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Speaker 3: Hi everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 3: Happy New Year, and as we wrapped up one year
Speaker 3: kicked off another. Some of the main themes for twenty
Speaker 3: twenty six definitely came into focus just in the past
Speaker 3: week or two. A focus on the FED, the conundrum
Speaker 3: of the US consumer, the AI spend and build out,
Speaker 3: and political division, debate and disruption. Yes, sounds a lot
Speaker 3: like how we began twenty twenty five one year ago.
Speaker 4: So this hour we explore the health of the consumer
Speaker 4: and how AI impacting the retail space, and more broadly,
Speaker 4: where the AI spend may take investors in twenty twenty six.
Speaker 4: On politics, we check out what New York City's political
Speaker 4: shift could mean for business in the Big Apple. A
Speaker 4: well known voice to the city's executive suite and member
Speaker 4: of the transition team of the city's new mayor, Zo
Speaker 4: run Mamdani stops by.
Speaker 3: Plus, we've got the story of the Donald Trump meme
Speaker 3: coin launch and how the team behind it made an
Speaker 3: estimated three hundred and fifty million dollars while many other
Speaker 3: investors lost money. Then, in our second hour, in honor
Speaker 3: of New Year celebrations, we kick back and dig into
Speaker 3: some of our favorite conversations of the past year with
Speaker 3: leaders in the wine and spirits businesses.
Speaker 4: Perfect for a little New Year's celebration.
Speaker 3: Yes, I feel like we've earned it this past week.
Speaker 4: Yeah, I think that's fair to say. All that to come.
Speaker 4: We begin, though, with AI affecting a lot in our world,
Speaker 4: with much more forecast to come. We may get a
Speaker 4: peek into that this coming week at CEES. It's the
Speaker 4: annual Consumer Technology Conference and it gets underway in Las
Speaker 4: Vegas this coming week. The biggest names in tech, including Nvidia, AMD, Samsung,
Speaker 4: and more, will make the case for AI their target audience, investors,
Speaker 4: corporate clients, and perhaps just as importantly, ordinary shoppers who've
Speaker 4: yet to be fully sold on the idea of AI
Speaker 4: infused gadgets.
Speaker 3: And speaking of we ordinary shoppers. They we are increasingly
Speaker 3: using AI agents to perform deep discount hunting, real time
Speaker 3: product comparisons, and personalized gift curation that according to data
Speaker 3: from the AI Shopping Optimization platform.
Speaker 4: Novy, retailers including Macy's, Sephora, Target, and Alta, along with
Speaker 4: thousands of other consumer package goods brands, rely on Novy
Speaker 4: to optimize their product data for AI driven discovery. Kimberly
Speaker 4: Shank is the company's CEO. She joined Carol and Bloomberg's.
Speaker 5: Vonnie Quinn Novi's technology.
Speaker 6: We're actually helping retailers and brands increase their sales by
Speaker 6: ensuring their products are found and trusted and then ultimately
Speaker 6: recommended by AI models. So thank CHATCHBT, Gemini and Claude
Speaker 6: and so we do this. We work with leading retailers
Speaker 6: including Macy's, Sephora, Target, Aulta, thousands of CpG brands, and
Speaker 6: they rely on us to optimize their product data for
Speaker 6: AI driven discovery by consumers.
Speaker 3: So when you say that, it's basically a consumer who
Speaker 3: does something and their data is processed and recorded, and
Speaker 3: they're saying, oh, you bought that pair of pants, maybe
Speaker 3: you would like this pair of pants is that is
Speaker 3: it as simple as something like that or is it
Speaker 3: more sophisticated.
Speaker 6: It's a little bit different in terms of consumers now
Speaker 6: flocking to chat shipt or Gemini and asking questions to
Speaker 6: actually do their shopping. So they're outsourcing a lot of
Speaker 6: their research, discount hunting, you know, personalized gift curation to
Speaker 6: the AI agent who's then gooing and finding products and
Speaker 6: recommending it to them based on just questions and prompts.
Speaker 1: So who are your competitors and how do you stand
Speaker 1: out from them?
Speaker 5: It's interesting.
Speaker 6: So there's a couple of different up and coming competitors
Speaker 6: in the tech space who are helping brands and retailers
Speaker 6: stand out in AI shopping. But we also have a
Speaker 6: lot of the older, more traditional data companies because we
Speaker 6: are a data company and we feed data with throw
Speaker 6: our partnerships with our retailer partners. So think about Syndigo
Speaker 6: or Salsify or even Nilsen Iq some of those older
Speaker 6: data partnership players. So a lot of what we're doing
Speaker 6: in these partnerships, and we'll be able to announce some
Speaker 6: of them really soon, is feeding trustworthy, personalized information to
Speaker 6: the models themselves, which is what we have seen at
Speaker 6: NOV to increase your potential as a brand to show
Speaker 6: up in AI shopping. So we found that you know,
Speaker 6: products that have verified trust signals are a selected two
Speaker 6: hundred and fifty nine percent more often than random chance
Speaker 6: to think like certifications, reviews, badges, third party testing. And
Speaker 6: we're feeding this directly to the retailers and the models
Speaker 6: so that they help the brands show up in AI
Speaker 6: recommendations to consumers.
Speaker 3: So one of the things I always think about, Kim
Speaker 3: is like, how much of what is spent on AI
Speaker 3: to kind of attract consumers retailers or folks to retailers. So,
Speaker 3: in other words, that AI driven traffic to retail sites,
Speaker 3: how much of it is productive that results in actually
Speaker 3: a consumer buying something.
Speaker 6: Yeah, that's actually a very interesting question. So we're seeing
Speaker 6: the traffics start to increase. There's actually we saw from
Speaker 6: Adobe Analytics, like we just said, five hundred and twenty
Speaker 6: percent over last year from AI.
Speaker 5: But what we're not sure about yet is conversion.
Speaker 6: And this is just because CHATCHBT, Gemini, none of them
Speaker 6: are publishing the conversion.
Speaker 5: Results, but we at no V.
Speaker 6: What we did see is that chatgbt's shopping research answers
Speaker 6: sent consumers directly to the brand's website eighty six percent
Speaker 6: of the time, which means that the remainder of traffic,
Speaker 6: you know, only about fourteen percent was sent to the
Speaker 6: large retailers like Walmart or Target. And so what brands
Speaker 6: are starting to see is more and more direct consumer
Speaker 6: traffic to their website, which is driving conversion in sales
Speaker 6: for them.
Speaker 3: So would you say, based on the data that you see,
Speaker 3: could you see so much data that the consumer's doing well,
Speaker 3: that retail's doing well? Like how much could you can
Speaker 3: obviously break it down? Probably a lot, So give us
Speaker 3: a little bit of insight as we get ready to
Speaker 3: wrap up this hotiday shopping season.
Speaker 6: Well, so what we're actually seeing is, you know, consumers
Speaker 6: are using AI as their category manager.
Speaker 5: So think of.
Speaker 6: It is we all used to trust the big box
Speaker 6: retailers for their ability to manage each shopping category, do
Speaker 6: the curation for us.
Speaker 5: And that's why you walked into a Target, right.
Speaker 6: They scoured the earth for the best, most compelling products
Speaker 6: and we trusted them to do that. But now, and
Speaker 6: what we say saw play out this holiday season, the
Speaker 6: consumer has shifted their trust to AI to do the
Speaker 6: research and curation for them. So we're seeing strong numbers
Speaker 6: and users using chat to BT and shopping, but it's
Speaker 6: just not quite played out yet and we'll see that
Speaker 6: in twenty twenty six.
Speaker 5: Is where that conversion is going to happen.
Speaker 6: If it's going to happen direct on the brand websites
Speaker 6: are still in retail.
Speaker 1: Kimbridy, just a word on yourselves, how difficult is it
Speaker 1: to raise money?
Speaker 5: What are the key words that.
Speaker 1: Investors are looking for these days? And you know the
Speaker 1: key ideas.
Speaker 5: Yes, AI is definitely the hot topic.
Speaker 6: If you are not involved in AI, doing something future
Speaker 6: with your company that's progressing AI.
Speaker 5: So for example, we're an agentic commerce.
Speaker 6: That is what is hot for investors these days, and
Speaker 6: that's what is raising money and getting the majority of
Speaker 6: the cowpit.
Speaker 5: In Soldier Valley.
Speaker 4: That was Kimberly Shanks, CEO of Novi Vonnie sticking around
Speaker 4: for this next conversation.
Speaker 3: Yeah, that's right, Tim, and it was a chat where
Speaker 3: we explored what may be the next AI trade for investors.
Speaker 3: Chip makers, no doubt have been the biggest winners of
Speaker 3: the artificial intelligence spending frenzy this year and really for
Speaker 3: a couple of years now, and Wall Street will look
Speaker 3: for that momentum to continue for some of the biggest
Speaker 3: names in twenty twenty six.
Speaker 4: And Yet, as Bloomberg's Ian King wrote in this week's
Speaker 4: Tech and Deaf newsletter, quote, watching the less publicized chip
Speaker 4: makers may be a better way of assessing the future
Speaker 4: of artificial intelligence than keeping an eye on market leader
Speaker 4: in Vidia. To talk the AI trade and what we
Speaker 4: may expect this year, Carolyn Vonnie spoke to Bloomberg opinion
Speaker 4: columnist Dave Lee.
Speaker 7: This will be a year when we start to say,
Speaker 7: you know, to what degree is AI actually being used
Speaker 7: in real world applications? How is it changing logistics and
Speaker 7: healthcare and medical.
Speaker 3: Story, how the return on investment?
Speaker 7: Right, well, precisely return on investment, the practical use is
Speaker 7: and that is something that for all the talk in
Speaker 7: our current year about this that's kind of been missing.
Speaker 7: It's all down the road, right And so Ian in
Speaker 7: his PC highlights companies like Texas Instruments and Analog Devices,
Speaker 7: And these are companies that specialize in kind of the
Speaker 7: sort of lesser hailed parts of chip making, things that
Speaker 7: go into cars, things that go into any you know,
Speaker 7: sort of less sophisticated devices than say smartphones and so on.
Speaker 7: They and when it comes to AI, what we're talking
Speaker 7: about there is what we call edge computing, So not
Speaker 7: AI that happens in a big cloud somewhere, but something
Speaker 7: that happens on a device or inside a robot or
Speaker 7: does something that needs an immediate response from AI that
Speaker 7: could be incredibly transformative. And so when investors are looking
Speaker 7: at chip makers that are you know, that are on
Speaker 7: the markets and want to say, well, who might be
Speaker 7: an unsung hero those those companies may may may be
Speaker 7: a clue.
