1 00:00:12,080 --> 00:00:15,200 Speaker 1: This is Wall Street Week. I'm David Weston bringing you 2 00:00:15,480 --> 00:00:19,520 Speaker 1: stories of capitalism this week. As the business and political 3 00:00:19,560 --> 00:00:22,639 Speaker 1: elites gathered in Davos, Switzerland, what did they try to 4 00:00:22,680 --> 00:00:26,759 Speaker 1: accomplish and what are the odds of success? Plus President 5 00:00:26,760 --> 00:00:30,639 Speaker 1: Trump pledges to deport unlawful immigrants by the hundreds of thousands, 6 00:00:31,040 --> 00:00:33,320 Speaker 1: we look at what that could mean for the economy 7 00:00:33,920 --> 00:00:36,920 Speaker 1: and the rapid growth of non alcoholic beer, what is 8 00:00:37,040 --> 00:00:40,680 Speaker 1: driving it and how far could it go? But we 9 00:00:40,760 --> 00:00:44,360 Speaker 1: start with the tragedy of the Los Angeles fires, measured 10 00:00:44,400 --> 00:00:48,400 Speaker 1: first and foremost in the lives lost and the homes destroyed. 11 00:00:49,000 --> 00:00:51,800 Speaker 1: It's much more than a story about money, but it 12 00:00:52,080 --> 00:00:55,760 Speaker 1: is also about money, and sadly only the most recent 13 00:00:55,880 --> 00:00:58,680 Speaker 1: chapter of a story We've brought you in December about 14 00:00:58,680 --> 00:01:00,680 Speaker 1: how much we are willing to pay to protect what 15 00:01:00,760 --> 00:01:04,440 Speaker 1: we value. Then it was losses from hurricanes in Florida. 16 00:01:05,160 --> 00:01:08,720 Speaker 1: Now it's about the even greater losses from fires in 17 00:01:08,800 --> 00:01:09,600 Speaker 1: Los Angeles. 18 00:01:11,200 --> 00:01:16,320 Speaker 2: H It's a lot of a lot of hard work building, 19 00:01:16,520 --> 00:01:19,400 Speaker 2: building a business and seeing. 20 00:01:19,120 --> 00:01:22,679 Speaker 3: This it's tough, and we can see fireballs just rolling 21 00:01:22,760 --> 00:01:23,240 Speaker 3: up the street. 22 00:01:24,920 --> 00:01:28,560 Speaker 4: Really scary when you can see the flames coming up 23 00:01:28,560 --> 00:01:33,880 Speaker 4: over the houses. It looked like pandemonium. 24 00:01:33,959 --> 00:01:38,280 Speaker 5: You love retired firefighters, so I know, I know the 25 00:01:38,400 --> 00:01:42,320 Speaker 5: dangerous one is a wind driven fire. There's nothing now, 26 00:01:42,440 --> 00:01:44,120 Speaker 5: you know, very little we can do. 27 00:01:44,640 --> 00:01:47,840 Speaker 6: It's definitely tough. There's a lot of people who don't 28 00:01:47,840 --> 00:01:48,480 Speaker 6: have insurance. 29 00:01:50,320 --> 00:01:54,840 Speaker 1: Yeah, as those that lost their homes try to figure 30 00:01:54,880 --> 00:01:58,320 Speaker 1: out how or even if they can rebuild, they'll be 31 00:01:58,360 --> 00:02:02,040 Speaker 1: turning to their insurance companies. JP Morgan estimates the insured 32 00:02:02,120 --> 00:02:06,400 Speaker 1: damages covered could exceed twenty billion dollars, which would make 33 00:02:06,520 --> 00:02:10,880 Speaker 1: these the costliest wildfires in US history. So could this 34 00:02:10,960 --> 00:02:13,600 Speaker 1: push California's insurance market to its limit? 35 00:02:15,080 --> 00:02:18,680 Speaker 3: This is speculative and shifting day by day, so we're 36 00:02:18,720 --> 00:02:21,200 Speaker 3: not sure exactly where it's going to land. But the 37 00:02:21,480 --> 00:02:24,560 Speaker 3: insurance industry that have looked into this and have looked 38 00:02:24,560 --> 00:02:27,800 Speaker 3: at the impact on their book are not running for 39 00:02:27,840 --> 00:02:28,240 Speaker 3: the hills. 40 00:02:29,320 --> 00:02:33,520 Speaker 1: Jerry Theodoro is director of the Finance, Insurance and Trade 41 00:02:33,560 --> 00:02:37,760 Speaker 1: Policy Program at Our Street Institute, a DC based think 42 00:02:37,800 --> 00:02:43,200 Speaker 1: tank that promotes free markets. Like Theodoro, SMP Global Ratings 43 00:02:43,200 --> 00:02:46,880 Speaker 1: says the insured losses from the LA fires should be manageable. 44 00:02:47,360 --> 00:02:50,320 Speaker 1: In part, that's because it's not just the primary insurance 45 00:02:50,320 --> 00:02:54,200 Speaker 1: companies bearing the losses, it's also the reinsurance companies that 46 00:02:54,280 --> 00:02:54,880 Speaker 1: back them. 47 00:02:54,760 --> 00:02:58,440 Speaker 3: Up made it. Insured losses are twenty to thirty billion 48 00:02:58,480 --> 00:03:01,160 Speaker 3: dollars and reinsurance is going to a big piece of 49 00:03:01,200 --> 00:03:05,440 Speaker 3: that risk that's spread all over the world Bermuda, London, 50 00:03:05,960 --> 00:03:10,320 Speaker 3: Continental Europe, the Far East. Reinsurance companies taking a piece 51 00:03:10,560 --> 00:03:13,320 Speaker 3: of the pain. So a big company like the Farmers, 52 00:03:13,360 --> 00:03:16,880 Speaker 3: which is the second largest insurer in California for homeowners, 53 00:03:17,160 --> 00:03:21,359 Speaker 3: has got over one hundred reinsurers on its reinsurance panel. 54 00:03:21,919 --> 00:03:25,600 Speaker 1: As the ones insured homeowners are the first step in 55 00:03:25,639 --> 00:03:29,120 Speaker 1: a ladder of risk that starts with individuals or businesses, 56 00:03:29,560 --> 00:03:33,680 Speaker 1: goes up to insurers, than to reinsures, and ultimately can 57 00:03:33,760 --> 00:03:38,280 Speaker 1: hit investors or even taxpayers. With each step, the risk 58 00:03:38,400 --> 00:03:43,200 Speaker 1: is calculated, changed, repackaged and spread around. But one thing 59 00:03:43,240 --> 00:03:47,880 Speaker 1: we know for certain, it never goes away. Instead, it's 60 00:03:47,960 --> 00:03:51,240 Speaker 1: increased and with it the premiums have also been on 61 00:03:51,280 --> 00:03:51,880 Speaker 1: the rise. 62 00:03:52,520 --> 00:03:56,040 Speaker 3: It's a tragic event and it's one that the insurance 63 00:03:56,080 --> 00:04:00,640 Speaker 3: industry I think is prepared to deal with of this 64 00:04:01,160 --> 00:04:04,800 Speaker 3: incredible distribution of risk. I mean, think about having one 65 00:04:04,880 --> 00:04:09,640 Speaker 3: hundred reinsurers on your panel you know Lloyd syndicates, big guys, 66 00:04:09,720 --> 00:04:15,680 Speaker 3: big reinsurers in continental Europe Bermuda reinsurans. There are some 67 00:04:15,840 --> 00:04:20,360 Speaker 3: US insurance Korea, China, other countries too that have got 68 00:04:20,440 --> 00:04:23,800 Speaker 3: reinsurance companies that take a bite out of the apple 69 00:04:23,920 --> 00:04:26,800 Speaker 3: of a company that is seeding its risk to the 70 00:04:26,800 --> 00:04:29,960 Speaker 3: reinsurance market so that it pays up to a certain amount. 71 00:04:30,040 --> 00:04:31,720 Speaker 3: This is the most that we're prepared to lose. 72 00:04:33,320 --> 00:04:37,159 Speaker 7: Swissree is a global reinsurance company and our clients are 73 00:04:37,360 --> 00:04:41,440 Speaker 7: insurance companies. We partner with insurance companies to protect their 74 00:04:41,480 --> 00:04:42,239 Speaker 7: balance sheets. 75 00:04:43,040 --> 00:04:47,480 Speaker 1: Monica Ningen is CEO of US Property and Casualty Reinsurance 76 00:04:47,480 --> 00:04:51,440 Speaker 1: at Swiss re, one of the largest reinsurers in the world. 