: we want to do.

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Speaker 4: Yeah, jeez, but.

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Speaker 1: Yes, I could tell you weren't paying attention to earnings.

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Speaker 1: I kind of feel like earnings are there. I've said

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Speaker 1: this before, but I swear to god they come up

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Speaker 1: more often than four times a year.

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Speaker 4: We were recording this, by the way, on February fourteenth,

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Speaker 4: twenty twenty four, four h six pm, and I'm looking

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Speaker 4: at a TV right behind you, Tracy, and there is

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Speaker 4: a headline Cisco to cut five percent of its global

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Speaker 4: work force. Yeah.

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Speaker 1: So this is a big theme of earnings right now,

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Speaker 1: which is Layoffs was aware of. Yes, in part because

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Speaker 1: they're also hitting our own industry media, but predominantly they've

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Speaker 1: been in tech so far. And it kind of raises

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Speaker 1: the question about what levers companies actually have to pull

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Speaker 1: to boost earnings and profit margins right now? Do you

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Speaker 1: remember we spoke to Samuel Ryans absolutely last year. So

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Speaker 1: Sam nailed the earnings trade last year and he kind

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Speaker 1: of has like a new thesis now. Sam. It's good

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Speaker 1: to talk to you on lots more.

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Speaker 2: Oh, it's fantastic to be here. And at least Joe

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Speaker 2: didn't make up an excuse to not be paying attention.

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Speaker 1: I just admitted it, just admitted Joe is very good

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Speaker 1: at taking ownership for his faults. Is faltisfying, Yeah, faults?

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Speaker 3: I mean I was just riffing off excuse flation.

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Speaker 4: Oh yeah, oh thanks, I got I picked that up.

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Speaker 4: I picked that up, Thank you.

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Speaker 1: So this is one reason I wanted to talk to you, Sam.

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Speaker 1: So last year we had this episode where we talked

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Speaker 1: about how companies were basically pushing price, so raising their

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Speaker 1: prices to offset lower volumes, and arguably they've been doing

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Speaker 1: that in the post pandemic environment for a while now,

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Speaker 1: and I think like it kind of went viral after that.

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Speaker 1: I don't know if that was your experience, it was.

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Speaker 3: Certainly my experience.

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Speaker 2: If I'd known that it was going to go quite

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Speaker 2: that viral, I probably would have discontinued my Twitter account

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Speaker 2: for a week or two.

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Speaker 3: But yeah, no, that definitely went viral.

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Speaker 4: Yeah, we should talk to Sam more often, because I

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Speaker 4: do know and I do read some of your notes.

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Speaker 4: I don't read everyone because leave is short, but I

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Speaker 4: like click on them. And during earning season, you do

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Speaker 4: track earnings and you derive the macro signals from what

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Speaker 4: companies are setting out their conference calls you to a

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Speaker 4: close reading. So talk to us about layoffs because they're

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Speaker 4: not really showing up in the macro data yet. Like,

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Speaker 4: by and large, the labor market data is good, but

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Speaker 4: we do have a lot of earnings headlined, So what

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Speaker 4: is going on there?

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Speaker 3: Yeah, so let's start with the layoffs.

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Speaker 2: It's a strange world, right, because the layoffs get a

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Speaker 2: lot of attention, they get a lot of the headlines.

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Speaker 2: But at the same time, if you look back at

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Speaker 2: what was happening January, February March of last year, it

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Speaker 2: was far worse. It was far more of a massacre

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Speaker 2: on the text lage.

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Speaker 1: Yeah, if you look at the Challenger layoffs, you can see,

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Speaker 1: like the spike last year was a lot more than

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Speaker 1: it is currently, even though it feels like these announcements

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Speaker 1: are in the headlines constantly.

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Speaker 2: Yeah, And when you look at what you call it,

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Speaker 2: a company like Meta, what they did last year in

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Speaker 2: terms of headcount reduction, like Cisco, it was five times

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Speaker 2: what Cisco did today.

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Speaker 3: Right, So Cisco.

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Speaker 2: Lays off five thousand people. Meta did twenty five in

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Speaker 2: a single month last year.

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Speaker 3: So to me, there's a.

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Speaker 2: Lot of headlines about the layoffs, but it's not necessarily

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Speaker 2: going to translate into the overall jobs pictures simply because

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Speaker 2: you have a pretty tight labor market and it's not

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Speaker 2: really as bad as the headlines which would suggest.