Speaker 3: Dave, how much of two? Maybe in twenty twenty six
Speaker 3: will also be about more productive chips Like I do
Speaker 3: feel like with the energy crunch that folks who are
Speaker 3: looking to build out AI data centers or do AI
Speaker 3: or a large language models that they're looking for tips
Speaker 3: that are much more energy efficient, like how much will
Speaker 3: that be driving kind of the chip trate come twenty
Speaker 3: twenty six? Then who stands out in that or is
Speaker 3: it kind of a moving target?
Speaker 7: Well, it's a moving target in the sense that with
Speaker 7: every new iteration, particularly within video, they say their chips
Speaker 7: get you know, vastly more energy efficient, you can do
Speaker 7: more with fewer of them. The problem is that for
Speaker 7: the companies that want to use these chips is that
Speaker 7: the prices are going down, right, the price these chips
Speaker 7: is still sky high. I think what was an interesting
Speaker 7: story this year was when Google announced it was going
Speaker 7: to be working with Better Now. Their chips aren't quite
Speaker 7: as versatile and videos GPUs, but Google's TPUs they call
Speaker 7: them tensor processing units. They are specialized at doing what
Speaker 7: the companies want right now, which is training AI models,
Speaker 7: running AI models, and Google is saying, well, we can
Speaker 7: do that more cheaply. And so for Google, which has
Speaker 7: Google Cloud as it's obviously its cloud business, that's a
Speaker 7: very attractive thing to companies that think, well we can't
Speaker 7: quite get hold in video chips, let alone afford them.
Speaker 7: So I think the efficiency question is an important one.
Speaker 7: Availability is kind of also the side question.
Speaker 8: Now.
Speaker 3: I am like always shocked when I hear like Google
Speaker 3: and their chips or Apple on the chips, and I
Speaker 3: know this is something that's been happening over the years.
Speaker 3: Are we going to see more of that where companies
Speaker 3: are doing more of this in house? And why are
Speaker 3: they because it's cheaper or what is it?
Speaker 7: It's cheaper. I mean, Apple is an incredible case here
Speaker 7: because when you use an Apple product of you using
Speaker 7: your iPhone, you can throw something from your iPhone to
Speaker 7: your MacBook. You don't even have to have to send it.
Speaker 9: It just happens, right.
Speaker 7: A lot of this is because of them having this
Speaker 7: sort of vertical integration. They designed the chips, they designed
Speaker 7: the hardware and the computers, they designed the software computers.
Speaker 7: It all just works wonderfully. I sound like Steve Jobs
Speaker 7: on stage trying to explain it, but he was right,
Speaker 7: and that is what they achieved.
Speaker 9: Now, if you're an AI.
Speaker 7: Company, open aiy is perhaps the interesting case study here.
Speaker 7: Open ai doesn't design its own chips. It desperately wants to.
Speaker 7: It's entered into a deal with Broadcom to do just that.
Speaker 7: But it's quite a way down the line. And when
Speaker 7: you look at other companies like Google, just as I mentioned,
Speaker 7: and Amazon as well, they're much further along in that process.
Speaker 7: And what it means is they can specialize those chips
Speaker 7: to do exactly what they want. And in Google's case,
Speaker 7: they decided to specialize in AI training and AI inference.
Speaker 7: That helped them do that quickly and do it. Do
Speaker 7: that more efficiently. I think as time goes on with
Speaker 7: the AI industry, having the same virtual integration that Apple
Speaker 7: has enjoyed for consumer devices is going to be just
Speaker 7: as valuable.
Speaker 1: For Dave ab ask you. We were talking about bitcoin
Speaker 1: for literally fifteen years before it took off. We've been
Speaker 1: talking about self driving cars for ten years, and when
Speaker 1: we actually get full self driving it's going to be
Speaker 1: probably another five or more years. Is it going to
Speaker 1: be that long before AI is really.
Speaker 5: That useful to us?
Speaker 9: You know?
Speaker 7: It's funny and one of the things that's because we'll.
Speaker 1: Need another narrative if so, I can't talk about it.
Speaker 7: I think, I mean, isn't it interesting because because the
Speaker 7: people and it's one of those stories that's broken containment.
Speaker 7: I was on a flight a few days ago and
Speaker 7: the people next to me we're talking about the AI bubble,
Speaker 7: and I was hearing it everywhere people, you know, and
Speaker 7: one of the things they say is will it be
Speaker 7: like the dot com crash?
Speaker 8: Right?
Speaker 7: In many respects, it might be. And I think this
Speaker 7: year we're going to see maybe some I p O
Speaker 7: s from Opening Eye Onthropy. They're going to kind of
Speaker 7: almost kick start that talk in a more intense way.
Speaker 7: But then when when I think about the dot com crash,
Speaker 7: the Internet will still revolutionary. So even though there we're
Speaker 7: on it right this moment, so you know that both
Speaker 7: things can be true. We can kind of have we
Speaker 7: need the new narrative, but I also think AI has
Speaker 7: this promise. Now what I what I when I think
Speaker 7: of the dot com bust in particular, is you know,
Speaker 7: it took Amazon years to recover from its crash price.
Speaker 7: It took Cisco up until about a month ago to
Speaker 7: come from its crash price. And I think we may
Speaker 7: see some of the same patterns, but in terms of
Speaker 7: how that shapes throughout this year, I mean, your guess
Speaker 7: is as good as mine.
Speaker 4: That was Bloomberg opinion columnist Dave lee Are Thanks to
Speaker 4: Vini Guinn for joining there as well.
Speaker 3: Coming up, The New York Times has the connector of
Speaker 3: New York's powerful Well now she's part of New York
Speaker 3: City Mayor Zoron Mamdani's transition team.
Speaker 4: Kathy Wilde, outgoing president and CEO of the Partnership for
Speaker 4: New York City, stops by. You're listening to Bloomberg BusinessWeek.
Speaker 4: This is Bloomberg.
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Speaker 3: This past Thursday, New Year's Day marked a new political
Speaker 3: chapter in New York City as Zoron Mamdannie was officially
Speaker 3: inaugurated mayor, marking a significant political shift on the start
Speaker 3: of a new governing era for the city. This was
Speaker 3: an election the whole country was watching.
Speaker 4: Yeah, and I think it's fair to say the country
Speaker 4: is going to be watching the first few months of
Speaker 4: this mayor in office. Bloomberg's reported about how some particularly
Speaker 4: the wealthy, are concerned about some of the priorities for mayor.
Speaker 4: Mom Donnie on that we caught up with someone NYC's
Speaker 4: billionaire whisper.
Speaker 10: Yeah, not so sure.
Speaker 3: She loves the nickname, but people have put it out there.
Speaker 4: Air he did.
Speaker 3: Hey, we were talking about Kathy Wilde.
Speaker 4: It wasn't the first time she's heard no.
Speaker 3: Totally that you knew she She's heard it before. Kathy Wilde,
Speaker 3: she is former President CE of the Partnership for New
Speaker 3: York City. That group represents much of the City's corporate leadership.
Speaker 3: It's a consortium of more than three hundred big companies,
Speaker 3: including banks, law firms, private equity firms, and real estate developers.
Speaker 3: Bloomberg LP, by the way, is a member of the
Speaker 3: Partnership for New York City. Kathy Wilde just left the
Speaker 3: Partnership and is now part of New York City Mayor
Speaker 3: zoron Mumdani's transition team. She spoke with us in mid December.
Speaker 3: Bloomberg New senior reporter Miles Miller also joined us. Why
Speaker 3: did you want to be a part of the transition
Speaker 3: team for the Mayor elect of New York City?
Speaker 11: Well, I think to the point that Ken Griffin of
Speaker 11: Citadel just made, and he's one of our members as well,
Speaker 11: and is a great corporate citizen of New York and Miami.
Speaker 11: He has he made the point about the concern yarns
Speaker 11: about the high expectations that Mayor Elect Mamdani gave to
Speaker 11: his voters, and he, to his credit, brought out one
Speaker 11: hundred and seventy thousand new voters, mostly young people, in
Speaker 11: the primary. The cutoff age for his voter his voter
Speaker 11: support was forty five. So many of us are beyond
Speaker 11: that point and looking around and saying, oh, dear, does
Speaker 11: he have the seasoning to be able to do this?
Speaker 11: And I think that he's got the energy and the intelligence,
Speaker 11: and it's up to all of us who have a
Speaker 11: little more seasoning and to be helpful. And so that's
Speaker 11: why I joined the transition team and was happy to
Speaker 11: do that, and then working on the economic development workforce
Speaker 11: activities there, But in general, I think working with him
Speaker 11: to capture the enthusiasm and the energy. We came out
Speaker 11: of the pandemic very negative and we lost a million jobs,
Speaker 11: and then concerns about the cuts from the federal government
Speaker 11: on entitlement programs, whether it's Medicaid and health insurance, that
Speaker 11: there's the fight going on now. This casts a real
Speaker 11: paull over New York City, which is very dependent on
Speaker 11: those funds.
Speaker 10: So I think that what he's brought.
Speaker 11: Is a positive energy and we ought to capitalize on
Speaker 11: that and hopefully he'll be the best marketer this city
Speaker 11: has ever had.
Speaker 8: Your role on.
Speaker 4: The transition team does it turn into a full time
Speaker 4: job in the Mundani administration.
Speaker 11: I am definitely not at my age looking for a
Speaker 11: full time job.
Speaker 10: I'm trying to get away from a.
Speaker 4: Full time because you're outgoing as the president of the partnership.
Speaker 11: I am outgoing and I do not plan to take
Speaker 11: another job, but I do plan to help the new
Speaker 11: mayor if he wants it.
Speaker 4: So beyond the transition period, you would stay on as
Speaker 4: an advisor.
Speaker 10: Well, I don't know in what capacity.
Speaker 11: As I say I'm there, I'm certainly going to help
Speaker 11: Governor Hokeel deal with her challenges. Where I've worked closely
Speaker 11: with her, She's done a great job, and I think
Speaker 11: we're counting on her to continue to manage New York's
Speaker 11: relationship with Washington and the relationship between the state and
Speaker 11: the city, which.
Speaker 10: Is very important.
Speaker 11: Our affordability problems will not get solved by the city alone.
Speaker 11: This is going to take federal, state, city cooperation, and
Speaker 11: so I think all of us who are committed to
Speaker 11: New York City in the future, we have to be
Speaker 11: thinking of all three levels of government and how we
Speaker 11: work with the leadership at all levels.
Speaker 12: You brought mom Donnie to meet with business leaders on
Speaker 12: several occasions. I wonder if you can talk about what
Speaker 12: his demeanor is in these meetings.
Speaker 9: Right I've talked to bilde.
Speaker 12: Blasio about how he works a room, Holmum, Donnie works
Speaker 12: a room and really gets the business community to be
Speaker 12: comfortable around him, but also talk about some of these
Speaker 12: policy proposals that business leaders wanted. Answers to, what are
Speaker 12: the things that business leaders set to him? Well, that
Speaker 12: sounds like a lofty thing that won't get done, or hey,
Speaker 12: that sounds like something that is much more than we're
Speaker 12: willing to back.