77 00:04:52,120 --> 00:04:55,120 Speaker 7: When it comes to reinsurance rates, there is an impact 78 00:04:55,120 --> 00:04:58,960 Speaker 7: from climate change, but it's relatively small. The other factors 79 00:04:59,000 --> 00:05:04,000 Speaker 7: being economic in inflation, wage inflation, inflation of construction plays 80 00:05:04,000 --> 00:05:07,120 Speaker 7: a big factor. Especially in the last few years. We 81 00:05:07,200 --> 00:05:10,880 Speaker 7: see people moving to areas that are more prone to catastrophes. 82 00:05:11,240 --> 00:05:14,039 Speaker 7: We also see people moving into forests that are of 83 00:05:14,080 --> 00:05:15,760 Speaker 7: course impacted by wildfires. 84 00:05:16,040 --> 00:05:16,760 Speaker 1: So there's a big. 85 00:05:16,640 --> 00:05:19,720 Speaker 7: Component of it that comes from just people living in 86 00:05:19,760 --> 00:05:22,200 Speaker 7: places that are more exposed to catastrophes. 87 00:05:23,080 --> 00:05:26,039 Speaker 1: With the help of reinsurance, insurers may be able to 88 00:05:26,080 --> 00:05:29,279 Speaker 1: cover the enormous losses in Los Angeles, but the owners 89 00:05:29,320 --> 00:05:32,040 Speaker 1: of homes and businesses will pay part of the cost 90 00:05:32,320 --> 00:05:36,760 Speaker 1: through higher premiums. Across the country, insurance prices have surged 91 00:05:36,800 --> 00:05:39,960 Speaker 1: over the past two years. Since the beginning of twenty 92 00:05:40,000 --> 00:05:44,040 Speaker 1: twenty three, the cost of homeowners insurance nationwide has climbed 93 00:05:44,040 --> 00:05:48,080 Speaker 1: over twenty one percent, while CPI rose just five percent. 94 00:05:48,880 --> 00:05:51,880 Speaker 1: The price of some commercial insurance is up nearly fifteen 95 00:05:51,920 --> 00:05:56,600 Speaker 1: percent over the same period. After seven of the twelve 96 00:05:56,720 --> 00:06:00,719 Speaker 1: major companies writing policies in California cut back on their coverage, 97 00:06:00,920 --> 00:06:05,680 Speaker 1: California recently changed some of its regulations, specifically to let 98 00:06:05,720 --> 00:06:09,760 Speaker 1: insurers take into account higher rates paid to reinsurers and 99 00:06:09,880 --> 00:06:13,119 Speaker 1: to use forward looking models to project losses like those 100 00:06:13,240 --> 00:06:17,560 Speaker 1: suffered in La. But as efficient as insurance and reinsurance 101 00:06:17,640 --> 00:06:20,640 Speaker 1: may be at distributing the risk up and down the chain, 102 00:06:21,279 --> 00:06:25,280 Speaker 1: the best remedy, by far is to avoid more minimize 103 00:06:25,520 --> 00:06:29,880 Speaker 1: the risk altogether. For a disaster like wildfires that begins 104 00:06:30,000 --> 00:06:32,800 Speaker 1: with enhanced firefighting capacity. 105 00:06:32,680 --> 00:06:37,240 Speaker 8: The La County Fire Department was prepared for one or 106 00:06:37,360 --> 00:06:41,839 Speaker 8: two major brush fires, but not for this is not 107 00:06:42,400 --> 00:06:44,600 Speaker 8: a normal red flag glurt. 108 00:06:44,880 --> 00:06:48,200 Speaker 1: Months before the Palisades Fire, the LA Fire Department's budget 109 00:06:48,240 --> 00:06:51,080 Speaker 1: was cut by about seventeen million dollars. 110 00:06:51,839 --> 00:06:55,120 Speaker 9: Unless that local government's budget has a whole bunch of 111 00:06:55,160 --> 00:06:58,839 Speaker 9: just reserve extra cash, it means that to increase some 112 00:06:59,040 --> 00:07:03,480 Speaker 9: port portion of those services or capacities always comes at 113 00:07:03,520 --> 00:07:05,960 Speaker 9: the expense of something else. Right now, we can point 114 00:07:05,960 --> 00:07:09,320 Speaker 9: at water, we can point it responders, we can point 115 00:07:09,320 --> 00:07:10,360 Speaker 9: at all kinds of things. 116 00:07:10,840 --> 00:07:13,880 Speaker 1: Frank Freevolt is a former fire chief who now leads 117 00:07:13,920 --> 00:07:18,880 Speaker 1: the Wild and Urban Interface Fire Institute at California Polytechnic 118 00:07:19,040 --> 00:07:20,160 Speaker 1: State University. 119 00:07:20,560 --> 00:07:22,520 Speaker 9: There are limits to the water system that you can 120 00:07:22,560 --> 00:07:26,080 Speaker 9: expand it's not just about getting the water someplace. It 121 00:07:26,120 --> 00:07:28,160 Speaker 9: needs to have a certain amount of pressure, especially in 122 00:07:28,200 --> 00:07:33,080 Speaker 9: firefighting situations. You have to increase capacity of storage. You 123 00:07:33,160 --> 00:07:38,320 Speaker 9: have to improve the distribution system, and that is that 124 00:07:38,480 --> 00:07:43,600 Speaker 9: is not cheap. You that have to lay additional distribution 125 00:07:43,760 --> 00:07:46,920 Speaker 9: lines into the infrastructure means tearing up roads, going through 126 00:07:47,000 --> 00:07:51,280 Speaker 9: other utilities, disrupting traffic. Or you need to increase the 127 00:07:51,360 --> 00:07:53,320 Speaker 9: diameter of the things you already have, which is really 128 00:07:53,440 --> 00:07:54,040 Speaker 9: the same thing. 129 00:07:55,200 --> 00:07:58,960 Speaker 10: LA will rise, and make no mistake, I am confident 130 00:07:59,280 --> 00:07:59,880 Speaker 10: that we. 131 00:08:00,200 --> 00:08:03,760 Speaker 1: Rebuild, But what will that rebuilding look like and will 132 00:08:03,800 --> 00:08:06,360 Speaker 1: it be different in ways that reduce the risk of 133 00:08:06,440 --> 00:08:09,720 Speaker 1: these sorts of losses being repeated in the future. Risk 134 00:08:09,800 --> 00:08:14,119 Speaker 1: models flag the Palisades due to several factors, including high 135 00:08:14,120 --> 00:08:18,200 Speaker 1: home values, challenging terrain, and windy, dry weather. 136 00:08:20,000 --> 00:08:25,160 Speaker 4: The more we build out into fire prone areas, and 137 00:08:25,280 --> 00:08:28,040 Speaker 4: in California, many of our areas are fire prone, we 138 00:08:28,080 --> 00:08:32,000 Speaker 4: have these very flashy climate episodes of really wet, wet, wet, 139 00:08:32,040 --> 00:08:34,960 Speaker 4: then dry, dry, dry, hot, hot, hot, which means that 140 00:08:35,000 --> 00:08:39,640 Speaker 4: the vegetation at any given time is very susceptible to burning, 141 00:08:40,040 --> 00:08:42,480 Speaker 4: and so the more humans are out there at the 142 00:08:42,600 --> 00:08:46,839 Speaker 4: urban interface with this highly flammable landscape, the more likely 143 00:08:46,880 --> 00:08:48,040 Speaker 4: there will be an ignition. 144 00:08:48,559 --> 00:08:51,880 Speaker 1: Stephanie Pincel is the director of the California Center for 145 00:08:51,960 --> 00:08:56,520 Speaker 1: Sustainable Communities at UCLA. She points out that city planners 146 00:08:56,559 --> 00:08:59,280 Speaker 1: don't have as much say in urban planning as one 147 00:08:59,400 --> 00:09:00,160 Speaker 1: might think. 148 00:09:00,679 --> 00:09:03,920 Speaker 4: This is not the first fire. This is one of many, many, many, 149 00:09:03,960 --> 00:09:11,000 Speaker 4: many fires that has occurred. The problem is, we, like 150 00:09:11,559 --> 00:09:14,160 Speaker 4: have been accustomed to living in a certain way, and 151 00:09:14,160 --> 00:09:20,720 Speaker 4: so it's very hard for policymakers to resist the desire 152 00:09:20,960 --> 00:09:24,520 Speaker 4: to rebuild in exactly the same way. Urban planners have 153 00:09:24,640 --> 00:09:27,520 Speaker 4: very little to do with that, in fact, because if 154 00:09:27,520 --> 00:09:32,480 Speaker 4: the mayor and the governor and others proclaim that things 155 00:09:32,480 --> 00:09:35,000 Speaker 4: are going to be rebuilding exactly the same way in 156 00:09:35,080 --> 00:09:38,800 Speaker 4: exactly the same places, the urban planner only has to 157 00:09:38,800 --> 00:09:41,200 Speaker 4: follow the you know, they have to follow along. They 158 00:09:41,240 --> 00:09:43,080 Speaker 4: are not at the leading edge. 159 00:09:43,320 --> 00:09:46,080 Speaker 1: Taking steps to reduce future risk will not come cheap, 160 00:09:46,559 --> 00:09:49,040 Speaker 1: which means that there has to be the political will 161 00:09:49,240 --> 00:09:51,040 Speaker 1: to spend the money that's needed. 