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Speaker 4: So we did an episode recently with Jason Cummins at Brevin.

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Speaker 4: He's negative on the economy, but one of the things

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Speaker 4: that he says is that, Okay, his basic thesis is

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Speaker 4: that pricing power growth is not like it used to be.

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Speaker 4: Companies can't push price like they could a year ago

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Speaker 4: or two years ago. So in order to flatter margins,

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Speaker 4: they're going to be cutting jobs because at least of

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Speaker 4: the short term, you can get a profit margin boost

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Speaker 4: by having few workers. How does that square with what

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Speaker 4: you're actually seeing right now?

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Speaker 2: I would say Tech really did take their medicine last year.

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Speaker 2: You can look at Alphabet, you can look at Meta,

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Speaker 2: you can look at Amazon. Right the head counts are

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Speaker 2: all down pretty significantly on a year a year basis.

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Speaker 2: The really interesting thing with the consumer products group companies,

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Speaker 2: you know, you're Procter and Gambles, your Unilely.

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Speaker 3: Your Coca Colas, they really.

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Speaker 2: Haven't had the hiring binge over the past two or

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Speaker 2: three years that would allow for a lever on that front,

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Speaker 2: particularly when they're running out of pricing power. So if

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Speaker 2: you're running out of pricing power and your primary way

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Speaker 2: of getting additional revenue in the door is volume, you're

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Speaker 2: probably going to find it pretty difficult to lay a

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Speaker 2: significant number of people off right. You're looking for that

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Speaker 2: incremental freedom lay being sold. That takes a manufacturing facility,

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Speaker 2: that takes somebody to make it right. It's a much

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Speaker 2: it's a much less interesting way of making margin. But

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Speaker 2: it's really important from the perspective of can they really

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Speaker 2: lay a lot of people off And I really don't

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Speaker 2: know that they can, particularly if they don't want to

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Speaker 2: get dragged in front of Congress and be a qu

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Speaker 2: used to price gouging and then laying people off right.

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Speaker 3: That is a really bad political look.

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Speaker 2: And so I mean, if I were Mark Zuckerberger Jeff Bezos,

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Speaker 2: I would really root for a significant layoff on the

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Speaker 2: CpG side, simply because you're going to have them dragged

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Speaker 2: in front of Congress instead of zucking Bezos.

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Speaker 1: I wanted to ask you about this actually because we're

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Speaker 1: recording this, like Joe said on Valentine's Day, and we

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Speaker 1: just saw the Super Bowl and one of the ads

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Speaker 1: that ran during the Super Bowl was from the Biden

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Speaker 1: administration about shrink flation, and they have also made noises

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Speaker 1: about price gouging and basically been saying that companies need

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Speaker 1: to start bringing down their prices as overall inflation and

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Speaker 1: supply chain pressures start to dissipate. And I always wonder

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Speaker 1: how scary is that type of jaw owning actually for

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Speaker 1: companies and CEOs, because it feels like, Okay, you know,

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Speaker 1: the President can say stuff about prices, but ultimately it's

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Speaker 1: a free market economy and unless you're engaging in monopolistic

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Speaker 1: practices or doing something illegal, you're allowed to raise your

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Speaker 1: prices again, as long as you're not colluding or something

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Speaker 1: like that.

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Speaker 3: It's really not.

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Speaker 2: That scary until the you know, the FTC gets involved.

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Speaker 3: Right.

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Speaker 2: It's something where you're like, eh, we have to tread lightly,

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Speaker 2: but you're not going to lower prices because you get

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Speaker 2: yelled at from Washington, right, You're going You're only going

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Speaker 2: to lower prices if it's advantageous for you in some way,

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Speaker 2: and that is just the way it works. It's a

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Speaker 2: very I would say it was politically advantageous from the

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Speaker 2: Biden administration, but it's not all that nerve wracking, you know,

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Speaker 2: if you're a corporate CEO that has raised prices over

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Speaker 2: the last few years, because frankly, you're really not raising

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Speaker 2: prices that much going forward, and you basically told everybody

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Speaker 2: you're not going to.

