Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
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Speaker 1: search Bloomberg Clovel News. So we had another big batch
Speaker 1: of bank earnings, the Big Bank, City Group, equity sales,
Speaker 1: trading revenue topping estimates, Fick disappointing investment banking fees, a
Speaker 1: little bit of a surprise there, uh Bag of America
Speaker 1: struggling to build back its landing income wells Fargo, average
Speaker 1: loans tumbling in the second quarter. We know that consumers
Speaker 1: and businesses, because of some of those stimulus programs, refrain
Speaker 1: from more borrowing. Tim Well, let's get right into it
Speaker 1: with Anton Show, its president and chief investment officer at
Speaker 1: Menden Capital Advisors, joining us once again on the from Florida. Anton.
Speaker 1: It's always great to have you on the show, especially
Speaker 1: when we're talking banks, because I know you follow the
Speaker 1: regional banks very closely. But how are you thinking about
Speaker 1: or how would you characterize what we've heard from from
Speaker 1: the big banks this week as they've reported earnings for
Speaker 1: their second quarter. Yeah, for the most part, not a surprise. Um,
Speaker 1: you know loan growth if you if you, of course
Speaker 1: I watched the weekly loan growth numbers. No surprise, There
Speaker 1: isn't any long growth because there's so much liquidity out there,
Speaker 1: and part of that liquidity is finding its way into
Speaker 1: deposits of the banks, which is lovely. It would be
Speaker 1: really nice if they could offset it with some loans
Speaker 1: instead of the low yield on some of the securities
Speaker 1: they're buying out there. Well, okay, right, it makes sense. Um,
Speaker 1: you know we talked about during the pandemic that was
Speaker 1: a pretty good environment for these big banks. What's the
Speaker 1: outlook for them or what stands out among the big
Speaker 1: ones Anton, that you have um that have reported, whether
Speaker 1: it's City, whether it's Bank of America, whether it's Wells
Speaker 1: JP Morgan Goldman. Is there anybody in particular that you
Speaker 1: really kind of hone in on because as maybe an
Speaker 1: indicator where the financial world, the banking world is going well.
Speaker 1: You know, if you look at the big their national right,
Speaker 1: and you can't you can't pick on regions. You know,
Speaker 1: I love picking on regions of the world because some
Speaker 1: some regions have above trend growth, so on a national basis,
Speaker 1: you know, banking is tough because too much liquidity on
Speaker 1: the bigger banks. I like Wells Fargo. It's a self
Speaker 1: help story, right, I mean, they're getting out from underneath
Speaker 1: this regulatory stuff. They've got insane amounts of excess capital
Speaker 1: because it has not been allowed to grow their balance sheet.
Speaker 1: You know, buybacks are a really big part of all
Speaker 1: of the big banks. And you know JP Morgan bought
Speaker 1: what five billion dollars of its own stock Glass Quarter
Speaker 1: Goldmen bought a billion, you know, Bank America. I didn't
Speaker 1: didn't see the numbers this morning, but they're way up
Speaker 1: there as well. At Wells As, I think something like
Speaker 1: eighteen billion dollars worth of stock to buy over the
Speaker 1: next you know, year, year, a year and a half,
Speaker 1: so that's a lot of its market cap. And that's
Speaker 1: a lot of good support will lead to earnings growth.
Speaker 1: But the real, the real grail for these banks is
Speaker 1: you know, a faster g DT, a lot of long
Speaker 1: growth materializing. It'll do wonders for their earnings. And you know,
Speaker 1: the interesting thing is they were all punished last year
Speaker 1: because they built all these giant loll loss reserves. Now
Speaker 1: they're releasing them, and you you see these giant earnings
Speaker 1: numbers on the surface, you all just releasing the loss reserves.
Speaker 1: That doesn't count well if you punish them on one
Speaker 1: side when you're punishing them again when they're releasing them.
Speaker 1: But the point is they have really great credit. They
Speaker 1: have lots of capital um and they'll be buying back
Speaker 1: a lot of stock. And the dividends are being raised
Speaker 1: with a lot of these banks, so on the big
Speaker 1: I look at them as capital return stories, buy backs, uh, dividends.
Speaker 1: Those are very important for those and and wells I
Speaker 1: think is going to be able to eventually have higher
Speaker 1: earnings and estimates are gonna have to get raised if
Speaker 1: long growth materializes. This entire group estimates have to get raised.