162 00:09:51,440 --> 00:09:56,880 Speaker 4: We have to really think practically about what rebuilding. 163 00:09:57,840 --> 00:09:58,480 Speaker 2: Can look like. 164 00:09:58,960 --> 00:10:02,120 Speaker 4: The other thing is that is not talked about very much. 165 00:10:02,760 --> 00:10:05,320 Speaker 4: We're a tax restricted state, and we need to have 166 00:10:05,360 --> 00:10:12,440 Speaker 4: a vigorous and serious discussion. We have to do things 167 00:10:12,440 --> 00:10:16,960 Speaker 4: like public participation, budgeting. Give people a budget, where would 168 00:10:16,960 --> 00:10:19,200 Speaker 4: you spend the budget. Let's have a discussion about this 169 00:10:19,640 --> 00:10:23,560 Speaker 4: and bring people into the understanding of what governing your 170 00:10:23,679 --> 00:10:27,880 Speaker 4: place is like and that these decisions are not easy decisions. 171 00:10:31,559 --> 00:10:34,800 Speaker 6: I'm just happy to see the community rallying together. I 172 00:10:34,840 --> 00:10:37,679 Speaker 6: know everyone's been on the phone texting about how we're 173 00:10:37,720 --> 00:10:40,040 Speaker 6: going to come back from this, and it's going to 174 00:10:40,040 --> 00:10:41,360 Speaker 6: take a lot of effort in a lot of time. 175 00:10:41,440 --> 00:10:44,800 Speaker 6: But I love the Zoork, Kyle says, and I really 176 00:10:44,800 --> 00:10:47,439 Speaker 6: ex tested my home to come back together and rebuild. 177 00:10:48,720 --> 00:10:50,960 Speaker 1: But in the end, it all comes back to those 178 00:10:51,040 --> 00:10:55,360 Speaker 1: experiencing the laws most directly and painfully. It turns on 179 00:10:55,400 --> 00:10:57,360 Speaker 1: the behavior of those of us at the bottom of 180 00:10:57,400 --> 00:11:01,040 Speaker 1: the insurance chain to determine whether and how best to 181 00:11:01,040 --> 00:11:03,400 Speaker 1: protect ourselves from the next one. 182 00:11:05,120 --> 00:11:07,480 Speaker 7: So when you look to the future, I think there's 183 00:11:07,480 --> 00:11:11,720 Speaker 7: a few things that will change. I think that consumers 184 00:11:11,720 --> 00:11:16,320 Speaker 7: were still to better understand their own risk exposure and 185 00:11:16,360 --> 00:11:20,480 Speaker 7: what their own resiliency looks like. As events impact our 186 00:11:20,520 --> 00:11:23,600 Speaker 7: lives every day, consumers are being more aware than they 187 00:11:23,640 --> 00:11:26,880 Speaker 7: ever have been on the risks that their homes face. 188 00:11:27,240 --> 00:11:30,960 Speaker 9: Whatever we do, do not build back in the same 189 00:11:31,000 --> 00:11:34,760 Speaker 9: place in the same way, or we have the same consequence. 190 00:11:36,080 --> 00:11:38,520 Speaker 1: Coming up. We turn to the snowy slopes of the 191 00:11:38,559 --> 00:11:41,480 Speaker 1: Alps where we talk with our special contributor Larry Summers 192 00:11:41,640 --> 00:11:44,400 Speaker 1: and have Sonny Beschloss of Rock Creek about what the 193 00:11:44,559 --> 00:11:47,760 Speaker 1: move away from globalization means for things like the World 194 00:11:47,880 --> 00:12:09,120 Speaker 1: Economic Forum that's next on Wall Street Week. The World 195 00:12:09,160 --> 00:12:12,200 Speaker 1: Economic Forum was founded in nineteen seventy one to bring 196 00:12:12,320 --> 00:12:14,760 Speaker 1: together leaders from around the world to develop a common 197 00:12:14,800 --> 00:12:18,920 Speaker 1: agenda on important policy issues. The theme this year is 198 00:12:19,080 --> 00:12:22,520 Speaker 1: collaboration in an intelligent world. Collaboration is something we aren't 199 00:12:22,520 --> 00:12:23,720 Speaker 1: seeing all that much of. 200 00:12:23,800 --> 00:12:24,360 Speaker 11: I must say. 201 00:12:24,559 --> 00:12:26,840 Speaker 1: We are joined once again now by our very special controller, 202 00:12:26,920 --> 00:12:29,760 Speaker 1: Larry Summers of Harvard, who actually has now been coming 203 00:12:29,800 --> 00:12:32,840 Speaker 1: here for parts of five decades. So welcome Larry. It's 204 00:12:32,840 --> 00:12:33,520 Speaker 1: great to have you. 205 00:12:33,679 --> 00:12:35,120 Speaker 11: Good to be with you here in Davos. 206 00:12:35,200 --> 00:12:38,160 Speaker 1: David, so give us your perspective of the years. I mean, 207 00:12:38,200 --> 00:12:40,480 Speaker 1: it was a very different world in nineteen seventy one. 208 00:12:40,600 --> 00:12:43,520 Speaker 1: How has Davos changed or not changed over that period 209 00:12:43,520 --> 00:12:43,960 Speaker 1: of time. 210 00:12:45,240 --> 00:12:50,559 Speaker 11: It's still cold, it's still crowded, people are still networking 211 00:12:51,080 --> 00:12:58,239 Speaker 11: at a ferocious rate. I think the world saw Davos 212 00:12:58,760 --> 00:13:01,840 Speaker 11: and the people who came to Davos with a bit 213 00:13:01,880 --> 00:13:06,840 Speaker 11: more admiration some years ago than today. If you look 214 00:13:06,880 --> 00:13:09,920 Speaker 11: around the world, do the election of President Trump in 215 00:13:09,960 --> 00:13:13,400 Speaker 11: the United States, what's happened in France with Lapan, what's 216 00:13:13,440 --> 00:13:22,000 Speaker 11: happening in Germany? Almost everywhere? The kinds of political figures 217 00:13:22,440 --> 00:13:27,319 Speaker 11: who don't really like Davos, and the kind of cosmopolitan 218 00:13:27,400 --> 00:13:32,840 Speaker 11: globalism for which it stands are riding high, and people 219 00:13:32,880 --> 00:13:38,679 Speaker 11: here have different reactions. Some are scared, some are angry, 220 00:13:39,480 --> 00:13:44,880 Speaker 11: some are a little bit contemptuous. I think it's important 221 00:13:44,960 --> 00:13:51,560 Speaker 11: that everyone be listening and reflecting on the political strange 222 00:13:52,160 --> 00:13:56,959 Speaker 11: that clearly are more present in democracies today than they 223 00:13:57,000 --> 00:13:58,880 Speaker 11: were a decade or two ago. 224 00:13:59,200 --> 00:14:01,640 Speaker 1: There has been a fair line discussion about what the 225 00:14:01,800 --> 00:14:04,800 Speaker 1: reelection of President Trump means. A lot of discussions as 226 00:14:04,800 --> 00:14:07,040 Speaker 1: well about general of AI, something that you've been talking 227 00:14:07,040 --> 00:14:10,679 Speaker 1: about for some time, and the technological innovation that's going on. 228 00:14:11,160 --> 00:14:13,240 Speaker 1: What do you make of that, and maybe as important, 229 00:14:13,520 --> 00:14:17,320 Speaker 1: does technology help us avoid financial mistakes. 230 00:14:17,960 --> 00:14:23,640 Speaker 11: I don't think technology is any kind of armor against 231 00:14:23,760 --> 00:14:28,920 Speaker 11: financial access. I even argue the opposite. I think almost 232 00:14:28,960 --> 00:14:34,640 Speaker 11: all bubbles start with a story that's based in reality. 