Chobani cheats on dairy (with oats)

Thursday, November 21, 2019 by Robinhood Snacks | Disclosures

"Jimmy, we drink 2% in this house. Not oat drink"

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Hey Snackers,

Someone give Burger King a hug — first it faced a vegan lawsuit over its plant-based Whoppers (they're cooked beside beef), now it's running out of zesty sauce because of the global horseradish shortage.

Stocks inched down Wednesday after a big delivery of earnings reports from your go-to big box retailers.

1. Victoria's Secret's quarterly loss grows 6 times bigger — it badly needs a new leader

Nothing silky smooth about it... L Brands, which owns Victoria's Secret, just announced (another) depressing quarter of business: Its loss ballooned by over 6 times to $252M. L Brands' plus-sized loss is the combination of 2 key brands:

  • The Good: Its Bath & Body Works chain's skincare lineup keeps having a moment — sales rose 11% last quarter.
  • The Bad: Victoria's Secret sales sank 8% as bralettes replace pushup bras.
  • Overall: Vicky's makes up 57% of L Brands' sales — that has an impact.

American dream (but also awkward/uncomfortable)... Les Wexner, a son of Russian immigrants, founded L Brands in Ohio in 1963. Awesome. But he's still the CEO — an 82-year-old man decides what panties should be sold with PINK scripted across the butt. The rejection of uber-sexified models lately has sunk the stock by 85% in the past 4 years.


It's time for some shareholder activism... Wexner is inextricably linked to Victoria's Secret as long as he's CEO (btw - he's also Chairman of the board). He represents the off-brand, out-of-touch past. Replacing him with someone who actually reflects women today could save Vicky. We've seen that happen before:

  • Papa John's booted founder John Schnatter after a racial slur — Shaq is the new face, and shares are up 50% this year.
  • Weight Watchers was beaten by paleo/keto/Atkins — Oprah rejuvenated the brand as an investor and spokeswoman.

Free the nipple... Lactose legend Chobani already dominated yogurt: 19% of all yogurt sales in the US and 43% of all Greek yogurt sales are Chobani's. But the still-private company just announced its 1st non-milk lineup, an oat-based family of oat milk, oat yogurt, and Greek yogurt with oatmeal. Here's the bold move: They're all labeled only "Oat." No "milk." No "yogurt." Mic drop.

Cleanup in the dairy aisle... Chobani's yogurt sales are still growing 8% per year even as overall US yogurt sales are slowing. And America's biggest milk processor, Dean Foods, filed for bankruptcy last week. Alt-milks are having a moment — but oat milk's the one going viral:

  • Soy's out: The seasoned elder plant-based beverage isn't trendy enough.
  • Almond's too thirsty: It requires 8X as much water to grow the nuts and produce the milk as oat milk does.
  • Quinoa, flax, and hemp: Still not mainstream.
  • Oat milk is now top-shelf: Sales have surged 636% in the last year (led by the Oatly brand).
  • And it gets dual-generational love: Boomers now reach for plant-based milks (rising lactose intolerance with age) along with Millennials (because it's just, you know, different).

How do you know if it's a trend or a fad?... Your Snacks team noticed 2 industries that often face fad challenges: Fashion and food. We can't tell you if oat milk's a sustainable trend or a fad that ends before your next grocery run. But we can give you this framework — if you're planning to invest, consider the trend vs. fad phenomenon:

  • We think athleisure is a trend with staying-power, but fast fashion is/was a fad that's out.
  • Non-processed foods are a trend, juice cleanses are/were a fad.
  • Plant-based beverages like oat milk can spill either way.
What else we’re Snackin’
  • Splurged: PayPal drops $4B to treat itself to shopping rewards platform Honey (unclear if they got a discount code)
  • ABV: White Claw, the spiked seltzer brewed (?) by Mark Anthony Brands, is expecting to hit $1.5B in sales this year
  • Sharp: Levi's CEO thinks scanners that measure every inch of your body will send clothing sizes "out the window" in 10 years
  • Dig: Apple breaks ground on its new Austin campus that will house 500 iWorkers — and President Trump considers exempting it from tariffs
  • Racketeered: General Motors alleges in a lawsuit that Fiat Chrylser bribed auto worker union negotiators to make life worse for GM
Snacks Daily Podcast

TJ Maxx and Urban Outfitters. Both discounted their clothes hard last quarter, but one's stock slipped 2% yesterday while the other's plummeted 15%.

Our 15-minute pod breaks down how you'll probably spend more this holiday season, but you expect more deals than last year.

That's good for TJ Maxx, bad for Urban.


Disclosure: Authors of this Snacks own shares of Tesla

ID: 1018273

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