Speaker 1: How how are the results from the big banks? How
Speaker 1: are they informing you about the regional banks, the smaller
Speaker 1: banks that you follow so closely their results. Sure, So
Speaker 1: first of all, you know, JP Morgan really did actually
Speaker 1: talk about some long growth. Where it's not having long
Speaker 1: growth which doesn't impact the regionals is it's the credit
Speaker 1: card balances. The consumer is flush with cash, they've got
Speaker 1: lots of stimulus. So no, none of the big banks
Speaker 1: are having growth there. So if you're a consumer lender
Speaker 1: other than on auto, which a lot of smaller banks are,
Speaker 1: you're really not getting a lot of long growth. You know, mortgage,
Speaker 1: the re five booms sort of ended. Um, you know,
Speaker 1: so that's tapid. But I think you're going to see
Speaker 1: good commercial long growth out of the southeast, out of Texas,
Speaker 1: out of Florida, um. And I think you're going to
Speaker 1: see more tapid growth in other parts of the country.
Speaker 1: So among I'm looking at your R and B A
Speaker 1: mend in financial services fund um ANTI and it's up.
Speaker 1: It's up about three according to Bloomberg data year to date,
Speaker 1: so ninety one percent of I look at twelve months now,
Speaker 1: the fourth percent up almost a D three. What kind
Speaker 1: of allocations are you looking to do? Is there anything
Speaker 1: in your portfolio that you think is getting ahead of itself.
Speaker 1: How do you see some of those names. Yeah, that's
Speaker 1: that's really you know. You sit there and you say, wow,
Speaker 1: you're up a hundred percent over twelve months, and there
Speaker 1: are things ahead of themselves. And I've had some people
Speaker 1: say that to me and things were so overdone. We
Speaker 1: were talking twelve months ago and how crazy the valuations were.
Speaker 1: On the downside. The interesting thing is is if I
Speaker 1: look at my average holding and I did this exercise
Speaker 1: about a week ago, so the numbers even better. They're
Speaker 1: down about fifteen from their highs. So you know that
Speaker 1: a lot of things have not gotten ahead of themselves.
Speaker 1: Obviously rotated into some things that are cheaper. But I
Speaker 1: look at a number of my my positions that are
Speaker 1: trading it less than ten times next year's earnings, and
Speaker 1: you know, I want to own those. They have excess capital,
Speaker 1: they have good loan growth. I think they'll eventually get
Speaker 1: revalued higher. UM one of them and I'll first, Horizon
Speaker 1: closed a merger with Iberia last year, so that's got
Speaker 1: some some really good evaluation here. I look at a
Speaker 1: pending merger between Bankcorps South and Cadence, and again Great
Speaker 1: Geographies four billion dollar Bank. Post the merger, you get
Speaker 1: a special divnated O owning Caden and I'm going under
Speaker 1: ten times next year's earnings. Yeah, I want to own
Speaker 1: as much as I can. And uh yeah, I mean
Speaker 1: so yeah, I see lots off side in those names.
Speaker 1: They're well off there fifty two weeks. Well, always good
Speaker 1: to get a check with you and a lot of
Speaker 1: those regional banks, of course, their earnings to come, so
Speaker 1: we'll be tracking them here at Bloomberg. Anton take care.
Speaker 1: Anton shuts He's president, chief investment officer at Minden Capital Advisors,
Speaker 1: on the phone from Florida, wondering about all the M
Speaker 1: and A in if it's going to consolidation, right, consolidation.
Speaker 1: It's interesting as he went through some of those names
Speaker 1: and talked about, uh, the activity that's still so highly regulated. Yeah, exactly.
Speaker 1: All right, you're listening to Bloomberg Radio. Today's Bloomberg Big Take.
Speaker 1: It's all so this week's cover story of Business Week magazine.
Speaker 1: It's about the future for the drug company that's become
Speaker 1: a household word during the pandemic. We're talking about Maderna
Speaker 1: and really what is its second act? Joining us now?