233 00:14:34,760 --> 00:14:38,600 Speaker 11: The Internet was a big thing in the nineties, but 234 00:14:38,680 --> 00:14:43,200 Speaker 11: that didn't stop a bubble from developing. In nineteen ninety nine, 235 00:14:43,920 --> 00:14:49,880 Speaker 11: Japan had really come into its own as a highly productive, 236 00:14:50,040 --> 00:14:55,360 Speaker 11: rapidly growing economy, but that even contributed to the massive 237 00:14:55,480 --> 00:15:01,760 Speaker 11: Japanese bubble in the nineteen eighties. Twenties were a period 238 00:15:01,800 --> 00:15:05,880 Speaker 11: of extraordinary technological change. It was the biggest period for 239 00:15:06,000 --> 00:15:10,880 Speaker 11: diffusion of both electricity and the automobile in the United States, 240 00:15:11,440 --> 00:15:16,280 Speaker 11: but that didn't stop. Indeed, it contributed to the euphoria 241 00:15:16,800 --> 00:15:22,200 Speaker 11: that led to accesses in the market and to a 242 00:15:22,280 --> 00:15:27,200 Speaker 11: sharp decline in the market in the nineteen twenties. So 243 00:15:27,400 --> 00:15:32,720 Speaker 11: I think it's a mistake for people in markets to 244 00:15:33,360 --> 00:15:35,800 Speaker 11: lose sight of the fact that even if there are 245 00:15:35,920 --> 00:15:43,600 Speaker 11: happy things happening technologically, that those are not armor against 246 00:15:43,760 --> 00:15:49,120 Speaker 11: financial or cyclical excess. And I think that's particularly important 247 00:15:49,520 --> 00:15:53,480 Speaker 11: at a moment when there are lots of questions about 248 00:15:53,520 --> 00:15:56,360 Speaker 11: the processes generating public policy. 249 00:15:57,440 --> 00:15:59,960 Speaker 1: A Sunny Beach Loss of Rock Creek has been participating 250 00:16:00,120 --> 00:16:03,360 Speaker 1: in Davos meetings for many years, although she didn't make 251 00:16:03,400 --> 00:16:06,040 Speaker 1: it to Switzerland this year. We asked her about how 252 00:16:06,120 --> 00:16:10,000 Speaker 1: it has adapted to a changing world and what comes next. 253 00:16:10,840 --> 00:16:13,320 Speaker 12: First of all, the number of people going has changed 254 00:16:13,360 --> 00:16:15,040 Speaker 12: a lot, David. This year, I think it will be 255 00:16:15,080 --> 00:16:17,200 Speaker 12: close to three thousand people going from one hundred and 256 00:16:17,200 --> 00:16:20,520 Speaker 12: thirty countries. It started much more as a European, much 257 00:16:20,520 --> 00:16:24,720 Speaker 12: smaller focused group for business leaders only, so in that 258 00:16:24,840 --> 00:16:27,360 Speaker 12: way it has changed. It has also changed in terms 259 00:16:27,400 --> 00:16:29,600 Speaker 12: of the scope it used to really look at a 260 00:16:29,600 --> 00:16:33,280 Speaker 12: few topics, and now it looks across so many different sectors, 261 00:16:33,320 --> 00:16:38,360 Speaker 12: from energy to tech, to utilities, to infrastructure, to a 262 00:16:38,360 --> 00:16:41,440 Speaker 12: lot of the soft and to a lot of issues 263 00:16:41,440 --> 00:16:45,880 Speaker 12: that are interested to nonprofits only and governments. So the 264 00:16:45,920 --> 00:16:50,760 Speaker 12: scope of the topics covered has changed. The biggest change 265 00:16:50,760 --> 00:16:53,280 Speaker 12: I find is that let's say if you went there 266 00:16:53,320 --> 00:16:56,400 Speaker 12: in the early nineteen nineties, as I did, what you 267 00:16:56,400 --> 00:16:57,640 Speaker 12: would find is that you. 268 00:16:57,600 --> 00:16:59,560 Speaker 2: Could cross collaborate a lot more. 269 00:16:59,600 --> 00:17:02,200 Speaker 12: By that, I mean if you were in one sector, 270 00:17:02,280 --> 00:17:06,280 Speaker 12: let's say finance or economics or multilateral groups, you would 271 00:17:06,359 --> 00:17:09,800 Speaker 12: be talking to other groups as well, and you would 272 00:17:09,800 --> 00:17:12,680 Speaker 12: go into meetings that you knew nothing about and come 273 00:17:12,720 --> 00:17:16,840 Speaker 12: back learning a lot about specific topics. Today with is 274 00:17:17,920 --> 00:17:23,120 Speaker 12: very very established. But one both advantage and disadvantage is that. 275 00:17:23,040 --> 00:17:24,280 Speaker 2: You go in your own lane. 276 00:17:24,400 --> 00:17:26,919 Speaker 12: So if you are a business leader, you are meeting 277 00:17:26,960 --> 00:17:28,200 Speaker 12: with other business leaders. 278 00:17:28,440 --> 00:17:31,000 Speaker 2: You may go to the morning yoga. 279 00:17:30,520 --> 00:17:33,480 Speaker 12: Session with a lot of other people, but really the 280 00:17:33,520 --> 00:17:37,760 Speaker 12: most of your sessions are pretty determined. If your university president, 281 00:17:37,800 --> 00:17:40,080 Speaker 12: you go into meetings with other university presidents. 282 00:17:40,240 --> 00:17:43,120 Speaker 1: Obviously, the World Economic Forum has evolved over the many 283 00:17:43,200 --> 00:17:45,480 Speaker 1: years it's been in existence. The world has changed as well. 284 00:17:46,280 --> 00:17:49,040 Speaker 1: When it was started back in nineteen seventy one, most 285 00:17:49,040 --> 00:17:52,240 Speaker 1: of the multilateral cooperation set up in the wake of 286 00:17:52,320 --> 00:17:54,960 Speaker 1: World War Two was still intact. A lot of is 287 00:17:55,160 --> 00:17:59,480 Speaker 1: challenged today, if not absolutely taken apart. How does the 288 00:17:59,520 --> 00:18:02,159 Speaker 1: world to the way it exists now really make it 289 00:18:02,200 --> 00:18:04,280 Speaker 1: possible for we F to do what it's trying to do. 290 00:18:06,680 --> 00:18:09,480 Speaker 12: I think, as you said, the world is a very 291 00:18:09,480 --> 00:18:13,879 Speaker 12: different place today, and I think what the WEF allows 292 00:18:14,040 --> 00:18:17,719 Speaker 12: is often actually at the sidelines of WEF for people 293 00:18:17,760 --> 00:18:20,320 Speaker 12: who are having some sort of conflict to meet and 294 00:18:20,400 --> 00:18:23,720 Speaker 12: talk in ways that they might not be able to do. 295 00:18:23,760 --> 00:18:27,120 Speaker 12: So you do see politicians who are meeting there in 296 00:18:27,280 --> 00:18:30,199 Speaker 12: quiet ways. A lot of business gets done there in 297 00:18:30,359 --> 00:18:34,320 Speaker 12: also relatively quiet ways. So people looking at M and 298 00:18:34,400 --> 00:18:37,920 Speaker 12: A or people looking at specific kinds of deals get 299 00:18:38,000 --> 00:18:42,080 Speaker 12: a lot accomplished during these meetings in a very concentrated way. 300 00:18:42,320 --> 00:18:45,560 Speaker 1: Klaus Schwab obviously found it and continues to lead it, 301 00:18:46,040 --> 00:18:48,399 Speaker 1: and the agenda for this year, as I understand, is 302 00:18:48,400 --> 00:18:52,520 Speaker 1: collaboration in an intelligent world, the intelligence in part in 303 00:18:52,680 --> 00:18:56,160 Speaker 1: artificial intelligence, and he's made a call for really having 304 00:18:56,240 --> 00:18:59,520 Speaker 1: global cooperation and dealing with generator of AI. What are 305 00:18:59,560 --> 00:19:00,480 Speaker 1: the prospect for that? 306 00:19:01,440 --> 00:19:03,800 Speaker 12: I think, David, it would be great if there was 307 00:19:03,840 --> 00:19:08,880 Speaker 12: cooperation globally across the globe on general AI, but as 308 00:19:08,920 --> 00:19:13,320 Speaker 12: we both see, that is probably not very likely, if anything, 309 00:19:13,800 --> 00:19:17,480 Speaker 12: With the existing geopolitical issues that we see, there's more 310 00:19:17,560 --> 00:19:21,920 Speaker 12: division on how countries and scientists and technical people are developing. 