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Speaker 4: So just sorry to be clear on the staying on

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Speaker 4: the layoffs real quickly. A tech company, I mean, one

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Speaker 4: of the amazing things about software modern tech companies. But

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Speaker 4: why software is this amazing business model that people love

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Speaker 4: is you build it and then it just in theory,

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Speaker 4: is a money making machine forever, and then the code

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Speaker 4: lives on when and so at least in the short term,

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Speaker 4: if you're not too worried about R and D or

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Speaker 4: product development, you could cut workers expand margin very clearly

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Speaker 4: without necessarily take your revenue hit in areas like tech

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Speaker 4: and software. But basically your contention is that in areas

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Speaker 4: like consumer package goods, et cetera, there is just not

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Speaker 4: much levers you could pull to cut workers without also

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Speaker 4: affecting your ability.

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Speaker 3: To do business exactly.

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Speaker 2: I really do think it's somewhat problematic when you look

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Speaker 2: back over the past oh decade or so, you know

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Speaker 2: a lot of these CpG companies really haven't added employees

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Speaker 2: on net in any meaningful way, so it's it's not

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Speaker 2: as though the employee leverage is really where they want

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Speaker 2: to reach. What I would say is that, you know,

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Speaker 2: we called it price over volume when I was on

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Speaker 2: about a year ago. What I would say now is

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Speaker 2: you're beginning to see that price that companies put in

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Speaker 2: begin to show up in margin in a very meaningful way,

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Speaker 2: particularly gross margin, and those gross margin dollars are flowing

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Speaker 2: into the quote unquote brand building that they need to

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Speaker 2: do in order to try to get volumes back. And

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Speaker 2: you look at the you know, the metas and the

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Speaker 2: alphabets of the world, they're kind of telling you that

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Speaker 2: that's exactly what's happening. These companies are taking the incremental

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Speaker 2: dollars that they're making on the gross margin line and

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Speaker 2: they're putting them into advertising and marketing in a meaningful

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Speaker 2: and significant way to compete for those volumes.

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Speaker 1: I was going to ask you exactly about this, like

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Speaker 1: how companies actually push through volume increase in the current environment,

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Speaker 1: and so you think that it's ad spending and basically,

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Speaker 1: you know, increasing brand awareness. One of the reasons I

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Speaker 1: really like talking to you sam is because you do,

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Speaker 1: unlike Joe, you do look at the earnings and like

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Speaker 1: specifically what companies are saying on their calls with analysts,

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Speaker 1: what CEOs are saying, Like what are some interesting things

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Speaker 1: that you've picked out from the current quarter. And you know,

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Speaker 1: for instance, I mentioned pepsi earlier, but like, are they

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Speaker 1: saying things specifically about either pricing, power diminishing or volumes increasing.

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Speaker 3: So one of the.

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Speaker 2: Most interesting companies this past quarter was Unilever, and they

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Speaker 2: do everything from skincare to ice cream, and they when

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Speaker 2: they put out their earnings in their presentation, they have

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Speaker 2: this great chart and it's thirteen point three percent pricing

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Speaker 2: in Q four of twenty twenty two and a decline

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Speaker 2: of I believe it was three point eight percent in

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Speaker 2: volume in Q four twenty twenty two. That evolved into

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Speaker 2: two point eight percent pricing in Q four of twenty

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Speaker 2: twenty three with slightly positive volume about one point eight

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Speaker 2: percent volume. That is a really interesting kind of mentality.

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Speaker 3: To take forward that if you're a.

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Speaker 2: Successful CpG company that raised prices, and you raised them

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Speaker 2: at the right time, and you began the process of

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Speaker 2: slowly allowing that price to flow through the system. You

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Speaker 2: didn't get too greedy. You simply allowed it to work

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Speaker 2: through the system. You're beginning to have those volumes come back,

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Speaker 2: and then you go, I think it's five or six

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Speaker 2: slides later, and you look at what happened with their

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Speaker 2: gross margin. Gross margins were up two hundred basis points.

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Speaker 1: Two hundred basis points or twenty basis points.

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Speaker 2: I was on lift, Yeah, two hundred basis points, So

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Speaker 2: gross margin was up tow hundred basis points. One hundred

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Speaker 2: and thirty basis points were spent on BMI brand market

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Speaker 2: brand marketing investment. So what they're doing is they're pouring

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Speaker 2: these gross margin dollars back into marketing in order to

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Speaker 2: get the volumes that they want. And that is indicative

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Speaker 2: of what's happening across the space. You can look at Kimberly.