Speaker 1: Is Joel Weber, Editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive at Broker Studio. Also Bob Langrath,
Speaker 1: the healthcare reporter for Bloomberg News, joining us on the phone,
Speaker 1: the healthcare Star, the healthcare Star. He's also the author
Speaker 1: of this other story and lost track, like so long ago,
Speaker 1: and it was at the beginning of the pandemic. Who
Speaker 1: I was like, right, who can write about pandemics? Well
Speaker 1: a year ago, I think it's fair to say maybe
Speaker 1: Bob was thinking about m R and A, but most
Speaker 1: of us in this room I don't think weren't. And
Speaker 1: I wonder what Moderna's second act is here right after
Speaker 1: the pandemic. Actually, I remember that exact conversation with Bob
Speaker 1: about a year and a half ago, and he was like, so,
Speaker 1: there's this company called Maderna that has this technology. It's
Speaker 1: gonna be really interesting to see if it works. So
Speaker 1: here we are, um uh, and Bob, let's just bring
Speaker 1: you in, you know, Like the what we set out
Speaker 1: here to do was to say, look, like Maderna has
Speaker 1: been one of the big heroes of the pandemic, and
Speaker 1: if you can solve COVID nineteen, what else do they
Speaker 1: have and what else does? What else is mRNA capable of?
Speaker 1: So what are they working on? Yeah? So yeah, it's
Speaker 1: efficacy has definitely been demonstrated very powerfully for vaccines, and
Speaker 1: so now they're working on a whole host of other vaccines.
Speaker 1: There's like about fifty or more viruses discovered the last
Speaker 1: forty years, only tiny handful of vaccines. You know. Maderna
Speaker 1: thinks that the technology, which is kind of modular and
Speaker 1: fast moving, can be you know, make vaccines to a
Speaker 1: lot of them. They're working on a food vaccine, They're
Speaker 1: working on several of the respiratory viruses. They ultimately want
Speaker 1: to combine it to one kind of super booster that
Speaker 1: you might get like once a year, and they deal
Speaker 1: with the whole host of like you know, fall winter
Speaker 1: type respiratory viruses. They're working on long term kind of
Speaker 1: HIV and even starting I think, uh and have some
Speaker 1: early trials in cancer vaccines, which has been a long
Speaker 1: promising but very difficult area. Well, we've got a hundred
Speaker 1: billion questions for you about that. I mean, this company
Speaker 1: hit a hundred billion dollar market cap today. The expectations
Speaker 1: on it are incredibly high in terms of what Maderna
Speaker 1: can do. Can this messenger RNA technology science really be
Speaker 1: trans translate to a lot of different vaccines ultimately or
Speaker 1: do we still not quite know. Well, we're gonna have
Speaker 1: to wait and see there's something gonna be testing a
Speaker 1: lot of things. Uh and uh. And you know, one
Speaker 1: of the things we talked about and the story is
Speaker 1: that they're certainly pursuing booster shots uh. And we may
Speaker 1: need them or at least a third booster shot at
Speaker 1: some point. It's it's you know, not you know, not
Speaker 1: at all clear how big the you know, the market
Speaker 1: for COVID nineteen is going to be sort of in
Speaker 1: a long term, so there is going to be pressure
Speaker 1: for them to come up with other things and new
Speaker 1: things and not be dependent on, you know, an endless
Speaker 1: market for COVID nineteen boosters. And the other thing going
Speaker 1: on is that now everyone else knows we other do
Speaker 1: a company in the world knows that this this technology
Speaker 1: can really work, you know, at least in the infections
Speaker 1: vaccinary and they're all pursuing an all kind of all
Speaker 1: trying to come up, like you know, new or better
Speaker 1: versions of m RNA. So it's you know, they're in
Speaker 1: a great position. But there's also a lot more very
Speaker 1: serious competition now. So you spent some time at one
Speaker 1: of the production facilities for Moderna outside of Boston. It's
Speaker 1: a former Polaroid factory. What is the competitive advantage that
Speaker 1: the company has now that every other biotech company knows
Speaker 1: that m RNA has been so successful, at least when
Speaker 1: it comes to coronavirus. Oh. Yeah, the basic competitive advantage
Speaker 1: they have is they've done it. They've done a success
Speaker 1: and the only other companies that achieved that level of
Speaker 1: success is obviously fiser BioNTech. But not every mRNA vaccine
Speaker 1: has worked as well. There's a third one that has
Speaker 1: tried cure Vac and it's trials came out a few
Speaker 1: weeks ago and it was only forty eight percent effectives.