311 00:19:21,960 --> 00:19:24,639 Speaker 12: And if you're sitting in the US or you're sitting 312 00:19:24,680 --> 00:19:27,120 Speaker 12: in China or other parts of the world, I think 313 00:19:27,119 --> 00:19:29,320 Speaker 12: people are not necessarily collaborating. 314 00:19:29,800 --> 00:19:31,360 Speaker 2: Even inside countries. 315 00:19:31,480 --> 00:19:35,120 Speaker 12: Companies are not necessarily collaborating as we see whether you're 316 00:19:35,160 --> 00:19:38,920 Speaker 12: looking at open AI or other companies that are involved 317 00:19:38,960 --> 00:19:41,480 Speaker 12: in developing a lot of the new technology. I think 318 00:19:41,480 --> 00:19:44,439 Speaker 12: there's not necessarily as much collaboration as you would like. 319 00:19:45,000 --> 00:19:47,920 Speaker 12: But I think the bigger topic, and class does touch 320 00:19:48,000 --> 00:19:53,440 Speaker 12: on this is not just collaboration is probably not going 321 00:19:53,480 --> 00:19:56,000 Speaker 12: to happen as much as you would like in these meetings. 322 00:19:56,480 --> 00:20:00,359 Speaker 1: When we think about global cooperation, I am strugg by 323 00:20:00,359 --> 00:20:03,280 Speaker 1: the difference between the response the global financial crisis in 324 00:20:03,320 --> 00:20:05,280 Speaker 1: two thousand and eight two thousand and nine. We're to 325 00:20:05,320 --> 00:20:08,240 Speaker 1: a large degree, I believe nations, even rival nations, came 326 00:20:08,280 --> 00:20:11,919 Speaker 1: together to fix it and the response to COVID nineteen 327 00:20:12,480 --> 00:20:14,280 Speaker 1: where it's not at all clear that they did come 328 00:20:14,280 --> 00:20:18,600 Speaker 1: together in twenty twenty, is that indicating that it's harder 329 00:20:18,640 --> 00:20:21,679 Speaker 1: and harder to get rival nations to really work with 330 00:20:21,720 --> 00:20:22,159 Speaker 1: one another. 331 00:20:23,560 --> 00:20:26,760 Speaker 12: I think definitely much harder today in terms of their 332 00:20:27,240 --> 00:20:31,520 Speaker 12: rivalries between nations. But also what has happened is the 333 00:20:31,520 --> 00:20:32,880 Speaker 12: world economic order. 334 00:20:32,720 --> 00:20:34,600 Speaker 2: Has changed what you had. 335 00:20:34,640 --> 00:20:37,200 Speaker 12: Maybe if you looked even at the stock market, you had, 336 00:20:37,400 --> 00:20:40,159 Speaker 12: for example, the Chinese stock market had become large, and 337 00:20:40,200 --> 00:20:42,679 Speaker 12: you saw that it was a big share of the market. 338 00:20:43,080 --> 00:20:46,720 Speaker 12: European markets were a little bit bigger. Today you have 339 00:20:46,960 --> 00:20:51,000 Speaker 12: such dominance of the US when it comes to finance, 340 00:20:51,080 --> 00:20:54,800 Speaker 12: when it comes to the size of the US companies, 341 00:20:54,840 --> 00:20:57,680 Speaker 12: when it comes to the power of the US dollar. 342 00:20:59,160 --> 00:21:00,119 Speaker 2: A lot has shift that. 343 00:21:00,280 --> 00:21:02,320 Speaker 12: While you know, ten years ago we might have thought 344 00:21:02,359 --> 00:21:05,480 Speaker 12: there would be more diversification with the global seuth with 345 00:21:05,560 --> 00:21:08,280 Speaker 12: a lot of emerging markets doing better, with Europe doing 346 00:21:08,320 --> 00:21:11,440 Speaker 12: better with the EU, what we have found is that 347 00:21:11,480 --> 00:21:14,719 Speaker 12: whether it is regulation in the EU, whether you know, 348 00:21:14,800 --> 00:21:18,520 Speaker 12: the differentiation in emerging markets among them those who have 349 00:21:18,720 --> 00:21:21,800 Speaker 12: used technology in a different way compared to the other ones, 350 00:21:22,240 --> 00:21:24,920 Speaker 12: and where there's been more political strife. And by the 351 00:21:24,960 --> 00:21:28,199 Speaker 12: way we should look at the red points when you 352 00:21:28,200 --> 00:21:31,240 Speaker 12: look at the wef new risk areas, the risk of 353 00:21:31,320 --> 00:21:34,600 Speaker 12: war has increased, particularly in emerging markets. So you have 354 00:21:34,680 --> 00:21:37,960 Speaker 12: a world much more dominated today by the US in 355 00:21:38,000 --> 00:21:41,119 Speaker 12: a way you didn't before. So this strife that we see, 356 00:21:41,480 --> 00:21:45,520 Speaker 12: we see I think increasing because of the huge differentiation 357 00:21:46,320 --> 00:21:49,119 Speaker 12: that you see between the US and other countries. And 358 00:21:49,160 --> 00:21:51,480 Speaker 12: I think China is going through so much of its 359 00:21:51,520 --> 00:21:55,600 Speaker 12: own problems where internal consumption is not going up, where 360 00:21:55,640 --> 00:21:59,200 Speaker 12: you have the demographic issues, where you have growth issues, 361 00:21:59,240 --> 00:22:02,080 Speaker 12: where the growth the economy is coming up to much 362 00:22:02,119 --> 00:22:06,000 Speaker 12: lower levels. So you are in a different world that 363 00:22:06,000 --> 00:22:08,000 Speaker 12: that's not very conducive to cooperation. 364 00:22:08,720 --> 00:22:11,200 Speaker 1: If we were creating the equivalent of a World Economic 365 00:22:11,240 --> 00:22:14,240 Speaker 1: Forum today, would we do it the same way? I 366 00:22:14,280 --> 00:22:16,640 Speaker 1: wonder there are so many alternative meetings that are held 367 00:22:16,640 --> 00:22:19,760 Speaker 1: around the globe pretty much every day of the year, 368 00:22:20,040 --> 00:22:23,719 Speaker 1: somebody's meeting, and the need for cooperations global coverage has 369 00:22:23,760 --> 00:22:26,879 Speaker 1: gone up, even as the prospects for it may have 370 00:22:26,920 --> 00:22:30,879 Speaker 1: gone down. Is this the most effective way to really 371 00:22:30,920 --> 00:22:33,240 Speaker 1: develop global agendas on these important issues. 372 00:22:35,040 --> 00:22:36,880 Speaker 12: I think if you were starting from scratch, you might 373 00:22:36,920 --> 00:22:40,040 Speaker 12: do it differently. You might again go back a little 374 00:22:40,040 --> 00:22:42,280 Speaker 12: bit to the origins of web and truly try to 375 00:22:42,320 --> 00:22:45,160 Speaker 12: get groups that do not necessarily come across each other 376 00:22:45,280 --> 00:22:48,080 Speaker 12: or talk to each other to start talking much more 377 00:22:48,359 --> 00:22:50,560 Speaker 12: across and sort of take out the hierarchy out of 378 00:22:50,600 --> 00:22:52,720 Speaker 12: it a little bit. So in that way, I think 379 00:22:52,760 --> 00:22:56,000 Speaker 12: things could be done differently today and also bring young 380 00:22:56,000 --> 00:22:59,600 Speaker 12: people into the conversation much more, because at the same time, 381 00:22:59,680 --> 00:23:02,480 Speaker 12: as well has accomplished bringing a lot of different kinds 382 00:23:02,480 --> 00:23:06,240 Speaker 12: of people, it is still fairly regimented when it comes 383 00:23:06,280 --> 00:23:07,760 Speaker 12: to different populations. 384 00:23:07,760 --> 00:23:09,160 Speaker 2: I think you would do it differently. 