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Speaker 2: Clark had a very similar type of not necessarily you

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Speaker 2: know numbers, but they had a very similar type of

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Speaker 2: message in that we are going to spend on brand marketing,

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Speaker 2: and we're going to do it in a very significant

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Speaker 2: way because we want those volumes back. Right, we push

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Speaker 2: price to the extent that we think we can. Now

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Speaker 2: it's all about getting those volumes back. And those AD

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Speaker 2: dollars are beginning to flow back into Meta and Alphabet

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Speaker 2: and you saw it in you know, in Meta's numbers.

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Speaker 2: I would suggest this is not a short term trend right.

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Speaker 2: It is very much something where they do not want

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Speaker 2: to be in the headlines for laying people off after

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Speaker 2: raising prices so much. What they want to do is

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Speaker 2: they want to get volumes back while spending on ad dollars,

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Speaker 2: and AD dollars don't get you in the headlines. One

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Speaker 2: really interesting point on that is when mulsen Core's it

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Speaker 2: was earlier this week came out with earnings, they spent

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Speaker 2: more money on advertising to kick their competition while they

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Speaker 2: were down. It was an amazing, amazing conference call that

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Speaker 2: everyone should listen to. That when your competition's down, you

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Speaker 2: you don't just sit back and take the volume that

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Speaker 2: you're getting. You spend more. You really cement those gains

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Speaker 2: that you're getting. And it was it was amazing.

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Speaker 4: I have to read that. So the basic mechanism is

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Speaker 4: for twenty twenty, to tolerate some market share loss in

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Speaker 4: exchange for increased significantly increased prices. Then over time those

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Speaker 4: increased prices you don't have to keep increasing them. Over time,

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Speaker 4: they become a little more competitive as the inflation process

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Speaker 4: generally rolls on, and so now it's about getting that

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Speaker 4: market share back and sort of a little more stability

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Speaker 4: on price. When you sit there increasing AD spending, I

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Speaker 4: was like, oh, good, this will be the this will

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Speaker 4: be the savior of media. But then you said, no,

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Speaker 4: it's all going to Meta anyway, So I guess not.

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Speaker 3: I mean, yes, that is the exact flow.

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Speaker 2: And it's really intriguing when you think of it as

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Speaker 2: price all volume shifted to what I call PAM, which

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Speaker 2: is price and margin but also price and marketing dollars

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Speaker 2: shifted to that that really benefits the major platforms.

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Speaker 3: Right, it is.

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Speaker 2: Meta in Amazon's boondoggle. However, if you think about what

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Speaker 2: the boom really means for Meta and Amazon, it means

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Speaker 2: they basically get a free right or a free option

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Speaker 2: on investing in AI because their revenues are ripping as

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Speaker 2: everybody really wants to compete for those volumes. So you're

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Speaker 2: getting a tremendous uptick in AD dollars. You're getting everyone

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Speaker 2: throwing money at the incremental dollar of coming in the

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Speaker 2: door for revenue, and that is a really interesting kind

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Speaker 2: of dynamic that POV basically built the AI world. Huh.

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Speaker 1: I want to ask you more about AI, But just

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Speaker 1: before that, what would be the proximate trigger for consumer

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Speaker 1: package good companies specifically, I guess, to bring prices down.

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Speaker 1: Would it be if like the ad spending doesn't pay

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Speaker 1: off and translate into higher volumes than they have to

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Speaker 1: start discounting. It just seems like there's a general reluctance

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Speaker 1: to go down that route at the moment. So, yes,

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Speaker 1: they're not raising prices as much, but most of them

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Speaker 1: definitely aren't actually cutting them either.

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Speaker 3: Oooh, what would be the impetus for a price cut?

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Speaker 3: I don't know that there is one that is.

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Speaker 2: I would say that's kind of the conundrum of anyone

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Speaker 2: who's looking at it and saying, I really want to

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Speaker 2: see prices at the grocery store go back to twenty twenty.

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Speaker 2: That's simply going to not happen. That's that's really that's

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Speaker 2: a really tough one. You know, you could maybe see

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Speaker 2: some price competition, but at the same time, you know,

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Speaker 2: there's a pretty high industry concentration on the shelves. And

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Speaker 2: if one person begins to hold price and do it

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Speaker 2: successfully and have volumes begin to pick up slightly, it's

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Speaker 2: unlikely that you get price cuts. The one way I

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Speaker 2: think you could see significant price cuts would be if

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Speaker 2: you have the gpl ones or something really actually reduce

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Speaker 2: the overall consumption of food, that that could have an

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Speaker 2: overall effect on price. But we haven't seen that yet,

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Speaker 2: and I'm highly.