Speaker 11: Well, there's been quite an evolution since he won the primary,
Speaker 11: so in terms of his having a more nuanced position
Speaker 11: on a lot of the policies. You know, during the
Speaker 11: primary campaign there were whole slewer candidates and everything was
Speaker 11: one liners and the social media stuff was one liners
Speaker 11: or you know, show and tell. When you get into
Speaker 11: conversation with CEOs, they want to hear data, they want
Speaker 11: to hear facts. And I have watched him evolve and
Speaker 11: grow over the last eight months where we had conversations
Speaker 11: last week, one on housing, one on childcare, where he
Speaker 11: was there with a pen and a notebook, taking notes,
Speaker 11: asking questions and coming back with very substantive responses. So
Speaker 11: he has absorbed a lot and is now digging deep
Speaker 11: on these issues that you know, Ken Griffin expressed concern
Speaker 11: about the fact that he made a lot, you know,
Speaker 11: raised a lot of expectations, create a lot of idealistic
Speaker 11: notions out housing and childcare and how we can do
Speaker 11: all this for free. I think he's very quickly figuring
Speaker 11: out none of this is free. Raising taxes creates real issues.
Speaker 11: You may raise the rates of taxes, but that may
Speaker 11: not result in more revenues if you scare people away,
Speaker 11: or if you scare companies away, or as we've seen lately,
Speaker 11: we've seen a real threat to jobs in New York
Speaker 11: for the first time, the first time in my experience
Speaker 11: over fifty years, are seeing a decline in the number
Speaker 11: of jobs in our financial services industry. Scary thing. That's
Speaker 11: forty percent of our state income tax revenues. We don't
Speaker 11: I mean, these are you know, we've got to pay attention,
Speaker 11: and I think he gets that. But we've got to
Speaker 11: be at the table discussing these issues and helping figure
Speaker 11: out how to employers help solve the childcare problem.
Speaker 3: Kathy, you know, one of the things I think about,
Speaker 3: and I remember, you know, being at Milken years ago
Speaker 3: and talking with very wealthy investors who said, yeah, it's
Speaker 3: about time we pay more taxes. So what is the balance?
Speaker 3: And I am curious among those folks that you talk
Speaker 3: to who are very wealthy, and a lot of times
Speaker 3: their wealth is not an income, it's assets and it's
Speaker 3: investment gained. What do they think, though, should be maybe
Speaker 3: more of their contribution. And I know they often contribute
Speaker 3: in philanthropy and so on. I know that, but I'm
Speaker 3: just curious, what is the balance of willing to pay
Speaker 3: more when again, I've had side conversations with folks are
Speaker 3: surprised that they aren't pay more in taxes.
Speaker 11: So what I've found and for somebody who's upper income
Speaker 11: earned income in New York, which is the you know,
Speaker 11: our biggest tax payers, we're paying fifty five percent of
Speaker 11: our income to the federal, state and city government with
Speaker 11: you all in so we're paying more more than half
Speaker 11: my paycheck goes to the federal government. So it's not
Speaker 11: like we're getting away with something. For the very wealthy
Speaker 11: who are capital gains, et cetera. The big problem there
Speaker 11: is if they move their legal residents out of New
Speaker 11: York City, get we don't.
Speaker 10: Share or get taxes.
Speaker 11: They aren't taxed here on the basis of their global income,
Speaker 11: and so we may get their a piece of their paycheck.
Speaker 10: But not their wealth. And that's a big question. It is.
Speaker 11: But what I found is over many years, when business
Speaker 11: leaders and the big taxpayers are at the table and
Speaker 11: they see that number one government is doing what they
Speaker 11: can to figure out, how do we offer the most efficient,
Speaker 11: the most effective services at the lowest cost possible. How
Speaker 11: do we make government more fishient. On the one hand,
Speaker 11: then so then you begin to narrow, So what's the
Speaker 11: delta in terms of what what do we need to
Speaker 11: raise revenues for. So for example, when Dick Ravage in
Speaker 11: two thousand and seven, for Governor Patterson led the effort
Speaker 11: to figure out how are we going to pay to
Speaker 11: upgrade our subways which were falling apart, we supported, and
Speaker 11: the business community supported, creating a payroll mobility tax where
Speaker 11: a portion of payrolls of corporations employers who were in
Speaker 11: the metropolitan region would go to that eighty two percent
Speaker 11: of the employees who work for our companies based in
Speaker 11: Manhattan take the public transit to get here. That was
Speaker 11: something everybody signed off on. We supported. We supported an
Speaker 11: increase in that tax twice. Same thing with congestion pricing,
Speaker 11: we supported congestion pricing. Obviously a user fee where you
Speaker 11: get something reduce congestion more time in.
Speaker 10: Your day, is easier to sell. So it is.
Speaker 11: And actually, when Mike Bloomberg was elected mayor right after
Speaker 11: nine to eleven, the city had to raise real estate
Speaker 11: taxes in order to rebuild and recover from the nine
Speaker 11: to eleven shock. We supported that eighteen percent tax increase
Speaker 11: in real estate taxes. So it's not that we're anti
Speaker 11: all taxes. Is government doing what they can to keep
Speaker 11: costs down, to be responsible in what they're spending. And
Speaker 11: then what is the contribution and how do we make
Speaker 11: it that makes the most sense, gets the most bang
Speaker 11: for the buck.
Speaker 4: Just very briefly, because you spent such a big part
Speaker 4: of your career working on affordable housing, I'm wondering if
Speaker 4: the mayor is sticking to freezing rent as his solution
Speaker 4: for affordability, because not one person that we have spoken
Speaker 4: to over the last few months thinks that not increasing
Speaker 4: supply and rather freezing rent is the right way.
Speaker 9: To approach the affordability crisis with housing.
Speaker 11: Well, the new mayor is very well aware that those
Speaker 11: are not mutually exclusive options and that if there's no
Speaker 11: economic return, nobody's going to build housing. He's figured that out.
Speaker 11: So he has He has said really since pre primary
Speaker 11: that he understood the private sector had an important role
Speaker 11: in the supply side, and he was going to work
Speaker 11: on that. So I think that again, his view is
Speaker 11: much more nuanced when he says now when he talks
Speaker 11: about freezing the rent, he says, and one thing that'll
Speaker 11: enable us to do that is if we do reduce
Speaker 11: property taxes on rent stabilized regulated buildings.
Speaker 10: So he gets it. He can add and subtract.
Speaker 3: So can you come back?
Speaker 4: I said, you said, we had an hour of an
Speaker 4: hour hours worth of question barely scratched the.
Speaker 3: Service, but we still appreciate Kathy. Thank you, Good luck,
Speaker 3: Thank luck having Kathy Wilde, president and CEO at going
Speaker 3: president and CEO of the Partnership for New York City,
Speaker 3: part of the transition team of the New York City
Speaker 3: mayor elect, and of course, our Bloomberg News senior reporter,
Speaker 3: Miles Miller.
Speaker 2: This is the Bloomberg Business Week Daily podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
Speaker 2: Play and the Android Auto. With the Bloomberg Business app.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: It was billed as just another meme coin, a Trump
Speaker 3: branded token based on hype in a political spectacle.
Speaker 4: But the rise of the trump Coin tells a much
Speaker 4: bigger story. A glitzy ballroom, anonymous wallets, lightning fast trades,
Speaker 4: and then came the crash that caused hundreds of thousands
Speaker 4: of people to lose money, except most notably the Trump
Speaker 4: team that launched it.
Speaker 3: Writing about it for Bloomberg Business Week, Zeke Fox and
Speaker 3: Max Abelson. Zeke is Bloomberg News investigations reporter and author
Speaker 3: of Number Go Up. Inside Crypto's Wild Rise and Staggering Fall.
Speaker 3: Max Abelson is Bloomberg News Finance reporter.
Speaker 4: We just got to start with some basics here before
Speaker 4: we get into the shadowy web that spans like cafes
Speaker 4: in New York City and Singapore, which you guys travel,
Speaker 4: which you Zeke travel to Singapore. Memecoin been arount for
Speaker 4: more than a decade. Started with the Doggie But what
Speaker 4: are they?
Speaker 13: Yeah, So the first one was doge Coin. It was
Speaker 13: kind of intended as a joke, like a parody. This
Speaker 13: guy he liked crypto and he was like, why are
Speaker 13: people making these dumb cryptocurrencies. I'll make the dumbest one
Speaker 13: I can think of, And then it kind of took off.
Speaker 13: But in the last couple of years there's been this
Speaker 13: huge boom in meme coins. It's kind of like this
Speaker 13: trend where people just pick anything that's in the news,
Speaker 13: say a little like six seven, like the joke the
Speaker 13: kids like, they'll slap it on a coin. The coin
Speaker 13: transparently doesn't do anything, but people just sort of gamble
Speaker 13: on the idea of it attracting attention and other people
Speaker 13: jumping in. They all sort of follow this pattern of
Speaker 13: going up and then crashing, and you're these gamblers are
Speaker 13: looking for the next one.
Speaker 4: So Max, let's let's go back to January of this year,
Speaker 4: just a few days before the president is inaugurated for
Speaker 4: his second term.
Speaker 14: What happens, Well, you know, there was so much going
Speaker 14: on that week and that it's easy to forget, but
Speaker 14: there was like an actual kind of crypto ball, and
Speaker 14: that might not have been like a real official title,
Speaker 14: but it was certainly this big crypto ball and it
Speaker 14: costs a lot of money, and it was like, it
Speaker 14: was like twenty five hundred bucks to get in, and
Speaker 14: we spoke to people who are there. Actually, I think
Speaker 14: maybe one of my favorite interviews this year was with
Speaker 14: George Santos, the disgraced congressman. He was honestly a delight
Speaker 14: to interview. I have to say, he was there. He
Speaker 14: talked about how he skipped the line because he was like,
Speaker 14: I'm George Santos, Like George Santos doesn't wait onlines, and he.
Speaker 3: Tim kind of says that too occasionally.