Speaker 1: So not every iteration of things you put in. You
Speaker 1: can't just put in our mr andy vaccine and have
Speaker 1: it automatically work. You've got to make the right choices
Speaker 1: and then it can work, you know, do a powerful,
Speaker 1: mean response. So they have you know, they are one
Speaker 1: of the two companies with real experience that doing this
Speaker 1: in a large scale now, and you know their production
Speaker 1: that you know they haven't matched Fizer, which has just
Speaker 1: been listening incredible. You know, vaccine producing juggernauts. They haven't
Speaker 1: matched Fiser BioNTech, but you know their their productions still.
Speaker 1: You know, they haven't had big problems and kind of
Speaker 1: more or less made their numbers, uh so, which is
Speaker 1: you know, which is impressive for a company that hadn't
Speaker 1: really made until last Yearly they had a plan as
Speaker 1: a small plant, but it was basically kind of like
Speaker 1: a pilot plant, never made a hundred thousand doses of
Speaker 1: anything in a year, and now they're talking about as
Speaker 1: a billion doses uh this year. So so that's quite
Speaker 1: a scale. Bob, you've followed obviously, you know that little
Speaker 1: story I said at the beginning where we sat next
Speaker 1: to each other in that conference from all those months ago,
Speaker 1: and you were like, so maderna uh in person that
Speaker 1: was it was in the before times, just just before
Speaker 1: everything changed. Um. But but Bob, you know, I'm curious
Speaker 1: because you've written about maderna weekend week out over the
Speaker 1: past year, and then you got to do a story
Speaker 1: like this and to the CEO and everything else, I'm wondering,
Speaker 1: what did you learn while you were working on this story?
Speaker 1: You know, how they did this, and you know, it's
Speaker 1: still a very small company relatively what they've done. They
Speaker 1: like they're up to people nowaday. You know, they were
Speaker 1: like eight hundred of the Star last year, so they
Speaker 1: get all this relatively small number of people, which is,
Speaker 1: you know, it's impressive they're able to to make this
Speaker 1: many doses, you know, with a few contractors and obviously
Speaker 1: some government funding and that was significant, but you know,
Speaker 1: it wasn't you know, it was until last year, until
Speaker 1: the pandemic came along. It was a startup company. There
Speaker 1: was a well funded startup but you know, most of
Speaker 1: its most of its products were early trials. It wasn't
Speaker 1: planning to have anything in the market, you know, even
Speaker 1: if things went well for a few years. So this
Speaker 1: is like, you know, a rather you know, impressive scale
Speaker 1: and they certainly have big ambitions. But what I love
Speaker 1: about your reporting is you really explain the science right
Speaker 1: for those who are like, what is a message or
Speaker 1: it's still even today I get questions, you know, and
Speaker 1: I'm sharing articles and links with people. You know, what
Speaker 1: is it about the science of a messenger RNA or
Speaker 1: of messenger RNA that makes it so adaptable to create
Speaker 1: maybe so many more uses and just got about a
Speaker 1: minute or so. Yeah, So it doesn't like solve every
Speaker 1: miracle known to medicine, but it is relatively straightforward to
Speaker 1: produce because you're not you don't have to produce a
Speaker 1: whole new protein, which because a lot of biotech products
Speaker 1: are produced produced inside live cells chicken chicken eggs for X,
Speaker 1: some flu vaccines and even for monocolon antipole's producing vats
Speaker 1: of live cells, and that's very complicated. And this is
Speaker 1: actually just kind of a prototypes instructions and for the
Speaker 1: body's own cells to produce a protein. And that makes
Speaker 1: it very module and very easily adaptable to new users.