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Speaker 3: Skeptical of it.

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Speaker 1: I've I told Joe this. I've stopped eating lunch, not

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Speaker 1: because I'm on ozempic, but because I just don't want

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Speaker 1: to pay twenty dollars for a sad salad anymore. It

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Speaker 1: is funny listening to this conversation how little competition comes up.

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Speaker 1: And I think this is something we talked to you

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Speaker 1: before about, Sam, and I think we definitely mentioned it

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Speaker 1: in that excuselation article we did. But just the idea

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Speaker 1: that no one's incentivized really to do price wars because

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Speaker 1: it's just a race to the bottom, and why even

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Speaker 1: try to compete on price when you could just hold

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Speaker 1: the line and boost margins that way.

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Speaker 4: Sam, you mentioned AI, and I have this theory that, Okay, like,

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Speaker 4: if Nvidia is talking about AI, I believe it. If

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Speaker 4: Meta is talking about AI, believe it. If Google is

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Speaker 4: talk about AI. I believe it. If some random other

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Speaker 4: companies talking about AI, my assumption is, Oh, this company

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Speaker 4: is doing badly and they're just trying to drop in

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Speaker 4: some buzzwords on the conference call to get analysts and

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Speaker 4: investors excited. I have no evidence for this theory, but

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Speaker 4: what is what is your What are the patterns of

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Speaker 4: who's talking about AI and what?

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Speaker 3: Like?

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Speaker 4: Actually I do more levitted, Like UPS cut a bunch

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Speaker 4: of workers recently and then their CEO came out and

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Speaker 4: said like, oh, we're not you know, these are jobs

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Speaker 4: that could be done by AI, and like, I'm like skeptical,

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Speaker 4: but you know whatever. So but it sort of feeds

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Speaker 4: into this thing that AI is what people talk about

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Speaker 4: when they're having trouble.

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Speaker 3: Yeah.

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Speaker 2: So on the UPS front, one, they're getting absolutely destroyed

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Speaker 2: by Amazon. Right instead of Amazon shipping through UPS and FedEx,

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Speaker 2: what are they doing? They're shipping through themselves. So UPS

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Speaker 2: is using AI and blah blah blah to mass the

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Speaker 2: fact that they got their lunch eaten by Amazon and

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Speaker 2: never saw it coming. I mean, Amazon went from basically

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Speaker 2: having no market share a decade ago to being the

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Speaker 2: size of UPS. On the shipping front, it's an under report,

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Speaker 2: under talked about the story that they just destroyed.

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Speaker 3: Everyone in their path. I mean, that's what Amazon does.

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Speaker 2: When it comes to companies talking about AI, there are

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Speaker 2: some ones that I think.

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Speaker 3: Do it to cover up it, but there's also some.

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Speaker 2: That do it because they actually have something and it's

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Speaker 2: probably underrated. So one of the examples that I'd use

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Speaker 2: is Kroger, So they talk about AI in their earnings

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Speaker 2: and on their conference call. If you think about how

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Speaker 2: much they have in terms of data on consumers, that

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Speaker 2: is a pretty big database with which you toss in

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Speaker 2: AI on top of it, and all of a sudden

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Speaker 2: they actually have something suit the right the large language

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Speaker 2: models that everybody likes to talk about. There are companies

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Speaker 2: who have been collecting data for a long time that

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Speaker 2: didn't really know what to do with it, that all

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Speaker 2: of a sudden are probably sitting on gold mines in

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Speaker 2: terms of how to run their business, how to let

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Speaker 2: me have a coupon at the right time, how to

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Speaker 2: not have me have a coupon at the right time,

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Speaker 2: incentivize me to go buy XYZ product.

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Speaker 3: Off the shelf.

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Speaker 2: Those are very very interesting data sets, and I think

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Speaker 2: it's anyone and their brother, you know, has AI. It's

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Speaker 2: really the data to train the model that I think

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Speaker 2: is going to become increasingly important over time, and companies

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Speaker 2: that have been collecting that data are going to surprise

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Speaker 2: a lot of people.