Speaker 14: You know what Tim Tim would, Yeah, we zeke and
Speaker 14: I wait online. So they go into the Crypto ball
Speaker 14: So it's a room full and this is the Melon
Speaker 14: Auditorium in Washington by the Washington Mall. Is if it
Speaker 14: is a fancy space and it's a room full of
Speaker 14: of course, you know, crypto people, crypto investors, crypto executives, influencers,
Speaker 14: and phones start going off. At one point I think
Speaker 14: it's just before Snoop Dogg is about to perform, I believe,
Speaker 14: and they find out that Donald Trump has launched a
Speaker 14: mean coin. And I think one of the first thoughts
Speaker 14: on people's minds was like, this can't be real. And
Speaker 14: the thing is it was real. And one thing that
Speaker 14: I just loved about working with Zeke is that he
Speaker 14: explains in our Business Week story sort of the shades
Speaker 14: of realness. On the one hand, it really was true,
Speaker 14: Donald Trump really did launch a meme coin, right as
Speaker 14: he was on the edge of becoming, you know, the
Speaker 14: most important person in the entire universe. But on the
Speaker 14: other hand, it's it's lacking in a certain kind of
Speaker 14: realness as we usually think about assets, A meme coin
Speaker 14: has a certain kind of like existential nothingness, you know,
Speaker 14: it's it's sort of it's it's vacant by design. It
Speaker 14: doesn't give you rights to future profits. It basically represents
Speaker 14: nothing but itself. And it's investigators, excuse me, it's investors,
Speaker 14: as Zeke and I wrote, are basically investing in sort
Speaker 14: of nothing but speculation. It's speculating in speculation itself, as
Speaker 14: I believe this man said.
Speaker 3: And because of that, nobody makes money. Right, So it's
Speaker 3: kind of like sarcasm.
Speaker 13: I mean, it's kind of like a it's a zero
Speaker 13: sum game, right, Like some people are going to get
Speaker 13: in early and make money. Other people are going to
Speaker 13: get in late. They're going to be left holding the bag,
Speaker 13: except that whoever created the coin, their goal is obviously
Speaker 13: to get paid, and they're going to suck out a
Speaker 13: lot of like the total amount that's been gambled on
Speaker 13: this coin.
Speaker 4: You guys write a little bit about pump and dump
Speaker 4: schemes like Wolf of Wall Street boiler room style in
Speaker 4: the piece, and you draw distinction between what's happening with
Speaker 4: meme coins from a regulatory perspective versus what would happen
Speaker 4: with a traditional stock penny stock.
Speaker 8: Talk about that a little bit, Zeke.
Speaker 13: Yeah, I mean, if you think about what was happening
Speaker 13: at Stratton Oakmont, like the boiler room depicted in the
Speaker 13: Wolf of Wall Street. You've got all these salesmen who
Speaker 13: are on the phone calling you know, retired dentists and
Speaker 13: being like, you got to get in on this hot
Speaker 13: new gold mine stock, and this would drive the stock up.
Speaker 13: And then eventually whoever had like created this promotion would
Speaker 13: secretly have holdings of it they dump, the stock would
Speaker 13: go back down, but the sale, the people who bought
Speaker 13: these stocks were had to be tricked. You had to
Speaker 13: convince them like this was a pretty cool gold mine
Speaker 13: that should invest in with meme coins. The people who
Speaker 13: are gambling on them. Basically know the drill, and they
Speaker 13: know that whoever creates the coin is going to want
Speaker 13: to dump once it gets going, and that they are
Speaker 13: like seeking out this pump and dump game.
Speaker 4: Then the SEC does not look favorably on the equity,
Speaker 4: the stock side of this, But what about the meme
Speaker 4: coin side of this?
Speaker 13: So the meme coins were in a pretty like gray area.
Speaker 13: No one really knew what to make of it. There
Speaker 13: hadn't regulators, hadn't really taken any action. It'd been weird
Speaker 13: enough that most of the better celebrities had stayed away
Speaker 13: before Trump. The most famous was probably Caitlyn Jenner, but.
Speaker 3: I forgot about that one.
Speaker 13: Three weeks after Trump's inauguration, after he had created his
Speaker 13: own meme coin, the Trump administration's Securities and Exchange Commission
Speaker 13: came out and said, Hey, you know what, these meme coins.
Speaker 13: They're fine, not securities, not our business. That wouldn't stop
Speaker 13: maybe someone else from regulating them, but no one has
Speaker 13: stepped up at this point.
Speaker 3: So let's talk about the money. This is an administration.
Speaker 3: We talk about it being transactional. We talk about some
Speaker 3: say grift going on, and so on and so forth.
Speaker 10: There's a lot that goes back.
Speaker 3: And forth, but this is made right the president and
Speaker 3: his family some real money, hundreds of millions of dollars.
Speaker 15: Yea.
Speaker 13: Yeah, so Trump made about three hundred million from launching
Speaker 13: his meme coin, according to estimates from crypto tracing firms,
Speaker 13: and then that same weekend, Mulania launched her own meme
Speaker 13: coin and likely create collected another forty or fifty million.
Speaker 13: I mean, this is like the easiest money they've ever
Speaker 13: made for like a couple tweets.
Speaker 4: And now those of the as we mentioned, those cryptocurrencies
Speaker 4: have plummeted more than ninety percent from their peak. So Max,
Speaker 4: let's get into a little bit of the shadowy global
Speaker 4: network that helped the president make these meme coins. Were
Speaker 4: we look at the blockchain as this entity that kind
Speaker 4: of allows us to see who does what, But it
Speaker 4: was kind of a challenge to get to the bottom
Speaker 4: of who actually helped the president. Who are some of
Speaker 4: the characters that you and Zeke found.
Speaker 14: Yeah, honestly, it would be so much cooler if we
Speaker 14: could sit here and look at you and be like,
Speaker 14: we honestly did crack this, and there's like no mystery
Speaker 14: left and we can explain it all. The truth is,
Speaker 14: I cannot look you in the eye and say that
Speaker 14: in good faith does.
Speaker 4: Not mean you did not meet some people along the way.
Speaker 16: We did.
Speaker 14: It's all about the friends you make along the way.
Speaker 14: That's why we get to journalism. And you know, I
Speaker 14: have to say for viewers who haven't ready yet, you know,
Speaker 14: my co writer on this story wrote a book called
Speaker 14: Number Go Up that I mean, it's certainly the funniest
Speaker 14: and probably realistically the best book about the crypto industry
Speaker 14: that exists. And so I felt a little bit by comparison,
Speaker 14: kind of like a babe in the woods as we
Speaker 14: started this, because I was working with someone who really
Speaker 14: really understands how this works. But he was very generous
Speaker 14: with me, and we kind of took it a step
Speaker 14: by the time, a step at a time. I think
Speaker 14: the first thing we did is to meet someone who
Speaker 14: you'd really want to stop it and talk to you
Speaker 14: if you're trying to understand meme coins, and that is
Speaker 14: one of the creators of something called pump Fun And
Speaker 14: this young man and his name is Alon Colin.
Speaker 17: I mean, I'm in my forties.
Speaker 14: I believe Allen was like twenty one when we met
Speaker 14: him maybe twenty twenty two. He is part of this
Speaker 14: small group that has launched this marketplace for meme coins
Speaker 14: where if you want, like right now, you could go
Speaker 14: and start the Carol coin and you could do it
Speaker 14: with how long.
Speaker 16: Would it take a few minutes.
Speaker 8: Like ten seconds.
Speaker 17: And it's this.
Speaker 14: Remarkable, slightly gross, certainly immature marketplace because the whole idea
Speaker 14: that I think if you were here, he would say
Speaker 14: that the grossness is it's not a bug. It's a
Speaker 14: feature that people get to do whatever they want, and
Speaker 14: that whatever people find funny, whatever grabs people attention, it
Speaker 14: can be commodified and it can be sold. Now, to
Speaker 14: be fair, that is not where the Trump point launched.
Speaker 14: So after we sort of understood pump on, then we
Speaker 14: had to go sort of make a slight pivot.
Speaker 13: Yeah, so we got nobody. Last you said, nobody took
Speaker 13: responsibility for helping the Trumps. Was just a little weird.
Speaker 13: But a clue emerged a few weeks later when another
Speaker 13: president launched a meme coin. This was Javier Marlay, the
Speaker 13: president of Argentina.
Speaker 8: Of Chainsaw fame.
Speaker 13: Yeah, and it's kind of weird in meme coins everyone, So,
Speaker 13: like I said, everyone knows the drill, but still they
Speaker 13: have their own.
Speaker 8: Code of ethics.
Speaker 13: And the Malay coin really set people off because it crashed.
Speaker 13: Instead of waiting like a couple of days to crash,
Speaker 13: it crashed within hours and Malay, who had promoted it
Speaker 13: with a tweet, deleted his tweet, which was just not
Speaker 13: seen as fair play. And after this Malay coin debacle,
Speaker 13: this previously unknown crypto bro named Hayden Davis came forward.
Speaker 13: He's twenty eight years old, he'd kind he'd been in
Speaker 13: involved in NFTs, he'd sort of but was not like
Speaker 13: a well known guy. And he said, I am Javier
Speaker 13: Malay's advisor. We were creating this coin for the people
Speaker 13: of Argentina. And then he gave a series of uh
Speaker 13: increasingly ill advised interviews in which he talked about how
Speaker 13: meme coins are rigged, how they're sort of insider trading
Speaker 13: of a sort within meme coins, and then he said
Speaker 13: that he had helped uh Milania Trump with with her coin.
Speaker 8: And you know, I.
Speaker 13: Thought to myself, like, could the could this be? Is
Speaker 13: this really? Is this really true? How did and how
Speaker 13: did he connect with Milania? And it turned out that
Speaker 13: luckily for us, he had been quite a boastful guy
Speaker 13: who loved to text like crazy stuff to his friends,
Speaker 13: and we were able to review some messages that he'd
Speaker 13: sent to associates where he clearly did know that Milania's
Speaker 13: coin was coming, like suggesting this was true, and where
Speaker 13: he even hinted that maybe he'd been involved in Trump's coin.
Speaker 4: We got to leave it there, guys, Zeke Max, check
Speaker 4: out the story. It's the Bloomberg A big take. You
Speaker 4: can find it at the Bloomberg terminal. We just scratched
Speaker 4: the service.
Speaker 3: We know you want more.
Speaker 9: This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 3: Let me a hend our second hour of our first
Speaker 3: weekend edition of Bloomberg Business Week of twenty twenty six.
Speaker 3: It's an hour dedicated to something we like to feature
Speaker 3: from time to time here on Bloomberg Business Week. And
Speaker 3: we were talking about the wine and spirits industry, from
Speaker 3: market trends to the story behind the label. And yeah,
Speaker 3: sometimes we do a little sampling.
Speaker 4: This hour, the perfect wine pairing for your next dinner
Speaker 4: party with the CEO of Duckhorn tapping into a mega
Speaker 4: wine experiences in Uruguay and regenerative farming techniques in wine
Speaker 4: making with the CEO of Maison.
Speaker 3: Mirabau, plus the business of bourbon with the retired Kernel
Speaker 3: behind Lofted Spirits first up this hour. It's not been
Speaker 3: an easy year though for those in the business of
Speaker 3: selling alcohol, thanks to a consumer pullback, changing tastes and trends,
Speaker 3: high costs, supply chain disruptions, and of yes, tariff uncertainty.