Speaker 1: Very briefly, what the rails moderna with these ambitions? You know, uh,
Speaker 1: you know it doesn't work in other applications. You know,
Speaker 1: other competitors get their first or you know they don't
Speaker 1: you know, they don't have they don't have an intellectual
Speaker 1: property stranglehold over the whole field. They can't like if
Speaker 1: they can't say, you know, we're the only ones with
Speaker 1: m R and so I think that's a really interesting point,
Speaker 1: you know, because you're gonna have all these other competitors
Speaker 1: and Bob goes into others now like a Chinese m
Speaker 1: R and a dark horse out there. But you know
Speaker 1: it may work for coronavirus as a vaccine, but whether
Speaker 1: or not that can translate into something that is a
Speaker 1: therapeutic that works with cancer, big big question mark. Still right, Well,
Speaker 1: and as Bob Wright goes, you know, we rush this
Speaker 1: through right the f D. A approval process for anything
Speaker 1: else that they do is going to take years. So
Speaker 1: remember that when you look at the market cap and
Speaker 1: the valuation, it will take some time to play out. Um,
Speaker 1: great stuff. You make a smarter Bob Landreth, healthcare reporter
Speaker 1: oft Bloomberg News along with your Weber, editor of Bloomberg
Speaker 1: Business Week. I'm so glad you have those conversations with
Speaker 1: your reporters. They never stopped. That's a good thing. All right.
Speaker 1: You're listening to Bloomberg Business Week, and this is Bloomberg Radio.
Speaker 1: Your list du Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Yeah, you're
Speaker 1: listening to Bloomberg Business Week Wednesday, July fourteenth. As we mentioned,
Speaker 1: but steal day Apple shares check it out. Another record
Speaker 1: high today there's a couple of Apple stores you want
Speaker 1: to get to. We mentioned one yesterday about Apple teaming
Speaker 1: up with Goldman for a buy now, pay later services
Speaker 1: is a big deal. We saw a firm trade lower
Speaker 1: on that news Bloomberg exclusive. In fact buyer Mark German
Speaker 1: and Tree Ndarajan, who was also Mark, is reporting along
Speaker 1: with Bloomberg's DEBUTU today on how Apple is looking for
Speaker 1: an up to increase in new iPhone output for Apple.
Speaker 1: By the way, one of my gainers today for the
Speaker 1: for the close as two point five trillion dollar market
Speaker 1: cap getting very close to it. Mark German, technology reporter
Speaker 1: for Bloomberg News, joins us on the phone from l A. Mark.
Speaker 1: Let's start with Apple looking to boost iPhone output by
Speaker 1: why is Apple so confident that it can sell more
Speaker 1: iPhones or needs to make iPhones to satisfy demand for
Speaker 1: this next phone. Yeah, I think there's a lot of
Speaker 1: people who despite the millions and millions of upgraders to
Speaker 1: the iPhone twelve line last year, there's still a lot
Speaker 1: of people on the iPhone ten and earlier. And I
Speaker 1: think now this is the second version with five G,
Speaker 1: you have stronger five G penetration in the US, China
Speaker 1: and elsewhere. Now, after a year of new towers being
Speaker 1: placed up that you're going to see, you know, additional
Speaker 1: upgraders were also entering sort of the beginnings of the
Speaker 1: end of the pandemic. So, you know, in two months
Speaker 1: from now, when these new phones will roll out, Apple
Speaker 1: likely feels that there will be you know, additional people
Speaker 1: who were looking to buy uh these devices. Well, it's
Speaker 1: interesting what along their channel checks tells in this mark.
Speaker 1: You know, the channel checks you know are basically you know,
Speaker 1: economic based, Right, they put traffic to Apple stores increase,
Speaker 1: and you see more Apple stores opening. Right a year ago,
Speaker 1: right when they launched the phone, the majority of Apple
Speaker 1: stores were still closed. Now you have their entire retail footprint,
Speaker 1: plus that third party reach l footprint reopening for you know,
Speaker 1: in time for this new you know, iPhone launched not
Speaker 1: only the US but in many places around the world.
Speaker 1: What do we know? What do we know about this
Speaker 1: new iPhone? This is gonna be a fairly iterative update.
Speaker 1: The design is going to be the same. The notch
Speaker 1: sort of that cut out on the top of the
Speaker 1: display is going to be smaller, So it's gonna look
Speaker 1: a little bit better, you'll have a little bit more
Speaker 1: screen real estate for all intents of purpose. Wait wait, wait,
Speaker 1: I just bought a new phone. That's why you gotta
Speaker 1: be like me, carolinshone every five years ahead, Carol, Well,
Speaker 1: where are they come out the new phone every year? Right?
