🛢Oil giants = pumped

Wednesday, October 6, 2021 by Robinhood Snacks | Disclosures
Not pumped at the pump [Hybrid Images via Getty Images]

Not pumped at the pump Hybrid Images via Getty Images

Yesterday’s Market Moves
Dow Jones
34,315 (0.92%)
S&P 500
4,346 (1.05%)
Nasdaq
14,434 (1.25%)
Bitcoin
$51,210 (4.13%)

Hey Snackers,

You can’t turn water into wine, but sometimes vino can turn into $$: Since 2003, some fine wine indices have risen more than the S&P 500 or Dow Jones.

After a Facebook-fueled selloff earlier this week, stocks rebounded yesterday across all major indices. “Recovery stocks” spanning the cruise, airline, and retail industries also rose. Plus, Bitcoin climbed back over $50K, ticking up over 77% this year.

Gassy

1. Oil stalemate: OPEC’s refusal to crank out gas means higher prices — and more profits for oil giants

Grumpy at the pump… Oil prices spiked to a seven-year high this week, while US prices are up 63% this year — a dollar more per gallon than last year. The spike is weighing on drivers’ wallets and boosting inflation concerns because higher prices mean pricier goods. President Biden asked OPEC to crank up production to keep economic recovery on track. But earlier this week, OPEC’s powerhouses rejected the request and said they’d make only gradual production increases to help prop up prices.

A slippery slope… Demand for oil fell during the pandemic, when people stayed home and drove to the mall less. But demand rebounded faster than analysts expected. So to keep prices high and profits flowing, oil giants are capping supply. It’s paying off for oil companies, but costing everyone else:

  • Barrel half full: BP and Shell doubled their profits last quarter from the previous year, and Exxon boosted profits 6X.
  • Barrel half empty: Gas prices have hit $4.41/gallon in California, while panicked petro-purchases have caused fuel shortages in Britain and China. Such high gas prices could also increase the cost of food, heating, plastic, and other goods.
THE TAKEAWAY

The US economy still runs on gas… Just like your uncle’s ’64 Impala. Many investors are shifting their dollars toward renewables, but the US economy still depends on fossil fuels. High oil prices don’t only affect consumers; they can also up supply-chain costs and shape policy priorities. Oil has cracked the $80-per-barrel mark for the first time in seven years, and could hit $100 by winter. So even though US consumer spending has been rebounding this year, businesses like restaurants and retailers could suffer if consumers blow their cash on gas — and their products and services cost more.

Wine

Sounds like a hunting tool… actually a wine. Duckhorn Portfolio is Napa Valley’s first publicly traded winemaker in decades, and the stock (perfect ticker: NAPA) is up 20% since its $2B March IPO. Its 10 luxury wine brands include Decoy, Duckhorn Vineyards, and Kosta Browne, with bottles ranging from $20 to $200. Last quarter, the supplier swung a profit and beat pre-pandemic levels with 36% sales growth. Behind the boon:

  • Wide net: Duckhorn wines are sold in bars, restaurants, and grocery stores across the US. Last year, it sold more than 1.4M cases.
  • Member fees: Duckhorn’s Wine Club sends three to four of its top bottles to your doorstep for up to $420/month.

One-stop wine shop… Empty vineyards and shuttered tasting rooms put a strain on most luxury vineyards during the pandemic. Duckhorn offset those losses by increasing its presence in grocery stores, where most consumers shopped, and by launching new products and features:

  • Wine seltzer: Duckhorn unveiled a line of canned Decoy wine seltzers this year, like “Chardonnay with Clementine Orange.”
  • Tastings with Alexa: Its new Alexa assistant means its 55K club members don’t have to sip alone. Think: virtual tasting rooms and wine-pairing suggestions.
THE TAKEAWAY

In crowded markets, differentiation is key... When customers walk into the wine section of a grocery or liquor store, they’re overloaded with options. While IRL wine tours paused and in-store and online shopping competition spiked, Duckhorn innovated to reach a target audience: millennials, who spend more per bottle than any other demo. Differentiation worked: Brand-new products like seltzers and its Alexa feature helped its wine portfolio sales grow faster than those of the other top 20 US suppliers.

What else we’re Snackin’

  • Whistle: Facebook whistleblower Frances Haugen testified to Congress that the company repeatedly prioritized profits over safety, joining a chorus of critics.
  • Vax: Johnson & Johnson finally asked the FDA to authorize its Covid-19 booster shot, following Pfizer and Moderna as the third vaccine maker to seek approval.
  • Sail: Norwegian Cruise Line said that its full fleet of 28 ships would hit the seas again by April, for the first time since pandemic no-sail orders.
  • Clash: House Democrats are at odds over which key social programs and tax changes to snip from the $3.5T budget proposal as its size faces opposition.
  • Recall: Volvo is recalling more than 460K of its older-model cars because of faulty airbags linked to one fatality. The news came just one day after the Swedish carmaker announced its plans to go public.
  • Pop: PepsiCo raised its full-year revenue forecast on strong snack and packaged-food sales, but warned supply-chain troubles would raise product prices.

Snacks Daily Podcast

Twitter is taking likes to the next level — and by that we mean $$.

Tune in on why it could spell trouble for the OG payment space.

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Snack Fact of the Day

Ireland’s population cracked 5M this summer for the first time since 1851

Wednesday

  • Earnings expected from Constellation Brands and Levi Strauss

Authors of this Snacks own shares of: Bitcoin

ID: 1864265