Speaker 4: What used to sell itself now needs a sharper story
Speaker 4: and an even sharper strategy. Robert Hanson is CEO of
Speaker 4: the Duckhorn Portfolio. It's a premium American wine company known
Speaker 4: for high end Napa Valley Coastal California wines. He discussed
Speaker 4: his strategy along with a wine tasting with a fun
Speaker 4: trio Bloomberg's Alexis, Christopherus, Christina Quino, and Bailey Lipschultz, who
Speaker 4: filled in for us while we were.
Speaker 18: Out Just for context. So Dughorn Portfolio is the twentieth
Speaker 18: largest wine marketer in the US by volume two point
Speaker 18: eight million cases this year, so not a small place.
Speaker 18: And you know, you know some of their brands, Yards,
Speaker 18: Golden Eye, Paradox, Migration. Oh, you're pouring wine for us.
Speaker 18: Now what are we what are we having?
Speaker 5: Baileies normally in equities.
Speaker 19: Yeah, So this is the Decoy Featherweight caps off twenty
Speaker 19: twenty three. Low Caw we were talking about it in
Speaker 19: the green room, so low Caw low alc. Kind of
Speaker 19: catering to the younger generation.
Speaker 20: Sure, first, thanks for having me, you know, excited to
Speaker 20: be here on your Netflix and.
Speaker 8: Chill day, I guess.
Speaker 9: Yeah.
Speaker 8: We're we're going to taste first.
Speaker 20: As we talk, We're going to taste the Decoy Featherweight
Speaker 20: Cabernet Sevignon. It's the recent launch, most recent innovation in
Speaker 20: our Decoy Featherweight offering, which is the largest and fastest
Speaker 20: growing low lower alcohol, lower calorie offering within the wine category.
Speaker 20: The cabernet is really unique. It's about nine percent alcohol,
Speaker 20: about eighty calories per serving. That's about a third less
Speaker 20: alcohol than a typical cabernet and about fifty percent of calories.
Speaker 20: It's tough to achieve a great tasting cabernet. Somnil that's
Speaker 20: low Alcan locale. So give it a taste and tell
Speaker 20: us what you think.
Speaker 18: It's delicious and you know what, I don't need to
Speaker 18: necessarily have it with food. It's just like good straight
Speaker 18: up on its own.
Speaker 20: Yeah, it's it's addressing. You know, there's a lot that's
Speaker 20: been reported about the dislocation of the wine market. You know,
Speaker 20: we're excited about what we've achieved this year. We're excited
Speaker 20: about twenty twenty six. Twenty twenty six is the fiftieth
Speaker 20: anniversary of the founding of the company. Dan and Margaret
Speaker 20: Duckhorn founded the company fifty years ago on Murlau, which
Speaker 20: we're going to taste as well at the different a
Speaker 20: different end of the market that when we just tasted
Speaker 20: about twenty five dollars a bottle, the Murleau will taste
Speaker 20: is one of our high end luxury estate Murlau's. But
Speaker 20: we're excited about what's happening. This wine we just tasted
Speaker 20: is leaning into one of the trends that's impacting, especially
Speaker 20: younger consumers consumption in the category. All younger consumers are
Speaker 20: looking for value. Pricing matters a lot they're looking for.
Speaker 20: They're very conscious about consuming things that are better for them,
Speaker 20: so having a better mint, introduction and innovation in the.
Speaker 8: Category is important.
Speaker 20: We're about to celebrate the first year anniversary of taking
Speaker 20: the company private with Duckcorn, with Butterfly Equity our sponsor.
Speaker 20: They only invest in food and beverage. They understand craftsmanship.
Speaker 20: You know, if you're going to put it across your lips,
Speaker 20: it's got a taste yummy. And we've got a strategy
Speaker 20: of competing in the best neighborhood, the best street in
Speaker 20: the neighborhood, in the best house on the street.
Speaker 18: So that was about a year ago that they came in.
Speaker 18: So and this company has been has been public, has
Speaker 18: been taken private a couple of times, a few times.
Speaker 18: What changes have happened? I mean you actually started with
Speaker 18: the company earlier this year February, so, but what changes
Speaker 18: have been made now that this private equity company has
Speaker 18: come in and just sees this past year.
Speaker 20: Yeah, well, look, we for the reasons I just explained,
Speaker 20: we think Butterfly Equity is a great sponsor, a great
Speaker 20: partner for us. What I would say is one of
Speaker 20: the superpowers of the company I respected when I first
Speaker 20: got to know it is the agility, the ability to
Speaker 20: innovate at the pace of the consumer marketplace, and the
Speaker 20: market is demanding, and consumers expect you to meet them
Speaker 20: on their place field, on their terms. That's how Butterfly
Speaker 20: thinks what's changed. I would say the agility is the
Speaker 20: pace of the agility of the company has picked up.
Speaker 20: We've made some significant progress in a very short period
Speaker 20: of time. If I reflect upon the analogy I just provided,
Speaker 20: neighborhood street house, we compete in the fifteen and above
Speaker 20: price segment. The market's been dislocated a bit. We can
Speaker 20: talk about that, but that's been driven by below fifteen
Speaker 20: and especially below ten, so we compete in the right neighborhood.
Speaker 20: One of the best examples of what's changed, we did
Speaker 20: a portfolio construction exercise over the past nine months.
Speaker 8: Where we looked at our whole portfolio.
Speaker 20: Eleven brands we've concentrated on seven and four are really
Speaker 20: high growth core brands because we're winning with fewer things
Speaker 20: and focusing on the winners that matter, big clear lanes
Speaker 20: of competition, exceptional lines that compete against the best in
Speaker 20: the category, and we've actually increased our addressable market by
Speaker 20: almost two billion dollars from two billion to four billion
Speaker 20: in that exercise and then the proofs in the putting
Speaker 20: so Best House on the Street. The team, I'm really
Speaker 20: proud of them, have grown our market share from ten
Speaker 20: point four percent to eleven point seven percent during our
Speaker 20: whole period. So it's been a busy, busy year. We've
Speaker 20: got a lot of air to travel. You'll hear Duck analogies.
Speaker 20: We don't talk ground.
Speaker 8: We talk to air.
Speaker 20: You'll hear Duck analogies when we talk a lot. But
Speaker 20: we have a lot of air to cover. But we're
Speaker 20: excited about what we've accomplished so far.
Speaker 19: I just want to ask before I get ready to
Speaker 19: pour them or low when you think about kind of
Speaker 19: the recovery we have so much.
Speaker 8: Dailey likes this part. He likes more this is the best.
Speaker 19: But when you think about kind of the state of
Speaker 19: the economy, it does seem like the upper five to
Speaker 19: ten percent of the US consumer is better off than
Speaker 19: really the bottom ninety percent. Thinking about higher price wine,
Speaker 19: better wine. As you mentioned best house on the best block,
Speaker 19: how do you think about attacking that consumer and whether
Speaker 19: you're seeing growth from them.
Speaker 20: Yeah, great question, Bayway. We're very conscious of it is
Speaker 20: to remain a premium, fine and luxury still wine competitor. However,
Speaker 20: and I'll give you two examples, specifically on price, We've
Speaker 20: talked about the better example, and then I want to
Speaker 20: talk to you about consumer experiences with the focus, especially
Speaker 20: for younger consumers, on purchasing power. There's a little nervousness
Speaker 20: around the social, political, and kind of economic environment. We're
Speaker 20: conscious of that. So two ways we've reacted. One, we
Speaker 20: introduced an amazing new brand called green Wing, which is
Speaker 20: a fifteen to twenty dollars a bottle winery brand with
Speaker 20: amazing cabernet from Washington and a Pina noir and pinogrigio
Speaker 20: from Willammett Valley and organ that fifteen to twenty dollars
Speaker 20: bottle of wine can translate into a twelve dollars by
Speaker 20: the glass program if you're at a restaurant. A lot
Speaker 20: of younger consumers say they get more value out of
Speaker 20: spirits or other categories. This is providing them an entry
Speaker 20: point into the wine category, kind of not telling them
Speaker 20: what to drink. That inviting them into our portfolio into
Speaker 20: the wine category based on value. And on the higher
Speaker 20: end of the market, we had our We made a
Speaker 20: price adjustment on our Duckcorn vineyards Knap and Valley Cabernet.
Speaker 20: It was it was priced at seventy two dollars. We
Speaker 20: took the price down to sixty because it's a larger
Speaker 20: addressable market and frankly even for a fine wine consumer
Speaker 20: that can buy wine at that level, recognizing we could
Speaker 20: produce the same or better quality, maintain or really we've
Speaker 20: got a structurally advantaged operating model with great margins. We
Speaker 20: could maintain our margins and put out a more sharp
Speaker 20: price point for them. We're just meeting people on their
Speaker 20: terms in this economic environment and growing as a result.
Speaker 18: If you heard the pouring behind us and the popcorn
Speaker 18: the core popping is because we are having some Duckhorn
Speaker 18: portfolio wine.
Speaker 21: Right.
Speaker 19: This is what we're about to taste is the twenty
Speaker 19: two Murleau. And remind me, why is this a particularly
Speaker 19: nice Merlow?
Speaker 20: This is an exceptional Marlo. Now I'm going to tell
Speaker 20: you I've got a personal bias. I'm a Merleau fan.
Speaker 20: Not everyone can remember, but I remember Sideways I was
Speaker 20: gonna make the jew I filmed from twenty years ago
Speaker 20: that said you shouldn't drink Brlow completely wrong.
Speaker 8: Murrellau, in my opinion, is the best varietal.
Speaker 10: Loved that movie.
Speaker 20: Love the movie, didn't love what it did. For Merlou
Speaker 20: Murlau is the easiest drinking wine. Super great to pair
Speaker 20: with lots of different food choices. It's an easy drinking Barrietal.
Speaker 20: This wine is my favorite in our entire portfolio for
Speaker 20: two reasons. One, Dan and Margaret Duckhorn, who respected nature,
Speaker 20: the craft of wine making and hospitality, introduced this wine
Speaker 20: as their first introduction fifty years ago. And we're celebrating
Speaker 20: our fiftieth anniversary next year and feel really good about
Speaker 20: the momentum of the company. It's an estate wine. It's
Speaker 20: a blend of ninety two percent me low, seven percent
Speaker 20: cabin one percent Cabernet franc It is a luxury wine,
Speaker 20: so it trays for between one hundred and twenty and
Speaker 20: one hundred and fifty dollars a bottle. But it's a
Speaker 20: beautiful wine, and I encourage all of your audience.
Speaker 8: It is a great right right here.
Speaker 22: Well our for audiences who are just joining us right now.
Speaker 22: We are here in the studio talking line and drinking
Speaker 22: wine with our guests.
Speaker 10: Here.