Speaker 1: And I know now at the same time every year,
Speaker 1: I want to know the market German thinking of okay,
Speaker 1: this is when I do actually step up and buy
Speaker 1: the phone, Like, how do you do it? Okay? Well,
Speaker 1: I mean it's different for me, right because what I
Speaker 1: live and breathe and it's my passion. So you know,
Speaker 1: I hate to tell you that I've had every I
Speaker 1: home since the original. But am I a consumer? A
Speaker 1: normal consumer? Absolutely not. And I recognized that what I
Speaker 1: would recommend to you know, the average consumer is probably
Speaker 1: every three to four years in order to keep getting
Speaker 1: those soft roup grades or until the phone stops working.
Speaker 1: On the other hand, there are programs now where you
Speaker 1: can get a new iPhone without paying additional money out
Speaker 1: of pocket. So if you are a tech fan, you
Speaker 1: are looking at this pretty economically. There is a way
Speaker 1: to get the phone every year without showing out a
Speaker 1: thousand dollars. I dropped mine and it kind of shattered
Speaker 1: the screen on a New York City streets. Try to
Speaker 1: drop it in a body of water because it'll fare better.
Speaker 1: Just put it in a bag of rice, all right,
Speaker 1: so the waterproof. I know, I know this Goldman story.
Speaker 1: Huoa so impressive Mark Exclusive. Yeah, and you a firm
Speaker 1: stock was moving down on the news by now pay
Speaker 1: later service. I am all in on Apple and Apple
Speaker 1: Pay now using it because of the pandemic. What could
Speaker 1: this potentially mean for Apple's business? For Apple's business, They're
Speaker 1: just going to make more percentage of a pr interest
Speaker 1: through the loans that Goldman is doing. You're going to
Speaker 1: see penetration and usage of Apple Pay probably likely increase.
Speaker 1: They take a load double double digits sense amount on
Speaker 1: every transaction. So this is just going to push people
Speaker 1: to use Apple Pay, because we have to understand this
Speaker 1: is a layer on top of any Apple Pay transaction.
Speaker 1: With any credit card you use, you can buy whether
Speaker 1: it's a cup of coffee, a bagel, or a purse,
Speaker 1: and you can split that over for interest free payments
Speaker 1: every two weeks over eight weeks, so not paying additional money.
Speaker 1: So if it's a thousand dollars, you're paying to fifty
Speaker 1: four times plus, you're gonna have easier access to loans
Speaker 1: for multi thousand dollar purchases with you know, lower Goldmen
Speaker 1: interest rates too, are getting kind of expensive. What does
Speaker 1: this say to you Mark about how Apple is thinking
Speaker 1: about its expansion in further into financial services. I think
Speaker 1: they're doing basically, you know, everything they can to move
Speaker 1: into fintech. Apple has a long payment spintech roadmap. Another
Speaker 1: thing they're working on UH is for small businesses to
Speaker 1: be able to accept payments through an eye phone or
Speaker 1: an iPad. So for example, I can have my little
Speaker 1: lemonade stand and if I wants to buy some of
Speaker 1: my you know, not so tasty lemonade, they can tap
Speaker 1: their credit card or their phone in the back of
Speaker 1: my phone and transfer over that money. Have you heard
Speaker 1: of that before? Well, it's called Square, but now it's
Speaker 1: built into every iPhone at some point when they rolled
Speaker 1: this out, and I think it's gonna be another pretty
Speaker 1: cool payment method for some people. So when this story
Speaker 1: broke yesterday, Tim and I were looking at um market
Speaker 1: caps and we were looking at the balance sheets and
Speaker 1: the amount of cash what that Apple has its over
Speaker 1: I think two billion dollars or something like that. I
Speaker 1: mean they could technically go out and buy Goldman Sacks.
Speaker 1: They could buy a firm. Is that likely to be
Speaker 1: part of the strategy or they are really a build
Speaker 1: out from internally kind of company. Let's say I don't
Speaker 1: know the market cap of a firm, but let's say billion. Okay,
Speaker 1: so you know rule of thumb, maybe they would cost
Speaker 1: thirty billion, right, Okay, So Apple could either pay thirty
Speaker 1: billion to buy a firm, or they can spend three
Speaker 1: billion to copy their product and make a better version.
Speaker 1: So they have no reason to buy these companies. That's
Speaker 1: why they only make small acquisitions. They rather invest in
Speaker 1: building it themselves. They're not going to buy now pay
Speaker 1: later for a firm. They're not going to spread it out.