385 00:23:09,520 --> 00:23:12,080 Speaker 12: One thing, David that was very interesting with that COVID 386 00:23:12,240 --> 00:23:14,200 Speaker 12: is when COVID happened, I think a lot of people 387 00:23:14,240 --> 00:23:17,800 Speaker 12: thought that wef would die potentially, But what we learned 388 00:23:17,960 --> 00:23:20,240 Speaker 12: is that people, as much as we like to meet 389 00:23:20,280 --> 00:23:22,320 Speaker 12: on zoom and as much as we like to meet 390 00:23:23,280 --> 00:23:27,920 Speaker 12: more efficiently electronically and digitally, we really want to meet 391 00:23:27,960 --> 00:23:31,320 Speaker 12: each other in person. So you certainly need people to 392 00:23:31,359 --> 00:23:35,440 Speaker 12: come together in person to discuss big topics and come 393 00:23:35,480 --> 00:23:36,600 Speaker 12: to some sort of resolution. 394 00:23:38,280 --> 00:23:41,760 Speaker 1: Coming up non alcoholic beer is all the rage, at 395 00:23:41,840 --> 00:23:44,560 Speaker 1: least for some We take a look at the fastest 396 00:23:44,600 --> 00:23:49,040 Speaker 1: growing non alcoholic brand in the United States Athletic. That's 397 00:23:49,160 --> 00:24:04,440 Speaker 1: next on Wall Street Week. This is a story about habits, 398 00:24:04,720 --> 00:24:08,160 Speaker 1: those we love and those we should probably do something about. 399 00:24:15,840 --> 00:24:17,120 Speaker 1: Sold the barrels of bear and full. 400 00:24:17,440 --> 00:24:17,960 Speaker 2: Don't you know what. 401 00:24:17,960 --> 00:24:18,639 Speaker 13: I'm one of those. 402 00:24:20,040 --> 00:24:23,000 Speaker 1: I love beer, so here's the right place to be. 403 00:24:24,320 --> 00:24:27,679 Speaker 1: Alcohol has been part of human society since the first 404 00:24:27,800 --> 00:24:31,280 Speaker 1: beers appeared in the Stone Age. It spans everything from 405 00:24:31,280 --> 00:24:33,680 Speaker 1: pop culture, go to the Winchester. 406 00:24:34,000 --> 00:24:37,320 Speaker 13: I have a nice coat client for all lists of blowouts. 407 00:24:38,280 --> 00:24:45,560 Speaker 1: To presidents. But now, after thousands of years, change may 408 00:24:45,560 --> 00:24:49,360 Speaker 1: be coming to the one point six trillion dollar alcohol industry. 409 00:24:50,200 --> 00:24:51,960 Speaker 10: We used to have a phrase in the early days, 410 00:24:52,480 --> 00:24:55,760 Speaker 10: people drinking good times and people drinking bad times. Well, 411 00:24:55,880 --> 00:24:58,679 Speaker 10: the trends appeared to be disproving that. 412 00:25:00,200 --> 00:25:03,440 Speaker 1: Brad Berkman's family has been in the alcohol business since 413 00:25:03,440 --> 00:25:06,280 Speaker 1: his great grandmother became one of the first women to 414 00:25:06,359 --> 00:25:09,480 Speaker 1: hold a New York state liquor license. Now he's a 415 00:25:09,520 --> 00:25:14,680 Speaker 1: lawyer at Greenspoon Martyr representing breweries, wineries and distilleries. 416 00:25:15,400 --> 00:25:20,560 Speaker 10: There's a lot of concern with sales Valumely twenty twenty 417 00:25:20,560 --> 00:25:23,240 Speaker 10: four as we move into twenty twenty five. We've seen 418 00:25:24,560 --> 00:25:29,600 Speaker 10: significant drops in all categories of alcoholic beverages, that is, wine, beer, 419 00:25:29,600 --> 00:25:34,880 Speaker 10: and distilled spirits, and the industry is a bit rattled. 420 00:25:34,520 --> 00:25:38,760 Speaker 1: By it, and it's young people driving the change. In 421 00:25:38,760 --> 00:25:42,520 Speaker 1: a survey last year, IWSR found that the number of 422 00:25:42,680 --> 00:25:46,160 Speaker 1: US drinkers who had added non alcoholic beverages to their 423 00:25:46,200 --> 00:25:49,520 Speaker 1: mix had gone up from seven percent to thirteen percent. 424 00:25:50,080 --> 00:25:53,520 Speaker 1: For millennials it was twenty two percent, with gen Z 425 00:25:53,920 --> 00:25:55,600 Speaker 1: following at fifteen percent. 426 00:25:56,160 --> 00:25:58,840 Speaker 10: I mean boomers are still drinking, right, We're not seeing 427 00:25:59,040 --> 00:26:02,960 Speaker 10: that much of a difference in all categories. But gen 428 00:26:03,080 --> 00:26:06,399 Speaker 10: zs as I mentioned, are looking for health alternatives or 429 00:26:06,440 --> 00:26:10,080 Speaker 10: healthier alternatives, at least those things they perceive to be healthier. 430 00:26:10,520 --> 00:26:13,280 Speaker 10: So you know what does that mean. It could mean 431 00:26:13,720 --> 00:26:17,800 Speaker 10: non alcoholic alternatives, It could mean low proof drinks, low 432 00:26:17,840 --> 00:26:21,960 Speaker 10: proof spirits. It could mean Selzer's or similar products. 433 00:26:22,840 --> 00:26:26,200 Speaker 14: While bar and restaurant volume is an overall low percentage 434 00:26:26,200 --> 00:26:28,920 Speaker 14: of our volume, I think it's a really high introduction 435 00:26:29,080 --> 00:26:30,080 Speaker 14: to our product. 436 00:26:30,280 --> 00:26:32,880 Speaker 1: One of those making the change from alcoholic to non 437 00:26:32,920 --> 00:26:35,880 Speaker 1: alcoholic beers was a young trader at point seventy two 438 00:26:36,200 --> 00:26:37,600 Speaker 1: named Bill Schufeld. 439 00:26:38,200 --> 00:26:40,679 Speaker 14: I was turning thirty, taking my career more seriously. I 440 00:26:40,720 --> 00:26:43,480 Speaker 14: was about to get married and kind of evaluating all 441 00:26:43,560 --> 00:26:48,159 Speaker 14: these major goals in my life, like health, wellness, relationships, career, 442 00:26:48,720 --> 00:26:51,919 Speaker 14: being a father. And there's one thing there was a 443 00:26:51,960 --> 00:26:55,360 Speaker 14: ceiling on all those things, and that was alcohol. And 444 00:26:56,840 --> 00:26:58,320 Speaker 14: I kind of realized, you know, I'm going out to 445 00:26:58,320 --> 00:27:00,600 Speaker 14: three or four work dinners a week than some things 446 00:27:00,640 --> 00:27:02,760 Speaker 14: dinner with my wife and relaxing on weekends. And I 447 00:27:02,800 --> 00:27:06,280 Speaker 14: went from someone who was surviving workouts to loving working 448 00:27:06,280 --> 00:27:09,639 Speaker 14: out and so basically feeling the best I've ever felt 449 00:27:09,640 --> 00:27:12,240 Speaker 14: and being as productive as ever. But I was still 450 00:27:12,320 --> 00:27:14,840 Speaker 14: at all those social things, and I realized there was 451 00:27:14,920 --> 00:27:17,560 Speaker 14: no other half of the adult beverage menu. So if 452 00:27:17,680 --> 00:27:20,159 Speaker 14: you wanted to be in all those places and not drink, 453 00:27:20,680 --> 00:27:21,800 Speaker 14: there weren't options. 454 00:27:22,400 --> 00:27:26,560 Speaker 1: So Schufelt teamed with craft brewer John Walker to create 455 00:27:26,600 --> 00:27:30,920 Speaker 1: some of those non alcoholic options, founding Athletic Brewing in 456 00:27:30,960 --> 00:27:35,760 Speaker 1: twenty seventeen. Today, the Connecticut based brewery is rapidly approaching 457 00:27:35,760 --> 00:27:39,600 Speaker 1: a one billion dollar valuation, writing a surge in non 458 00:27:39,760 --> 00:27:43,919 Speaker 1: alcoholic beers since twenty eighteen, The category now accounts for 459 00:27:44,040 --> 00:27:48,800 Speaker 1: one point five percent of total beer sales in America. 460 00:27:49,119 --> 00:27:53,199 Speaker 14: Most food and beverage businesses outsourced production, at least in 461 00:27:53,240 --> 00:27:57,000 Speaker 14: the early days. We made the opposite quality decision to 462 00:27:57,080 --> 00:28:00,919 Speaker 14: do everything ourselves. And so our first we built. It 463 00:28:00,920 --> 00:28:03,359 Speaker 14: took me one hundred and twenty investor meetings to raise 464 00:28:03,520 --> 00:28:08,000 Speaker 14: our nearly three million dollars from sixty six incredible angel investors. 