Speaker 22: Robert Hansen CEO of the Duckcorn portfolio, as well as
Speaker 22: Bluer News equities reporter Bailey Lipshaltz. So, Robert, you know,
Speaker 22: I want to touch on what you said earlier, right
Speaker 22: about the process of kind of going public, then private
Speaker 22: and then back again. And so you know, you mentioned
Speaker 22: agility was one thing that really kind of was sustained
Speaker 22: in the company throughout those changes, and you know, talk
Speaker 22: to us about how that's serving you now that the
Speaker 22: market is changing so rapidly. We have, on the one hand,
Speaker 22: gen Z drinkers who just consume less alcohol overall, and
Speaker 22: it seems like that's something that is maybe permeating throughout
Speaker 22: the broader American public.
Speaker 15: Right.
Speaker 22: I think a Gallup was saying that just fifty four
Speaker 22: percent of Americans in general say they drink alcohol.
Speaker 5: That's a right.
Speaker 22: How is the company thinking about these kind of structural
Speaker 22: changes among consumers?
Speaker 20: Yeah, well, I meant great question. And as I mentioned earlier,
Speaker 20: it's true as reported that the market's been dislocated. That
Speaker 20: being said, we compete in the segment of the market
Speaker 20: that has tailwinds fifteen and above, and we're segmented from
Speaker 20: fifteen dollars a bottle up to three hundred dollars a bottle.
Speaker 8: So in still Wine, we are.
Speaker 20: The best house on the street, and we're growing because
Speaker 20: we're competing from fifteen to three hundred. We've got a
Speaker 20: segmentation of our portfolio that meets most consumers' needs. More specifically, though,
Speaker 20: you know, a lot's been written about the betterment trend,
Speaker 20: about drinking less but better quality. That is the focus
Speaker 20: of this portfolio. So you ask the question, what's different.
Speaker 20: We've got our eye on the horizon. We're very much
Speaker 20: focused on meeting the consumer on their playing field, on
Speaker 20: their terms. They want to buy great value, they want
Speaker 20: to buy great quality, they want lower alcohol content in
Speaker 20: some cases, want to drink less but better quality. Our
Speaker 20: whole portfolio is about that. We encourage our consumers to
Speaker 20: drink you know, less but better quality, drink responsibly. We're
Speaker 20: meeting the consumer on their playing field.
Speaker 9: There's kind of.
Speaker 20: Three trends that we've addressed, value, betterment, and then the
Speaker 20: consumer experience of consuming wine.
Speaker 8: Here's one point I'll make.
Speaker 20: Though wine's been around for six millennia, it's a community
Speaker 20: based product right there, all right.
Speaker 18: Bloomberg's Robert Hansen of Duckcorn portfolio.
Speaker 2: This is the Bloomberg Business Week Daily podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
Speaker 2: Play and Android Auto with the Bloomberg Business App. You
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Speaker 2: New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 9: I know you are always ready.
Speaker 3: We're ready, always ready.
Speaker 4: So our Bloomberg Purceeds team out with a last minute
Speaker 4: gift guide for whiskey, wine and spirits lovers, and it
Speaker 4: states something I think we can all agree with, Carol,
Speaker 4: an unexpected bottle of booze is allways welcome around the holidays.
Speaker 3: Yes, indeed, retired, We're expected.
Speaker 9: We're expected.
Speaker 3: I didn't expect that from you, retired. Colonel Mark Erin
Speaker 3: is the CEO of Lofted Spirits. It's the parent company
Speaker 3: of Bardstown Bourbon and Green River Distilling Company. It's one
Speaker 3: of the largest distillers in the United States, and he
Speaker 3: joins us here in the Bloomberg Interactive Brokers studio along
Speaker 3: with David Weston, who is, of course the host of
Speaker 3: Wall Street Week and maybe partakes in bourbon. Everyone's great
Speaker 3: to have you both here with us. Mark tell us
Speaker 3: about kind of your journey. I want to just start there.
Speaker 3: Because you served in the US Army over twenty five years.
Speaker 3: You're ultimately Chief of Staff of the US Army Special
Speaker 3: Operations Command. How do you go from there? And there's
Speaker 3: a lot of stuff in between as well, but how
Speaker 3: do you then get to hear?
Speaker 15: Yeah, so walk and relationships. Bottom line, I've had great
Speaker 15: luck throughout my life. I've been a sports enthusiast all
Speaker 15: my life and grew up playing sports. The Army is
Speaker 15: really a sport in itself, a competition and a a
Speaker 15: team building exercise every day, and I spent twenty six
Speaker 15: years loved it. Got out of the military and wanted
Speaker 15: to do something different than government contracting, which is what
Speaker 15: most people do. With my skill set, ran into some
Speaker 15: great people and a good friend that David knows well
Speaker 15: became a mentor and a good friend of me, John Mack,
Speaker 15: who you all will have heard.
Speaker 17: Of obviously, head of Marshas Stanley.
Speaker 15: John became a great friend and mentored me, and John
Speaker 15: was actually asked to be on the board of margetown
Speaker 15: bourbon company. He had loaned our founder Peter offten money
Speaker 15: throughout the years, and John thought I knew something about whiskey.
Speaker 15: I drank whiskey, but didn't know anything about the Spirit's business.
Speaker 15: But John asked me to check out the company. I
Speaker 15: went and checked it out, became on the board, and
Speaker 15: then ultimately about six and a half years ago, was
Speaker 15: asked to come and run the company. Really a team
Speaker 15: of built a team, and that's what it's been about
Speaker 15: for me, just that kind of you know, creating something
Speaker 15: where people are proud to come to work every day
Speaker 15: is probably the most important thing for me.
Speaker 4: Well, you spent the first part of your career leading
Speaker 4: a lot of people. You led a thirty five one
Speaker 4: hundred man task force in Operation Iraqi Freedom. You teamed
Speaker 4: with coalition partners in Iraqis conducting stability operations throughout Iraq.
Speaker 4: That's just like one percent of what you did over
Speaker 4: your career in the military. How do you How does
Speaker 4: leading a company differ from actually leading in the US
Speaker 4: Armed Forces?
Speaker 9: Look or how is it?
Speaker 15: There's a thing out here in this in the commercial
Speaker 15: world that I've run into called the what's in it
Speaker 15: for me?
Speaker 16: Factor?
Speaker 17: And that's a big issue, and not saying.
Speaker 16: It's wrong, it's it's real.
Speaker 15: People have to worry about their families worry about what
Speaker 15: they're getting paid. That's a that's something that I didn't
Speaker 15: deal with for twenty six years because everybody knew what
Speaker 15: they were getting paid, everybody was on a team, everybody
Speaker 15: had a goal in a mission. So fighting through those
Speaker 15: things to try to create a company where literally people
Speaker 15: place the importance of their job as something that's that's
Speaker 15: a party that I am. Build an organization that folks
Speaker 15: are proud to be a part of and actually want
Speaker 15: to see that company succeed. That's the kind of thing
Speaker 15: that I came from in the militarym We've I think
Speaker 15: done a pretty good job of doing that. If you
Speaker 15: come visit us at Bortstown or Green River, you'll see
Speaker 15: that in our people. We get comments all the time
Speaker 15: about our people and our team, and that's what makes
Speaker 15: this place special for me.
Speaker 23: Mark typically is being a little honest here because from
Speaker 23: my vantage point, because I saw John Mack persuade you
Speaker 23: a fair amount at his house, and what I understood
Speaker 23: is they had a great product, and John Mack believed
Speaker 23: it was a great product, but the company had, let's say,
Speaker 23: upside in what he could do with that product. And
Speaker 23: Mark came in as far as I can tell I
Speaker 23: want to say, turn it around, really built it into
Speaker 23: something really powerful, which had the potential all along.
Speaker 9: I think Mark.
Speaker 15: The company was in a great spot, had an awesome
Speaker 15: growth path. Unfortunately, our founder passed away three months after
Speaker 15: he pugged me in, so we needed to go look
Speaker 15: for a partner who could help us grow. We brought
Speaker 15: in a private equity firm out of Chicago that's been
Speaker 15: a fabulous partner to us and truly enabled the growth
Speaker 15: to where we are now the largest custom distiller for
Speaker 15: spirits in Kentucky. We've grown two great brands, and that
Speaker 15: business model allows us to do the things that most
Speaker 15: brands cannot do. Young brands can afford right now to
Speaker 15: invest the way we're investing behind these two brands. And
Speaker 15: both Bartstown and Green River are two of the fastest
Speaker 15: growing brands in the US right now. And it's because
Speaker 15: of this making whiskey for others, copacking on bottling, all
Speaker 15: these different assets that we bring to our clients that
Speaker 15: enable us to go and invest in these two brands.
Speaker 3: That's what I thought was interesting. And I'm going to
Speaker 3: start doing a little bit of a poor here so
Speaker 3: that you can tell us about some of what we've
Speaker 3: got here, But it is you work with others who
Speaker 3: want to start a brand. I mean, it's a crowded space.
Speaker 3: So I'm just curious how you think about who you
Speaker 3: want to partner with and how do you do something
Speaker 3: that stands out in the shell.
Speaker 16: So we really have two different entities.
Speaker 3: And what am I pouring here?
Speaker 15: Okay, so you are pouring You're actually pouring the world's
Speaker 15: best bourbon according to New York Spirits Wine and Spirits.
Speaker 16: Competition as of this year.
Speaker 15: So that is the top top bourbon in the world.
Speaker 15: It's our Green River Weeded bourbon and that's a thirty.
Speaker 16: Five dollars bourbon.
Speaker 15: Compete togeinst all these other bourbons in a blind tape.
Speaker 18: They do a bigger port.
Speaker 16: You should do it. You should do a perfect court.
Speaker 8: But that's a really low price.
Speaker 16: That is a low price point.
Speaker 15: Is a low price that's you know, we're in the
Speaker 15: super premium and ultra premium price points and those are
Speaker 15: the two price points in American whiskey that are growing.
Speaker 15: American whiskey is down over the last year, yeah, down
Speaker 15: two to three percent. You know, with all the different
Speaker 15: things that are going on around around spirits and international
Speaker 15: trade and everything else. So luckily, what we're doing behind
Speaker 15: these two brands is making them grow the way we
Speaker 15: need them to.
Speaker 3: And before we all take a step take take us
Speaker 3: back to so that when you work with someone, how
Speaker 3: do you figure out who you want to work with?
Speaker 24: Right?
Speaker 3: And because it is, there's a lot out there.
Speaker 17: Yeah, you know, look, I'll tell you.
Speaker 15: Three years ago, we didn't have much competition and people
Speaker 15: saw the business model, and now there's a lot of competition.
Speaker 17: We used to kind of get just to get choose
Speaker 17: who we wanted.
Speaker 8: To work with.