Speaker 1: But I get it. They do it internally and they
Speaker 1: can kind sorry, Uh does this get people to buy
Speaker 1: more iPhones? Mark? No, I don't think so. I would
Speaker 1: be shocked if they had any impact on iPhone hardware sales,
Speaker 1: which which in its sense is a difference from Apple
Speaker 1: strategy in the past, right, And it kind of speaks
Speaker 1: to the way that Apple has shifted its strategy. Well,
Speaker 1: the strategy is keeping people from switching away from the iPhone.
Speaker 1: If you have a bunch of monthly installments for some
Speaker 1: items you bought right through your iPhone, you can't switch
Speaker 1: the Android because you have your your all your payments
Speaker 1: hook through your phone. So you know, this is just
Speaker 1: about them turn the phone into your wallet, into your keys,
Speaker 1: into your way. It's how I get on the subway
Speaker 1: every day, getting into my phone right there. Every every
Speaker 1: incremental new feature makes it that much harder to get
Speaker 1: rid of your phone. Mark, You're the best. Thank you
Speaker 1: so much. Mark German. He is must read on the
Speaker 1: Bloomberg terminal at Bloomberg dot com all the time. Mark Urman,
Speaker 1: his technology reporter at Bloomberg News, on the phone from
Speaker 1: Los Angeles. What I just want to say the story
Speaker 1: about that he wrote about the iPhones. Um Rick chang
Speaker 1: around the internet in the last twenty four hours because
Speaker 1: it's everywhere. Well, you know, he's always ahead of the
Speaker 1: game when he comes to Apple. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stenovic
Speaker 1: on Bloomberg Radio well time. Earlier today, I caught up
Speaker 1: with the Belvidere Vodka CEO Rodney Williams. He's also president
Speaker 1: of the company. Belvidere is part of the LVMH family
Speaker 1: of luxury brands. We did this at the Bloomberg Sustainable
Speaker 1: Business Summit, and in this excerpt from our conversation, Rodney
Speaker 1: Williams talks about the changes the alcoholic beverage industry has
Speaker 1: gone through during the pandemic. Check it out. Well, you know,
Speaker 1: we are all well poised for return to some sense
Speaker 1: of normalcy, but we're calling it a new normal because
Speaker 1: so much has changed. You know, during the pandemic um
Speaker 1: in our industry, there was always off and on trade.
Speaker 1: Either you consume the product in a restaurant bar or
Speaker 1: you take it home to consume it elsewhere. But home itself.
Speaker 1: Now is this whole new channel where people are entertaining
Speaker 1: at home. They're making cocktails at home because they've had
Speaker 1: all this time during the pandemic to UH to become
Speaker 1: more comfortable doing those sorts of things. So there's almost
Speaker 1: three channels versus two UH in the industry itself. So
Speaker 1: it's interesting because and we're gonna move on in a second,
Speaker 1: but in terms of a recovery, because people were doing
Speaker 1: so much at home, I'm assuming there was a fair
Speaker 1: amount of demand right over this past year. So how
Speaker 1: do you determine whether or not the market environment is
Speaker 1: getting to kind of pre pandemic levels and then maybe
Speaker 1: something a little extra because people are doing more things
Speaker 1: at homes and experimenting with making cocktails. It's a great question,
Speaker 1: and you don't if if we had a crystal ball,
Speaker 1: uh were in great shape. But what what we really
Speaker 1: are drawing from our lessons from China and Asia, countries
Speaker 1: that have sort of moved through the pandemic um at
Speaker 1: an earlier pace than the North America, Europe, And what
Speaker 1: we're certainly seeing is that the home consumption is continuing,
Speaker 1: but consumers have a huge, huge interest in going back
Speaker 1: to restaurants, going back to bars and nightclubs, you know.
Speaker 1: And it's, uh, it's sort of validation that at the
Speaker 1: end of the day, the humans are really social beings
Speaker 1: and and people really did miss that connection during the pandemic.
Speaker 1: All right, so let's dig down and let's talk about sustainability,
Speaker 1: because you guys have been talking about things for a while.
Speaker 1: It's really in your DNA in terms of a brand.
Speaker 1: But let's talk about the last couple of years. Last
Speaker 1: year you launched your Made in Nature platform this year.