465 00:28:08,520 --> 00:28:11,439 Speaker 14: And we thought we were building this brewery for five years, 466 00:28:11,480 --> 00:28:15,879 Speaker 14: and it was oversized. Enough cushion there, and we outgrew 467 00:28:15,920 --> 00:28:19,720 Speaker 14: that breery in ten months, and so immediately we're going 468 00:28:19,760 --> 00:28:22,919 Speaker 14: back to our investors and seeking a bigger plan. And 469 00:28:23,000 --> 00:28:26,040 Speaker 14: so our next bury was three thousand miles away in 470 00:28:26,080 --> 00:28:29,280 Speaker 14: San Diego. It was about ten times the footprint and 471 00:28:29,560 --> 00:28:32,719 Speaker 14: about twenty times the output of the original plan. So 472 00:28:32,760 --> 00:28:35,040 Speaker 14: the first one we built connected was the first ever 473 00:28:35,240 --> 00:28:39,280 Speaker 14: non alcoholic production facility in the US, and then immediately 474 00:28:39,400 --> 00:28:42,360 Speaker 14: built one two years later ten times the size of that. 475 00:28:42,880 --> 00:28:45,120 Speaker 14: And then the year later we started building another one 476 00:28:45,160 --> 00:28:46,720 Speaker 14: on the East coast that was two and a half 477 00:28:46,800 --> 00:28:50,040 Speaker 14: times the size of that bigger one and about fifty 478 00:28:50,080 --> 00:28:51,600 Speaker 14: times the size of our original brewery. 479 00:28:51,680 --> 00:28:53,760 Speaker 1: As you look to continue to growing your business, what's 480 00:28:53,800 --> 00:28:56,960 Speaker 1: the lowest hanging fruit. Is it to get other areas 481 00:28:57,000 --> 00:28:59,600 Speaker 1: that you reached geographically, Is it to get more people 482 00:28:59,680 --> 00:29:02,320 Speaker 1: drinking category, is to move into other beverages. 483 00:29:02,600 --> 00:29:06,160 Speaker 14: I'd say most of all the above. I'd say naturally, 484 00:29:06,280 --> 00:29:09,040 Speaker 14: our awareness is still pretty low, only about twenty percent 485 00:29:09,040 --> 00:29:11,680 Speaker 14: of Americans, even though the non i'll call category has 486 00:29:11,720 --> 00:29:14,680 Speaker 14: been totally revamped and is a really exciting place. So 487 00:29:15,040 --> 00:29:18,600 Speaker 14: I think new consumers becoming aware to the category in 488 00:29:18,760 --> 00:29:22,120 Speaker 14: the independent on and off premise so privately owned stores, 489 00:29:22,520 --> 00:29:25,320 Speaker 14: our penetration is still pretty low. Also, it's below twenty 490 00:29:25,360 --> 00:29:28,360 Speaker 14: percent nationally, so there's a lot of opportunity to be 491 00:29:28,480 --> 00:29:32,840 Speaker 14: more available. It's a really underdistributed category, despite it being 492 00:29:32,840 --> 00:29:35,200 Speaker 14: the fastest grown category in beer the last five years. 493 00:29:35,200 --> 00:29:39,800 Speaker 14: So I think new populations, awareness, distribution are all probably 494 00:29:39,800 --> 00:29:41,040 Speaker 14: the biggest opportunities. 495 00:29:41,760 --> 00:29:45,120 Speaker 1: It may be small, but it's growing fast, and Schufeld 496 00:29:45,240 --> 00:29:47,280 Speaker 1: thinks that growth has a way to go. 497 00:29:48,000 --> 00:29:50,680 Speaker 14: I really believe that for zero to two percent is 498 00:29:50,840 --> 00:29:54,200 Speaker 14: the hardest, like getting the boulder rolling. I think two 499 00:29:54,240 --> 00:29:56,600 Speaker 14: to ten percent is going to be incredibly faster than 500 00:29:56,640 --> 00:29:59,160 Speaker 14: people think, and ten to twenty percent will happen in 501 00:29:59,200 --> 00:30:02,200 Speaker 14: a blank and I think it's probably going far beyond 502 00:30:02,280 --> 00:30:05,200 Speaker 14: that also, which that would point into a category that's 503 00:30:05,200 --> 00:30:07,520 Speaker 14: somewhere in the twenty five to fifty billion dollar range 504 00:30:07,640 --> 00:30:08,959 Speaker 14: in the not too distant future. 505 00:30:09,960 --> 00:30:13,240 Speaker 1: Reaching those numbers would require the sort of generational culture 506 00:30:13,280 --> 00:30:16,360 Speaker 1: shift that Schufeldt feels is beginning to take hold in 507 00:30:16,400 --> 00:30:18,320 Speaker 1: corporate America. 508 00:30:18,440 --> 00:30:21,040 Speaker 14: I kind of saw in my financial career over the 509 00:30:21,040 --> 00:30:23,000 Speaker 14: twelve years I was in finance, it went from being 510 00:30:23,040 --> 00:30:25,640 Speaker 14: a badge of honor to be hungover and out entertaining 511 00:30:25,720 --> 00:30:29,600 Speaker 14: to really frowned upon, and people were really performance driven 512 00:30:29,640 --> 00:30:32,680 Speaker 14: and health driven, and so I saw that change in myself, 513 00:30:33,080 --> 00:30:36,080 Speaker 14: and so I was definitely extracolating that there's this big 514 00:30:36,120 --> 00:30:39,200 Speaker 14: tipping point coming in society, which has actually played out 515 00:30:39,240 --> 00:30:40,280 Speaker 14: over the last ten years. 516 00:30:41,360 --> 00:30:44,600 Speaker 1: When you talk about tipping points for alcohol, you have 517 00:30:44,680 --> 00:30:48,560 Speaker 1: to give credit to Dame INGA Beale, who in twenty seventeen, 518 00:30:48,840 --> 00:30:51,880 Speaker 1: when she was the first female CEO of Lloyd's of London, 519 00:30:52,240 --> 00:30:55,560 Speaker 1: instituted a ban on employees having alcohol between the hours 520 00:30:55,560 --> 00:30:58,520 Speaker 1: of nine and five, part of a broader initiative to 521 00:30:58,600 --> 00:31:02,160 Speaker 1: modernize an institution established over three centuries ago. 522 00:31:02,960 --> 00:31:06,160 Speaker 13: I started working in the eighties and I can remember 523 00:31:06,720 --> 00:31:09,680 Speaker 13: going to the bar, going down the pub with the 524 00:31:09,720 --> 00:31:13,760 Speaker 13: other underwriters, with my coworkers, with the brokers who brought 525 00:31:13,840 --> 00:31:18,240 Speaker 13: us the business, and necking down a few glasses of beer. 526 00:31:19,040 --> 00:31:21,400 Speaker 13: So I remember growing up like that. But you know, 527 00:31:21,520 --> 00:31:23,960 Speaker 13: times had moved on and I said, look, we need 528 00:31:24,000 --> 00:31:27,440 Speaker 13: to make sure that we've got people sober when they're 529 00:31:27,480 --> 00:31:32,280 Speaker 13: making big, multi billion decisions sometimes. So we said, right, 530 00:31:32,280 --> 00:31:34,480 Speaker 13: we're going to have an drug and alcohol policy, which 531 00:31:34,520 --> 00:31:37,120 Speaker 13: means you won't be able to consume alcohol if you're 532 00:31:37,160 --> 00:31:38,920 Speaker 13: coming back to work during the day, so if you're 533 00:31:38,960 --> 00:31:40,880 Speaker 13: in working hours, no alcohol. 534 00:31:41,320 --> 00:31:41,760 Speaker 1: Wow. 535 00:31:42,600 --> 00:31:45,480 Speaker 13: I had no idea that that would get me more 536 00:31:45,520 --> 00:31:49,280 Speaker 13: headlines than anything else I did. While I was modernizing Lloyd's, 537 00:31:49,720 --> 00:31:54,480 Speaker 13: the technology I was doing, introducing the innovation lab, opening 538 00:31:54,560 --> 00:31:58,400 Speaker 13: up new markets, this was the one, this banning alcohol 539 00:31:58,600 --> 00:32:00,960 Speaker 13: at lunchtime, that got me more head lines around the world. 540 00:32:02,000 --> 00:32:05,000 Speaker 13: I wasn't expecting it, so there was this huge backlash. 