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Speaker 1: This is my well, if I was going to come

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Speaker 1: up with investment thesis, which it's a good thing, I'm

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Speaker 1: not paid to actually do this, But I think insurers

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Speaker 1: are really interesting right now if you think about it

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Speaker 1: from like a sort of data AI perspective. And I

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Speaker 1: remember someone made this argument a long time ago. I

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Speaker 1: think it was in a book, and for the life

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Speaker 1: of me, I cannot remember what book it was, but

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Speaker 1: someone made the argument that like in an environment where

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Speaker 1: the government is like reluctant to be assertive or active,

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Speaker 1: then insurers become the de facto arbiters of acceptable behavior

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Speaker 1: and business because not only do they have all the

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Speaker 1: data about what people actually do, but they're also able

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Speaker 1: to price it. And I think a lot about that

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Speaker 1: in the current context of like not just AI, but

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Speaker 1: also wildfires and floods and other things that we've talked

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Speaker 1: about before. Joe, I buy it.

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Speaker 4: I I I one hundred percent by it that they

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Speaker 4: insurance insures are new overlords. Wait, Actually, Tracy and Sam,

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Speaker 4: what is the deal with Coca Cola margins? And I

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Speaker 4: ask you this in part because like, didn't you get

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Speaker 4: some sort of like little like debate with Jube Channo's.

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Speaker 1: I wasn't even I wasn't even trying to debate him.

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Speaker 4: I know what happened. So what is the story here?

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Speaker 1: This was?

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Speaker 4: I still totally get it. Actually, what was what was

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Speaker 4: this conversation about?

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Speaker 1: I don't understand. So he was saying that like Coca

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Speaker 1: Cola's raising prices and they're going to keep raising prices

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Speaker 1: or so I don't have the tweet in front of me.

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Speaker 1: And all I said was it was kind of a

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Speaker 1: messy quarter in terms of pricing. Because Coca Cola specifically

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Speaker 1: calls out a few hyper inflationary markets in their earning statement.

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Speaker 1: The only one they named specifically is Argentina. They've never

441
00:25:21,800 --> 00:25:26,240
Speaker 1: mentioned hyperinflationary markets before, I think, or at least not

442
00:25:26,720 --> 00:25:29,000
Speaker 1: in Q four last year. I went back and checked,

443
00:25:29,480 --> 00:25:33,399
Speaker 1: and then they specifically say in the earnings call that

444
00:25:33,640 --> 00:25:37,240
Speaker 1: they don't think pricing is going to be as strong

445
00:25:37,400 --> 00:25:39,199
Speaker 1: this year. So that's all I said, Like, Oh, it

446
00:25:39,240 --> 00:25:41,600
Speaker 1: was a slightly messy quarter in terms of pricing. So

447
00:25:41,640 --> 00:25:43,600
Speaker 1: I'm not sure how much you can take away from

448
00:25:43,680 --> 00:25:46,720
Speaker 1: it that they're absolutely going to continue, you know, the

449
00:25:46,720 --> 00:25:50,320
Speaker 1: POV strategy and also they're guiding for lower pricing power

450
00:25:50,400 --> 00:25:53,840
Speaker 1: in twenty twenty four and Jim wasn't having it, and

451
00:25:54,200 --> 00:25:56,320
Speaker 1: Sam you backed me up, So I appreciate it.

452
00:25:57,520 --> 00:26:00,000
Speaker 2: Yeah, I mean it was it was pretty straightforward. Right,

453
00:26:00,240 --> 00:26:03,240
Speaker 2: They got two points give or take for the year

454
00:26:03,400 --> 00:26:08,439
Speaker 2: out of hyperinflationary markets. They guided to seven to eight percent.

455
00:26:08,480 --> 00:26:09,400
Speaker 3: They landed at ten.

