🧽 Lysol does "Hygiene Consulting"

Wednesday, July 29, 2020 by Robinhood Snacks | Disclosures

The Hygiene Consultants have arrived

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Hey Snackers,

Domino's is bored with all its corona-conomy delivery success, so it's branching out to more highbrow pursuits. The pizza legend is launching a film festival. We're expecting masterpieces like: Pizzablanca, Lawrence of Pepperoni, and Some like it Garlic Knot.

The market ticked down on some Big Tech stock drops. The Senate GOP revealed its new stimulus plan, which includes checks of up to $1.2K and an extra $200/week in bonus unemployment pay (the $600/week bonus ends this week). TBD whether it'll pass.

1. Lysol leverages its clean reputation to launch a hygiene consulting business

Crank out the case interview books... Reckitt Benckiser is the consumer packaged goods company that makes Lysol. Now Lysol sales have surged a lemon-scented 70% during the pandemic. To expand on its success, Lysol's launching a new business line:

  • The Deloitte of Hygiene: Lysol is offering its cleaning products and sanitizing expertise to the travel and hospitality industries. It's positioning itself as a hygiene expert.
  • Case study: With its sanitizing know-how, Lysol tells the Bellagio that the mini bar needs to be sprayed down exactly 57 times.

"Hygiene Consulting" could be big... Travel and hospitality have been decimated by the pandemic. Hotels and airlines know that the only way to get customers back is to make them feel safe. Instead of complimentary continental breakfast, hotels are touting obsessive cleanliness. Lysol has capitalized on that concern to bag some big corporate partners:

  • Hilton is partnering with Lysol, leaving a sticker on your bed that shows the room was cleaned according to "Lysol standards." Also: Lysol wipes everywhere.
  • Delta is working with Lysol to research and develop new protocols and disinfectants for flights, starting with the airplane lavatory. The cleaning routines will be Lysol-certified.
  • BTW: Lysol's not the only Hygiene Consultant. Clorox has been a hygiene partner for United Airlines since May.

The value of brand equity... AKA brand clout. Brand equity is the extra value companies can squeeze from our perception of their brand. It's the reason why people pay $160 for Apple AirPods instead of $50 for generic wireless buds. Lysol and Clorox probably aren't more effective than a rando sanitizer that kills 99.99% of germs, but their brands allow them to capitalize on reputation. Hotels and airlines think they can piggy-back off that, too.


5th degree Zucking... Facebook's perpetual MO to crush competitors: bring their most successful feature to Instagram. In 2016, FB essentially crushed Snap Stories by launching Instagram Stories. In 2018, FB tried to take on YouTube by intro'ing IGTV. In May 2020, FB threatened Amazon by shipping "Shops" for ecommerce on Insta. Then FB started obsessing over the fact that TikTok has been downloaded over 2B times. So...

  • FB will try to kill TikTok with its Reels feature on (you guessed it) Instagram. Reels, which is launching in the US in August, lets users make short vids with musical tracks (sounds promising).
  • Double whammy: For Chinese-owned TikTok, which has major trust issues. India just banned TikTok over security/spying concerns, and TikTok is facing political threats of the same fate in the US.
  • Triple whammy: FB announced Reels back in November, so that's an old whammy. The new whammy: FB is reportedly paying popular TikTok stars to leave TikTok and post on Reels, instead.

"Reel it in, I got a bag"... FB has the $$$ to not only nab TikTok's product, but also its content. According to the WSJ's infamous "people familiar with the matter" (#PFWTM):

  • Insta has made big offers to some of TikTok's top creators. The biggest $$$ goes to those who ditch the Tok completely and go Reels-exclusive.
  • FB hopes that these influencers will bring their millions of followers over to Reels. That's why TikTok just announced a $200M fund of its own to counter Facebook's courting and keep stars on TikTok.

Success breeds copycats... But not all copycats are created equal. FB isn't the only one trying to replicate TikTok features, and TikTok-style apps like Triller and Dubsmash were launched years before TikTok. Since these product ideas aren't something companies can patent, they're up for grabs when they launch. Companies in similar industries are always incorporating each others' successes. But because of their huge-ness, FB and other Big Techies are facing intense regulatory scrutiny (including by Congress today).


Dust off the 5th grade field trip prints... Kodak is back, baby. You might remember Kodak as the company that supplied disposable cameras for your early 2000s "Kodak moments" (don't forget to scroll wheel). Then iPhones took over and Kodak filed for bankruptcy in 2012. Now the 131-year-old former photo leader is back with a flashy headline:

  • Kodak is getting a $765M loan from the US government under the Defense Production Act. The DPA lets the US prez force companies to prioritize production of necessary resources in a national emergency.
  • But Kodak won't be printing out pics. It'll be cranking out ingredients for medical drugs.
  • The goal: Reduce the US' reliance on foreigners for drugs. Kodak stock jumped a whopping 300% on the news.

Definitely frame-able... This is the 1st loan of its kind under the DPA, which was used earlier this year to speed up production of masks and ventilators. The US is heavily reliant on China for pharma drugs, so this domestic loan is a way to protect the supply chain in case something goes South (because, 2020). For Kodak, it's a big business pivot:

  • Kodak's factories manufacture chemicals used in photographic film, among other things — now they're ramping up to produce drug ingredients.
  • Kodak now says it expects pharma ingredients will make up 30%-40% of its biz in the future (funny, because it didn't say a word about pharma in its last earnings).

To successfully pivot, companies need to zoom out... Kodak's walking away from its OG camera reputation to focus on the chemicals that underlie it. It doesn't want to be "the company that makes chemicals for camera stuff" — it wants to be "the company that makes chemicals for anything." When BlackBerry realized its phones were doomed, it focused on the underlying software — Now it’s developing secure software for self-driving cars.

What else we’re Snackin’
  • UnHappy Meal: McDonald's sales plunge 23% despite drive-thru fame — profits also tanked on corona-related spending.
  • Post-it: 3M posts a sales drop, despite a surge in demand for its N95 masks — school and office supplies (like Post-its and Scotch tape) aren't happening.
  • Frappy: Starbucks sales fall 40%, but it claims the pandemic worst is behind it.
  • Puff: Marlboro-maker Altria says cigarette smoking is making a comeback on e-cig restrictions and stimulus checks.
  • Exciting: Paint legend Sherwin-Williams saw "unprecedented" demand for its DIY paint products this quarter as you pimp your home.

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