541 00:32:05,040 --> 00:32:08,120 Speaker 13: And when you're going through any change and you haven't 542 00:32:08,240 --> 00:32:11,640 Speaker 13: really involved and included people enough, you could always have backlash. 543 00:32:11,640 --> 00:32:13,760 Speaker 13: If you're ahead of your time, you're trying to force 544 00:32:13,840 --> 00:32:17,880 Speaker 13: something through, particularly when it's unexpected. I mean, nobody likes 545 00:32:17,920 --> 00:32:20,440 Speaker 13: to be perhaps told what to do, so I was 546 00:32:20,480 --> 00:32:24,360 Speaker 13: accused of operating a nanny state so fundamentally trying to 547 00:32:24,400 --> 00:32:27,600 Speaker 13: control everything that everyone was doing. So that was very 548 00:32:27,720 --> 00:32:31,120 Speaker 13: much a backlash on me personally, and people didn't really 549 00:32:31,240 --> 00:32:35,120 Speaker 13: understand why it was necessary because they'd been used to 550 00:32:35,200 --> 00:32:38,000 Speaker 13: it for so long. They've been used to it for centuries. Actually, 551 00:32:38,800 --> 00:32:41,280 Speaker 13: when you're doing culture change, even though culture is so 552 00:32:41,400 --> 00:32:45,000 Speaker 13: difficult to define and so difficult to actually explain and 553 00:32:45,400 --> 00:32:47,960 Speaker 13: tell somebody else about, we are talking about a real 554 00:32:48,440 --> 00:32:50,000 Speaker 13: culture change here. 555 00:32:51,160 --> 00:32:55,080 Speaker 1: Even with some initial backlash, Bill's policy shift did stick, 556 00:32:55,560 --> 00:32:58,760 Speaker 1: and Lloyd says since widened the policy to include anyone 557 00:32:59,000 --> 00:33:00,160 Speaker 1: entering its offices. 558 00:33:01,000 --> 00:33:04,080 Speaker 13: If you go to the bars around the Lloyd's market 559 00:33:04,200 --> 00:33:07,840 Speaker 13: now you'll see a whole host of array of non 560 00:33:07,880 --> 00:33:11,520 Speaker 13: alcoholic drinks for sale. And I remember when I used 561 00:33:11,560 --> 00:33:14,040 Speaker 13: to be a young underwriter. You'd go into the pub, 562 00:33:14,160 --> 00:33:17,120 Speaker 13: the bar, the beer was the cheapest thing. If you 563 00:33:17,160 --> 00:33:21,400 Speaker 13: wanted the equivalent volume in a soft drink, a soft beverage, 564 00:33:21,520 --> 00:33:23,560 Speaker 13: it costs much more than the bear did. It just 565 00:33:23,720 --> 00:33:26,040 Speaker 13: wasn't the dum thing. You're seeing a complete or we 566 00:33:26,160 --> 00:33:29,120 Speaker 13: are feeling now in the London market, the financial market 567 00:33:29,520 --> 00:33:33,520 Speaker 13: a difference, and non alcoholic beverages now are basically not 568 00:33:33,680 --> 00:33:36,360 Speaker 13: being priced out of the market like they used to be. 569 00:33:37,760 --> 00:33:40,160 Speaker 1: And while that culture shift is opening up a market 570 00:33:40,240 --> 00:33:43,160 Speaker 1: for the likes of athletic the ultimate question is how 571 00:33:43,200 --> 00:33:46,920 Speaker 1: far can this trend go? Could the future of alcohol 572 00:33:47,040 --> 00:33:50,680 Speaker 1: be under threat? Could alcohol go the way of cigarettes, 573 00:33:51,120 --> 00:33:54,480 Speaker 1: something seen as ubiquitous a century ago but now a 574 00:33:54,600 --> 00:33:57,240 Speaker 1: rarity on Wall Street or the city of London. 575 00:33:58,120 --> 00:33:59,760 Speaker 10: I don't think it's a flash in the pan. But 576 00:34:00,480 --> 00:34:04,320 Speaker 10: will it go the way of the cigarette and tobacco? 577 00:34:04,920 --> 00:34:07,840 Speaker 10: I don't have an answer to that yet. I strongly 578 00:34:08,000 --> 00:34:11,920 Speaker 10: doubt it, only because the cultural aspect and society, if 579 00:34:11,960 --> 00:34:14,799 Speaker 10: you will, of the consumption of alcohol, right and how 580 00:34:14,840 --> 00:34:17,120 Speaker 10: we drink and where we drink, and all those events 581 00:34:17,120 --> 00:34:20,560 Speaker 10: that are tied in to the consumption of alcohol, and 582 00:34:20,640 --> 00:34:24,200 Speaker 10: frankly all businesses that are tied in or other businesses 583 00:34:24,200 --> 00:34:27,920 Speaker 10: that are tied into the consumption of alcohol, bars, restaurants, hotels, 584 00:34:28,560 --> 00:34:30,879 Speaker 10: I mean, you name it. There are too many, too 585 00:34:30,920 --> 00:34:34,040 Speaker 10: many opportunities. It's too baked into our culture, it's too 586 00:34:34,120 --> 00:34:39,759 Speaker 10: baked into many people's lifestyles to go the way of tobacco. 587 00:34:40,400 --> 00:34:44,000 Speaker 10: That doesn't mean that we're not going to see a 588 00:34:44,040 --> 00:34:46,960 Speaker 10: decrease in consumption as a result of these health concerns. 589 00:34:47,719 --> 00:34:51,200 Speaker 10: I predict that it will have some effect. We will 590 00:34:51,239 --> 00:34:56,520 Speaker 10: see a decrease in some sales of alcoholic beverages, particularly 591 00:34:56,560 --> 00:35:01,560 Speaker 10: those that are perceived as being unhealthy. Popular priced products 592 00:35:02,000 --> 00:35:02,759 Speaker 10: may take a hit. 593 00:35:03,680 --> 00:35:07,440 Speaker 1: If I'm a traditional alcoholic beer producer, should I be 594 00:35:07,480 --> 00:35:09,680 Speaker 1: worried about you? Are you taking away market share from me? 595 00:35:10,719 --> 00:35:10,799 Speaker 4: So? 596 00:35:11,160 --> 00:35:14,279 Speaker 14: I think we have some parallels to other industries, like 597 00:35:14,400 --> 00:35:17,759 Speaker 14: plant based meat, plant based milk, But the big difference is, 598 00:35:17,840 --> 00:35:21,319 Speaker 14: like athletics not trying to bring back prohibition, we're not 599 00:35:21,360 --> 00:35:24,000 Speaker 14: trying to take away anyone's alcohol. I was just a 600 00:35:24,040 --> 00:35:26,839 Speaker 14: consumer who is at bars. I love beer, I love 601 00:35:26,880 --> 00:35:29,319 Speaker 14: good food. I wanted to be in those places and 602 00:35:29,360 --> 00:35:31,440 Speaker 14: there was nothing on the menu. And I think there 603 00:35:31,440 --> 00:35:35,840 Speaker 14: are fifty plus percent of adults in that position. Alcohol 604 00:35:35,880 --> 00:35:37,520 Speaker 14: and beer have been around for five thousand years. I 605 00:35:37,520 --> 00:35:39,239 Speaker 14: don't think it's going away, and it's a big part 606 00:35:39,239 --> 00:35:43,600 Speaker 14: of society and social traditions. However, there's this really exciting 607 00:35:43,680 --> 00:35:47,120 Speaker 14: growth vector of the category that I think shouldn't be ignored. 608 00:35:47,160 --> 00:35:50,319 Speaker 14: It should be embraced and encouraged and fostered. But we're 609 00:35:50,360 --> 00:35:52,719 Speaker 14: definitely not trying to be antagonistic to the industry. We're 610 00:35:52,719 --> 00:35:54,600 Speaker 14: trying to help it grow. 611 00:35:54,960 --> 00:35:57,640 Speaker 1: The US producers about one hundred and seventy five million 612 00:35:57,680 --> 00:36:01,879 Speaker 1: barrels of beer each year. Unlikely Americans will lose their 613 00:36:01,920 --> 00:36:05,560 Speaker 1: taste for beer anytime soon, but they just might revisit 614 00:36:05,640 --> 00:36:12,480 Speaker 1: their taste for alcohol. Cheers, jeers, Thanks, thank you. That 615 00:36:12,520 --> 00:36:14,560 Speaker 1: does it for this episode of Wall Street Week, I'm 616 00:36:14,640 --> 00:36:17,880 Speaker 1: David Weston. This is Bloomberg. Join us next week for 617 00:36:17,960 --> 00:36:34,000 Speaker 1: more stories of capitalism.