456
00:26:10,000 --> 00:26:12,440
Speaker 2: So guess what that gets you to eight and not

457
00:26:12,600 --> 00:26:16,760
Speaker 2: to mention they had guided the year for seven to

458
00:26:16,800 --> 00:26:20,600
Speaker 2: eight percent, dominated by price and so I mean you

459
00:26:20,640 --> 00:26:23,440
Speaker 2: look at what they did. They kind of nailed exactly

460
00:26:23,520 --> 00:26:26,439
Speaker 2: what they said they were going to do. They you know,

461
00:26:26,440 --> 00:26:29,920
Speaker 2: Coca Cola was pretty straightforward, as as was Pepsi, as

462
00:26:30,040 --> 00:26:33,320
Speaker 2: was Unilever, Parked and Gamble. You can go down through

463
00:26:33,320 --> 00:26:37,719
Speaker 2: the list that twenty twenty four is not going to

464
00:26:37,720 --> 00:26:40,359
Speaker 2: be the year of price increases. It's going to be

465
00:26:40,640 --> 00:26:45,359
Speaker 2: back to the algo and that algorithm is you know,

466
00:26:45,480 --> 00:26:48,440
Speaker 2: call it two to three percent on pricing and two

467
00:26:48,440 --> 00:26:52,679
Speaker 2: to three percent on volumes. And they're all competing on

468
00:26:52,720 --> 00:26:55,680
Speaker 2: that volume front and really trying to get that number up.

469
00:26:56,240 --> 00:26:58,240
Speaker 2: So to me, I was I was looking at the

470
00:26:58,320 --> 00:26:59,880
Speaker 2: chainos tweeting like.

471
00:27:00,000 --> 00:27:02,639
Speaker 4: Well, it sounds like it's normalized. It sounds like if

472
00:27:02,680 --> 00:27:04,399
Speaker 4: you're the fan, if you're anyone, like you're.

473
00:27:04,280 --> 00:27:07,400
Speaker 1: Basically not normalizing though. It's like two percent price increases

474
00:27:07,440 --> 00:27:11,920
Speaker 1: instead of like five or seven percent. Okay, all right

475
00:27:11,960 --> 00:27:12,840
Speaker 1: from like a CPO.

476
00:27:13,200 --> 00:27:16,919
Speaker 4: Yeah, like okay, right, I mean it sounds like like

477
00:27:17,040 --> 00:27:19,120
Speaker 4: if you're just the back road thing is like we're

478
00:27:19,119 --> 00:27:20,000
Speaker 4: back to sort of normal.

479
00:27:20,080 --> 00:27:22,919
Speaker 2: Huh yeah, And you've got to step function up in

480
00:27:23,040 --> 00:27:26,320
Speaker 2: terms of revenue, and then you know, you get to

481
00:27:26,400 --> 00:27:30,240
Speaker 2: drop those down to shareholders. And I don't actually think

482
00:27:30,280 --> 00:27:34,320
Speaker 2: that shareholders have realized that. You know that that step

483
00:27:34,359 --> 00:27:37,960
Speaker 2: function higher is a step function. It's you know, you're

484
00:27:38,000 --> 00:27:40,920
Speaker 2: not getting you're not going to have that step down

485
00:27:40,920 --> 00:27:41,760
Speaker 2: in a meaningful way.

486
00:27:42,160 --> 00:27:45,399
Speaker 1: I do actually want lower prices on coke, though I

487
00:27:45,480 --> 00:27:49,080
Speaker 1: drink a lot of diet coke. I guess I've played

488
00:27:49,080 --> 00:27:52,080
Speaker 1: a stereotype there, but I would appreciate if that could

489
00:27:52,119 --> 00:27:52,760
Speaker 1: go on sale.

490
00:27:53,119 --> 00:27:56,000
Speaker 2: They'll they'll probably do some sort of promo at some

491
00:27:56,119 --> 00:27:59,160
Speaker 2: point stock maybe maybe they'll have a bud light moment.

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00:28:00,160 --> 00:28:04,280
Speaker 1: Oh dear, I personally can't do volume. If I was

493
00:28:04,320 --> 00:28:06,440
Speaker 1: a company right now, I'd be doomed. I just can't.

494
00:28:06,480 --> 00:28:14,720
Speaker 1: I buy like one bottle per Dredge and take it home. Yeah.

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Speaker 4: Lots More is produced by Carmen Rodriguez and dash El Bennett,

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00:28:18,440 --> 00:28:20,600
Speaker 4: with help from Moses Onam and Keil Brooks.

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00:28:21,000 --> 00:28:24,159
Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the

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00:28:24,200 --> 00:28:25,800
Speaker 1: head of Bloomberg Podcasts.

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00:28:26,280 --> 00:28:29,639
Speaker 4: Please rate, review, and subscribe to Odd, Lots and lots

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00:28:29,640 --> 00:28:32,560
Speaker 4: More on your favorite podcast platforms.

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