Amex reserves Resy. All of it.

Thursday, May 16, 2019 by Snacks
_Stop bullying the sparkling waterboy_

Stop bullying the sparkling waterboy

Yesterday’s Market Moves
Dow Jones
25,648 (+0.45%)
S&P 500
2,851 (+0.58%)
Nasdaq
7,822 (+1.13%)
Bitcoin
$8,165 (+3.61%)
10-Yr US Treasury
2.377%

Hey Snackers,

Towel off. You just got through the wettest 12 months on record.

Markets rebounded a tad more Wednesday on word US tariffs on European cars (yes, other tariffs) have been delayed another six months.

Got this Snacks from a friend? Sign up for the daily newsletter here.

Sip

1. LaCroix is down because sparkling water is having a moment

Pamplemousse problems... Flavored sparkling water LaCroix has become the spirit drink of youthfulness — Millennial-powered anti-soda consumption pushed parent National Beverage Corp's stock to an all-time high in 2017 (FYI, great stock ticker: “FIZZ”). It has lost half its value since then, summed up by this stat:

Sales of sparkling water rose 16% in the US from Nov-Jan — but LaCroix’s sales fell 2%.

Pour some Pepsi on the wounds... Some banks decided to weigh in on issues the icon of calorie-free refreshment is facing. It's mainly competition. Lots more competition:

  • Bank #1: Thinks sales will “significantly decelerate,” so it downgraded the stock.
  • Bank #2: Thinks LaCroix’s getting bullied by soda — Pepsi's sleek Bubly is winning market share, while Coke is pumping out sparkling versions of Dasani and SmartWater.
  • Highlight: Texas-based Topo Chico is a fast-growing LaCroix-replacement that's gaining liquid ground.
  • Side Note: In March, National Beverage's colorful CEO blamed its sales drop on "injustice."
THE TAKEAWAY

LaCroix's gone flat on the big stage... Before sparkling water became the avo toast of drinks, National Beverage shares grew 7-times larger from 2014 to 2018. Now LaCroix is struggling to distribute itself. Its Coke/Pepsi competitors are filling up convenience stores where LaCroixs aren't. If you're not on the shelf, you can't be bought.

Acquired

2. Amex buys Resy to experienc-ify your reward points

"I'll have the Resy"... American Express ordered itself the largest privately-held reservation platform in the US, acquiring Resy (4K restaurants across 200 cities). Backed by Airbnb and Shake Shack co-founder Danny Meyer, Resy serves the dining industry two ways:

  • What you see: Restaurant pays Resy a fee to show its open tables. You snag last-minute 9pm for 2 (by the bar). You're a hero, the table gets filled, Resy gets paid. Win-win-win.
  • What you don't see: "Hospitality Software" — Its Resy Fly business intelligence tools educate restaurateurs on the average time a table's used or how weather affects the number of fish orders. Valuable intel.

Experiences > Points... That's Amex's strategy here. Instead of points for old school lounge access or TSA Pre✓, Amex wants to make its benefits more intimate, more personal, and (shocker) more Millennial. With Resy's network, it can now access special tables, restaurant openings, and fancy ticket-based reservations for its top swipers.

THE TAKEAWAY

Follow the food that follows the money... Americans 22-37 years of age (Disclosure: Us) are spending a huge chunk of their paycheck on dining out. Amex's latest acquisition spree shows it's focused on being everywhere its customers want to be: food. Here's who else in the fintech/foodtech space it recently bought:

  • March: Loungebuddy — Airport lounge access because, well, airports.
  • January: Pocket Concierge — The Resy of Japan.
  • 2018: Cake — Pay the restaurant bill without waiting for the bill.
Blacklist

3. The US bans Chinese wireless equipment (i.e. Huawei)

"I refuse to let you date him"... On concern that foreign governments could spy on, manipulate, or crank call Americans, President Trump just banned American phone/internet companies from using foreign-made telecom equipment. The obvious target is China's Huawei, and it's another escalation in the trade war.

Scandinavia is into it... Ericsson (🇸🇪Sweden) and Nokia (🇫🇮Finland) are the two other big competitors of Huawei, and their stocks jumped on the US move. The ban only applies to American telecom companies and only to future purchases:

  • The majors: AT&T, Verizon, Sprint, and T-Mobile don't use Huawei.
  • The regionals: Some smaller internet and wireless providers do.
  • Abroad: Trump's hoping foreign countries resist the temptation of Huawei's lower prices to stand strong with America's blacklisting (and buy Scandinavian instead).
THE TAKEAWAY

Stop China from dominating 5G... That's the goal here. China's epic "Made in China 2025" plan gives American foreign policy hawks night terrors. So does its ambition to lead in 5G, which will wirelessly connect phones, computers, appliances, and probably robo-pets to the web really, really and fast. But it could be too little, too late:

  • Huawei is leading already — It's making both phones and the network (think cell towers and satellites), courtesy of the Chinese government's assistance.

What else we’re Snackin’

  • Benched: MSG Networks drops after the Knicks end up with the 3rd pick in the NBA draft, not the first
  • Served: Beyond Meat hits a record high after Canadian chain Tim Horton's adds its plant-based sausages to the menu
  • Splurge: Berkshire Hathaway (aka Warren Buffett's investment firm) reveals it owns $900M in Amazon stock
  • Pre-IPO: WeWork (which has filed to IPO) showed earnings that include a $264M loss it wants you to interpret as an investment
  • Above: Macy's is selling the air rights above its Midtown Manhattan HQ so someone else can build a tower above it
  • Fires: PG&E got officially blamed by California investigators for the Camp Fires

Thursday

Disclosure: An author of this Snacks owns Beyond Meat and Amazon.

Subscribe to Snacks