Speaker 15: Now there's competition out there. So we are truly the
Speaker 15: only ones who are providing grain to glass service, meaning
Speaker 15: we're going to help you design your whiskey, we'll make
Speaker 15: it for you, we'll store it for you, and then
Speaker 15: we'll get it ready to go to market. With our
Speaker 15: world class bottom facility. We're helping our clients in so
Speaker 15: many different ways, you know, whether it be unique financing modes.
Speaker 16: You know, that's been probably.
Speaker 15: The biggest issue for our industry over the last few years.
Speaker 15: People talk about tariffs, we had financing issues.
Speaker 16: Before we had tariffs, there.
Speaker 15: Was a lot of negative chatter about alcohol and spirits
Speaker 15: in general. You know, young people aren't drinking supposedly. See
Speaker 15: the GLP drugs and the impact that those are having.
Speaker 15: All these different issues creating some negative chatter. But what
Speaker 15: we're seeing today is an opportunity where I think savvy
Speaker 15: investors are starting to get in. We're going We're getting
Speaker 15: a lot of inbound from family offices and private equity
Speaker 15: who want to create funds to specifically invest in whiskey
Speaker 15: because they see the low end of a market and
Speaker 15: an opportunity for reasonable rate to return, where four years
Speaker 15: ago I would have told you it was kind of
Speaker 15: a crazy rate of return. Yeah, now it's reasonable, and
Speaker 15: I think people are seeing that and coming back in well,
Speaker 15: not exactly the same.
Speaker 3: I grew up though my dad made a mean whiskey
Speaker 3: sour and you would say Nazadrovia because I'm Slovak, So anyway, Nazdovia.
Speaker 3: But tell us cheers.
Speaker 15: So this is again the number One's the number one
Speaker 15: bourbon in the world, according to New York Spirits Competition
Speaker 15: Blind Tasting Amazing. This is a weeded bourbon. So Bourbon
Speaker 15: is nineteen sixty four. It is our nation spirit, It's
Speaker 15: America's native spirit. And it has to be made in
Speaker 15: the United States and it has to be predominantly corn
Speaker 15: to be bourbon. And then typically you have a flavor grain.
Speaker 15: The flavor grain in this is people say wheat is
Speaker 15: sweet and smooth.
Speaker 16: The wheat is really kind of.
Speaker 15: Passive compared to rye and allows the sweetness of the
Speaker 15: corn to come through.
Speaker 17: So that's kind of what you sense from this as
Speaker 17: you sniff.
Speaker 15: It and as you taste it now carefully, it's a
Speaker 15: it's a good I don't I know David used to
Speaker 15: do the morning show and I don't know his drinking hours.
Speaker 16: This is my first bourbon of to day. So anyways, cheers.
Speaker 23: So while they're drinking, you've grown in a fair amount.
Speaker 23: Where's the sky? How far can you take this?
Speaker 9: And what do you need?
Speaker 16: So two different things. Really we have to uh two
Speaker 16: separate business lines. Our our core business is making whiskey
Speaker 16: for others. Again, that's that's our core.
Speaker 15: That's what pays all the bills and allows us to
Speaker 15: invest in these two brands the way we need to.
Speaker 15: We're innovating on our core business. We're and small bottling
Speaker 15: lines as people want to downside to different package sizes.
Speaker 15: We're helping people were making wrong for the first time.
Speaker 15: For a client who's doing the ready to drink in
Speaker 15: a can. We're bottling Vadkin gin for folks. So we're
Speaker 15: innovating on that side to make sure we give our
Speaker 15: clients everything we can so that we can continue to
Speaker 15: invest behind these two brands.
Speaker 16: Both of these brands are going.
Speaker 15: To be in the top ten of their price point
Speaker 15: by middle of next year.
Speaker 16: So we've got to set a new goal.
Speaker 15: That's been our goal for quite a while, and then
Speaker 15: we'll get into the international market. We're selling in London,
Speaker 15: we're selling in Sydney, and we're selling in Western Canada
Speaker 15: right now.
Speaker 3: And you said Green River was about thirty five Bardstown,
Speaker 3: same thing.
Speaker 15: Forty five dollars price point on that Bardstown bottled in Bond.
Speaker 16: That's our you know.
Speaker 15: The Bottled in Bond Act was the first really start
Speaker 15: of FDA, the Food and Drug Administration, where you had
Speaker 15: you were trying.
Speaker 16: To get people to say what's actually in the product.
Speaker 15: So they set the rules behind what it had to
Speaker 15: be and it had to be one hunter proof aged
Speaker 15: four years at one distiller in one season, so you know,
Speaker 15: premitting people from putting tobacco juice for coloring and other
Speaker 15: things in it.
Speaker 16: So that's a great product. And again Bartstown Bottled and Bond.
Speaker 23: What do you think, David, Well, I'm actually curious on
Speaker 23: the growing part.
Speaker 9: Again, is it capital intensive?
Speaker 1: Twenty second?
Speaker 16: Is capital intensive? We're committing that's again.
Speaker 15: Wow, We've got this unique business model that allows us
Speaker 15: to invest in these brands where most brands can't.
Speaker 4: That was Mark Irwin's CEO of Lofted Spirits, David Weston,
Speaker 4: host of Bloomberg Wall Street Week, joining us there as well.
Speaker 3: You know, David has always said wait, wait, wait, is
Speaker 3: this like, are you guys having an alcohol?
Speaker 4: Hey, we finally Gotpapy to have We.
Speaker 1: Finally got him to join.
Speaker 14: It was really a lot of fun.
Speaker 10: All rights still ahead.
Speaker 3: On Bloomberg Business Week, how one family left the London
Speaker 3: suburbs for a small village in France all through the
Speaker 3: love of wine.
Speaker 4: And then a wine experience by way of Little Tuscany
Speaker 4: and Uruguay. This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Business Week Daily Podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app or watch us live on YouTube.
Speaker 4: That's the stuff of fantasies, Carol.
Speaker 10: We've talked about this.
Speaker 4: Yeah, you quit your corporate job in London. Okay, you
Speaker 4: move to the south of France with your three kids,
Speaker 4: your wife, you make rose.
Speaker 3: It sounds magical, it does well.
Speaker 4: It wasn't a fantasy for Stephen Kronk, the founder and
Speaker 4: CEO of Maison Mirabo. He and his wife did exactly that.
Speaker 4: It was sixteen, sixteen years ago. It was yeah, wow,
Speaker 4: at the height of the global financial crisis.
Speaker 3: Talk about timing.
Speaker 4: Steven's with us right now here in the Bloomberg Interactive
Speaker 4: Brokers studio, and he brought rose. First of all, it's
Speaker 4: been a little while since we last spoke.
Speaker 9: To here, at least two years.
Speaker 4: Yes, yes, how's business been since then?
Speaker 9: It's well, it's interesting question. It's been up and down.
Speaker 9: I would say, I mean, I think Provence Rose is
Speaker 9: still the benchmark for rose around the world, so we're
Speaker 9: very lucky we've got that. But there's been a lot
Speaker 9: of headwinds, as I'm srure you're aware.
Speaker 4: Yeah it Look, there's the climate change headwind, but there's
Speaker 4: also the changing consumer tastes headwinds as well as tariffs exactly,
Speaker 4: which is the thing that is the biggest headwind.
Speaker 9: They all combine together. This is the perfect storm. So
Speaker 9: the health kick, there's the cannabis movement, there's the no
Speaker 9: and low alcohol movement, there's the zimpic movement because that
Speaker 9: suppresses people's desire to have a drink. So it's like
Speaker 9: everything and then you load on top of that the tariffs.
Speaker 9: It's like, yeah, what has happened?
Speaker 3: So what does that mean for you guys? Like how
Speaker 3: do you pivot? How do you adjust around that?
Speaker 9: Well, there's a lot of things we can't change. But
Speaker 9: what we try and do is is with the tariffs,
Speaker 9: for example, we've tried to swallow as much as we can.
Speaker 9: We don't want mirror bou to be much more expensive
Speaker 9: in the store, so we've tried to swallow that, which
Speaker 9: is it's hard, but we're keeping our fingers crossed that
Speaker 9: maybe this is going to change.
Speaker 4: Remind everybody the price range from the United States, so
Speaker 4: you don't want the price to go up in the US.
Speaker 9: So we generally between twenty and thirty, I mean want
Speaker 9: to try and keep below thirty dollars because that's a
Speaker 9: price point.
Speaker 4: So then how does that hit your margins?
Speaker 9: Yeah, it's not great, but you know, I'd rather build
Speaker 9: a brand, and you know, i'd rather people carry on
Speaker 9: drinking Mirbo especially you know, we're coming out of Thanksgiving
Speaker 9: and Provence Rose is just so good with with turkey.
Speaker 9: So you know, I'm just trying to hope this goes
Speaker 9: away and just carry on pushing my wines here.
Speaker 8: Yeah.
Speaker 3: Well, you know, and I've said I wasn't a big
Speaker 3: Rose drinker, but I've got to say yours is pretty
Speaker 3: pretty magical, and I've really enjoyed it, and we're going
Speaker 3: to taste it and know Tim is sniffing it out.
Speaker 3: You're in the United States, talk to us about the
Speaker 3: US market specifically.
Speaker 9: So I've started farming regeneratively for some of my wines, right,
Speaker 9: and the regenerative movement seems to be centered many around California. Now, yeah, so,
Speaker 9: I mean, I'm selling my wines in forty countries, but
Speaker 9: California is the epicenter of the regenerative movement. The California
Speaker 9: Department of Food and Agriculture has been the first state
Speaker 9: to to define the words regenerative agriculture, and meanwhile, we've got,
Speaker 9: you know, the wine regions, so Paso, Robles, Nappers and Oma.
Speaker 9: They are the most regenerative wine areas in the world.
Speaker 3: So what does that mean for one of county where
Speaker 3: t is from. But what does that mean that you
Speaker 3: would you do more here in the United States?
Speaker 9: I'm just trying to sell more wine here. And so
Speaker 9: the retailers say, like air One and Sprouts and Bristol
Speaker 9: Farms and Hagen's, they're really getting behind the regenerative movement
Speaker 9: that they're looking to seek out regenerative.
Speaker 3: Farmer because there's an awareness of it right.
Speaker 9: Because they know what it means for farmers, they know
Speaker 9: what it means for people to.
Speaker 4: Not everybody knows what regenerative farming means and especially how
Speaker 4: that is applied to farming the grapes that go into wine,
Speaker 4: that go into rose. So for for people who don't
Speaker 4: know what it is, explain regenerative farming in the context
Speaker 4: of Vina culture.