Speaker 1: We have Belvidere organic infusions that came out in the spring.
Speaker 1: You have a new biomass facility, biomass capture facility that
Speaker 1: I want to talk about. So how long has this
Speaker 1: all been in the works. Tell me how it kind
Speaker 1: of all comes together. What's the thinking and the conversations
Speaker 1: that go on at Belvidere that really guide you in
Speaker 1: a sustainable way? Yeah? Should um. Well, you know, when
Speaker 1: we look at Made with Nature, UM, it's more than
Speaker 1: just a campaign for us. It's frankly a whole platform
Speaker 1: around which we organize all of our activities, communications, innovation
Speaker 1: and certainly sustainability and and cs are UM and it.
Speaker 1: The g stalt behind it is that when Velvetire was launched,
Speaker 1: it was really about being on natural and a lot
Speaker 1: of people miss that part of our narrative that Velvitire
Speaker 1: has always been on natural, no additives, no sugar, because
Speaker 1: Poland was one of the first countries to appelate vodka
Speaker 1: the way France, Italy US appelates wine such that we
Speaker 1: can have no additives where non GMO all of distilled
Speaker 1: spirits are gluten free. UM and we're Kosher certified, so
Speaker 1: we operate at these standards. And you know, prior to
Speaker 1: the pandemic, this was kind of nice to have information,
Speaker 1: except for for maybe the younger gen z S who
Speaker 1: are really really into this, but we all lived with
Speaker 1: the consequences and the forces of nature, and this has
Speaker 1: all become much more on top of mind and relevant
Speaker 1: for a much broader consumer base. And that's what it's curious,
Speaker 1: and it's the consumer. It sounds like that's leading it right.
Speaker 1: The consumer wants to as you said, you know, you
Speaker 1: guys have always been natural, you know, purified water, free
Speaker 1: of additives. As you said you talked about your Polish rye.
Speaker 1: It's been there, but you needed to communicate that to
Speaker 1: the consumer exactly, and we also needed to provide valuable
Speaker 1: proof points for what we're doing. So with organic confusions,
Speaker 1: the vodka is organic, the the rye that we're using
Speaker 1: as organic, the herbs of botanicals, everything about it is
Speaker 1: organic um and we've seen we do big research in
Speaker 1: our key markets, five different countries and three different continents,
Speaker 1: and pre pandemic across the board, you had millennials and
Speaker 1: older gen Zer saying, yes, the ingredients are important to
Speaker 1: me UM and now post as we're moving out of
Speaker 1: this era, we're finding that, you know, some of it
Speaker 1: is because of the influences of kids being home from
Speaker 1: college on their parents Across generationally, people are much more
Speaker 1: interested in in simple ingredient lists, things that they definitely
Speaker 1: recognize and um and and things that they understand what
Speaker 1: they are wholesome ingredients. So that's the Devideer of Vodka
Speaker 1: CEO Rodney Williams. Again, as I said earlier, they're part
Speaker 1: of the LVMH family of luxury brand. You can check
Speaker 1: out more of that conversation, all the interviews from the
Speaker 1: Bloomberg Sustainable Business Summit Global, you can find that at
Speaker 1: Bloomberg Live dot com. Fascinating tim and kind of pre
Speaker 1: prepping for that interview. They've got this new platform called
Speaker 1: Made you Know with Nature, and you go to their
Speaker 1: website you look at these incredible films that they put out.
Speaker 1: It's all about nature and wheat fields or rye fields,
Speaker 1: you know, like it's just incredible and what a few
Speaker 1: years ago and it was all a very different ad. Yeah,
Speaker 1: it's amazing the way that the consumer messaging has shifted.
Speaker 1: And if you were watching on YouTube you saw that
Speaker 1: right exactly, and it is. And what they said is
Speaker 1: they're responding to the consumers specifically that consumers want to
Speaker 1: know what their products, what their vodka is made of,
Speaker 1: They want to know that it's much more sustainable and
Speaker 1: much more natural, much more organic. And that's the direction
Speaker 1: they're going in. That's direction we're going in as consumers. Totally, totally,
Speaker 1: all right, you're listening to Bloomberg Business Week, Carol Master,
Speaker 1: Tim Stanvic, and this is Bloomberg. Thanks for listening to
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