Speaker 9: So regenerative, as the name suggested, is about regenerating soil, fertility,
Speaker 9: and regenerating nature in simple terms, So you know, it's
Speaker 9: the if you think about it, what was organic farming
Speaker 9: called before the First World War? Farming right, and then
Speaker 9: there was a huge amount of pressure here. Everyone's still
Speaker 9: worried about industrial farming, so the heavy tillage and in
Speaker 9: particular heavy use of chemicals. So there's been a move
Speaker 9: certainly since the First World War and the Second World
Speaker 9: War as well. We've seen a lot of nitrogen being
Speaker 9: used in farms and a lot of heavy tillage, and
Speaker 9: a lot of chemicals pesticide and so on, and that's
Speaker 9: just been killing our soils. This is a catastrophe. You know,
Speaker 9: we were worried about famine at the end of the
Speaker 9: Second World War, so rightfully, we were worried about feeding
Speaker 9: our population. But we haven't been measuring food in the
Speaker 9: right value. It've been measured by calories rather than nutrient density.
Speaker 3: So I didn't mean to interrupt, but it was just interesting.
Speaker 3: We just came off a discussion of talking about the
Speaker 3: cost of meat and just what's going on in that world.
Speaker 3: But I do think about, like is our soil globally,
Speaker 3: how tortured is it or how bad is it because
Speaker 3: of the industrial farming.
Speaker 9: A lot of it, most of it, I would say,
Speaker 9: is on life support. It's really it's catastrophic. So when
Speaker 9: I I was gonna say, when I drive out from
Speaker 9: Na to Pazzerobuls, which is one of the most regenerative
Speaker 9: regions in in wine up the I five and you
Speaker 9: see thousands of acres of fruit trees and nut trees
Speaker 9: that are on life support. It's like the moon's surface,
Speaker 9: and so it's they're kept life by these excen inputs
Speaker 9: and what you end up with a product, but they're
Speaker 9: not very tasty and they're not very nutritionally dense. So
Speaker 9: we need to actually start restoring soil health globally, and
Speaker 9: regenerative is a way of doing that.
Speaker 3: So you can do that in terms of all that soil,
Speaker 3: how long does it take the process of getting it back.
Speaker 9: It can happen quite quickly, and that's one reason why
Speaker 9: we so I run a nonprofit as well called the
Speaker 9: Regenerative Viticulture Foundation. So viticulture is agriculture for vines, and
Speaker 9: we're launching these initiatives called one block challenges. So we
Speaker 9: did one in Paso, we've done one, we're doing one
Speaker 9: in Napo Opus one in fact a great winery and winery,
Speaker 9: so we're doing one there on the eighteenth of November,
Speaker 9: and we're challenging the growers in Napa and as we
Speaker 9: did in Pazo, to just transition one block of their
Speaker 9: vineyard to regen for a year and then come back
Speaker 9: and see the difference. It's incredible how generous mother nature
Speaker 9: is coming back.
Speaker 4: That's Stephen Kraut, the owner of Meissan Mirabeau.
Speaker 16: Hey.
Speaker 3: Before we go, how about another story of a family
Speaker 3: owned winery, this time in the luscious region of South America.
Speaker 4: Since nineteen ninety nine, Bodega Garzone has been making wine
Speaker 4: and developing a mega wine experience in Uruguay. Christian Wiley
Speaker 4: is Bodega Garzon's managing director. He stopped by to tell
Speaker 4: us all about it. You know, when we think about
Speaker 4: so called New World wines, I think a lot of
Speaker 4: people often think of in South America, maybe Argentina or Chile.
Speaker 4: Uruguay not really on the map as a wine destination
Speaker 4: as much as other areas.
Speaker 8: Why as the world.
Speaker 21: I mean, it's not on the map because they've been
Speaker 21: drinking all their wine they've been making for the last
Speaker 21: three three centuries. But then Darson comes into play, and
Speaker 21: this is an incredible investment of Don Alejandro Rulgeroni.
Speaker 24: It's two hundred and fifty million dollars capex.
Speaker 21: It is the largest investor investment ever.
Speaker 24: In the industry of wine. And this is right now
Speaker 24: in the region or in the world, in the world world. Wow,
Speaker 24: this is.
Speaker 21: Right next to the beach to the Uruguayan rivie Era.
Speaker 21: So you have josseig Nacio, which is like the centrope.
Speaker 4: Yeah, if you're watching us on YouTube Bloomberg Originals, you
Speaker 4: can see the stunning photos right now.
Speaker 3: And that was showing kind of the investment that you
Speaker 3: guys have been making.
Speaker 21: So it's and it's it's done in a in a
Speaker 21: very if you like, forward thinking way of the most.
Speaker 24: Committed to sustainability.
Speaker 21: We were the first winery in the world to be
Speaker 21: one hundred percent LEADS certified, and we work, you know.
Speaker 24: To express the place.
Speaker 21: It's a new taroire that is, you know, the vision
Speaker 21: is for Albert Antonini, who's like the top wine maker
Speaker 21: from from Tuscany. And then one of our pillars is
Speaker 21: the experiences, so we have Francis Malman is our chef,
Speaker 21: so you experience these beautiful wines with an incredible view
Speaker 21: right next to the ocean in a place that it's
Speaker 21: like the centerpe of South America.
Speaker 3: You don't spend two hundred and fifty million dollars on
Speaker 3: capex unless there's growth going on. Tell us about the
Speaker 3: business and in terms of topline growth, but it also
Speaker 3: sounds like it's also experiential that you guys have incorporated.
Speaker 3: So give us you know, we're Bloomberg. We love all
Speaker 3: the numbers, So give us an idea in terms of
Speaker 3: the growth that you guys have seen.
Speaker 21: Well, we've basically gone from a place that didn't grow
Speaker 21: vines to a vineyard that has more than a thousand
Speaker 21: little parcels, little blocks. We've gone from zero to sixty markets.
Speaker 21: We're selling all over the world. It's become the main
Speaker 21: brand in Uruguay, but it's also the leader in the States,
Speaker 21: to Brazil, to Japan, China, UK and it's it's growing
Speaker 21: very fast normally.
Speaker 3: And what's fast is it high teens? Is it above that?
Speaker 8: Many years?
Speaker 21: Wow, doubling the business many years in a row, including Covid,
Speaker 21: and as you said, all the different cycles right now.
Speaker 21: We've yesterday we toasted to our first year with our
Speaker 21: new partners in the US with a wine bow, and
Speaker 21: again we did really well in a very tough year.
Speaker 9: But you.
Speaker 21: Have a level of investment that it's really projected very
Speaker 21: very long term.
Speaker 24: We have projects for hotels, We have a real estate
Speaker 24: on the beach.
Speaker 21: Mister Voolgeroni has an incredible a golf course designed by
Speaker 21: Phil Michelson and Acha Caa that it's a PGA tour
Speaker 21: preferred golf course. We make our own extra virgin olive oil.
Speaker 21: So we talked about there are some.
Speaker 4: Universe what is the biggest revenue driver. Is it the winer,
Speaker 4: is it the real estate? Ask if it's even the
Speaker 4: olive oil.
Speaker 21: Yeah, the first one was the olive oil, extra virgin
Speaker 21: olive oil, and it's one like the best extra virgin
Speaker 21: olive oil in the world. A couple of times. The
Speaker 21: winery is the wines. It was driving the revenue. And
Speaker 21: it's not just setting wine as a product, it's also
Speaker 21: the experiences. So we have fifty thousand visitors a year
Speaker 21: and this is in the middle of nowhere, as you
Speaker 21: just mentioned other why Yeah, and it's all very high
Speaker 21: income and networth people. It goes from twenty thousand people
Speaker 21: living there in Punta de les De and Garson to
Speaker 21: two million tourists around New Years. It's a lot and
Speaker 21: a lot of them are celebrities like Clooney or Winneth
Speaker 21: Paltrow or Messi or it's.
Speaker 4: Christ say that's kind of our crew.
Speaker 24: Care well, I'm here to invite you. You have to
Speaker 24: corroborate this.
Speaker 3: Story, right, we only have unfortunately about a minute and
Speaker 3: a half or so left. You did bring in some
Speaker 3: bottles of wine and tell us about.
Speaker 4: What you brought.
Speaker 3: I don't want to mispronounced blasto, tant Alberino, Alvardino.
Speaker 21: It will start with the white wine. Yeah, it's this
Speaker 21: is Alberdino. We are the main grower of Albardino in
Speaker 21: the Americas. It's the white great variety that like the
Speaker 21: Queen of Spain. We have the same kind of granite
Speaker 21: and Atlantic Ocean influence, similar to Galicia. And this is
Speaker 21: actually our best selling wine in the US, perfect for
Speaker 21: summer or the end of the of the spring of
Speaker 21: your top one hundred wine spectator.
Speaker 24: So an awesome valley. This is like a twenty two
Speaker 24: dollars retail.
Speaker 5: That's great.
Speaker 24: So there's a beautiful opportunity there.
Speaker 3: Tell us about the other the reds, which I am
Speaker 3: a red kind of gal.
Speaker 21: Okay, if that's so, this is for you. Uruguay is
Speaker 21: the country of Tanat, like Maulbek would be Argentina. Yeah,
Speaker 21: this is a great variety from southwest France. It's known
Speaker 21: to be rustic and really tannic. We have kind of
Speaker 21: tamed that so it's very fresh and vibrant. And it's
Speaker 21: also been top one hundred Wine Spectator, so we have
Speaker 21: insane accolades. Actually, well there, our son is is one
Speaker 21: the new World Winery of the year. That's among another
Speaker 21: like ten thousand producers.
Speaker 3: I mean those things matter because it really gets people,
Speaker 3: whether it comes up in a surge or people you know,
Speaker 3: gets noticed. I just got about twenty thirty seconds for
Speaker 3: Pilaster tell us about this one.
Speaker 21: So this is our this is our grand one our
Speaker 21: but astors. Actually the soil is the meteorized granite. It
Speaker 21: gives mineralities, so the wines are quite ethereal. We have
Speaker 21: a lot of rainfall, so we have very nice natural
Speaker 21: Asiniti makes your mouth water.
Speaker 4: That was Christian Wiley, Bodega, Garzon's managing director. And be
Speaker 4: sure to check out Ellen McCoy's story on the Bloomberg
Speaker 4: and at Bloomberg dot com on how wine will change
Speaker 4: in twenty twenty six due to everything from climate impacts
Speaker 4: to gen Z's interest in wine bars.
Speaker 3: And that wraps up the weekend edition of Bloomberg Business
Speaker 3: Week from Bloomberg Radio. Thank you for joining us today
Speaker 3: and always, as you have throughout twenty twenty five, We're
Speaker 3: looking forward to more this year.
Speaker 4: I'm Tim Stenebek. Happy New Year.
Speaker 3: Everyone, and I'm Carol Masser. Have a good and safe weekend,
Speaker 3: Peace and prosperity, health and happiness. In twenty twenty six,
Speaker 3: we so look forward to sharing the new year with you.
Speaker 2: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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