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Hey Snackers,
“Please scream inside your heart" — the directive from execs at a reopened theme park in Japan. The park asks that you enjoy the Fujiyama roller coaster, but please don't scream (because, COVID). They made a beautiful video flexing their heart-scream abilities (impressive).
Markets dropped Thursday after Florida reported a record number of COVID-related hospitalizations. But the Nasdaq inched up on investors' tech optimism.
Plant
Kroger's alt-meat sales soar on real-meat shelf placement (but is it pulling an Apple?)
Beyond Impossible... We find the Simple Truth. Grocery giant Kroger stuffs its supermarkets with name brand items, but complements Heinz and Pepsi with its own Kroger-branded (private label) products. It owns a plant-based meat brand called Simple Truth, but also sells non-Kroger brands (like Beyond Meat and Impossible). Just in-stock: some tasty alt-meat stats...
- +75%: How much Kroger's plant-based meat sales jumped last quarter. The number of alt-meat buyers popped 50%.
- +23%: How much Kroger's plant-based meat sales grew simply by moving the products from the alt-food section to the meat department.
Location, location, location... Retail products want that prime shelf-placement real estate. Nice packaging and quality do little to help a product's sales if it's tucked on the bottom shelf by the Aisle 87 bathroom.
- Placement matters extra for a non-mainstream product like plant-based meat. By placing it in the meat department, Kroger made it a real consideration for traditional meat shoppers.
- Meat-eaters are the target: Alt-meat companies like Impossible know they can't grow unless they target meat-eaters. "Flexitarians" that eat both animal meat and plant-based are key to taking plant-based mainstream.
Kroger has the same power that Apple has... To give its products special treatment. Apple owns and controls the App Store — and it's being sued/investigated in Europe for allegedly playing favorites with its own apps in App Store search results (e.g. Apple Music #1, Spotify #5). Kroger owns its markets, but also competes in them with others' brands. It has the power to give its products special shelf placement. With the best shelf space and a lower price point, it's probably eating into Beyond and Impossible's growth.
Medicate
Walgreens drops $1B to open hundreds of doctors offices — healthcare is its Big Bet
Kleenex, Aisle 6... Walgreens lost $1.7B last quarter — for reference: it made a $1B profit during the same quarter last year. Foot traffic fell because of stay-at-home orders and those who came in were buying less-profitable items (like TP instead of beauty products). So to save cash, Walgreens is cutting 4K jobs in the UK and the stock still fell 8%.
Skipping 10 years of med school... Despite the loss, Walgreens will invest a whopping $1B over 3 years to open up 700 doctors' offices. It's invested in primary-care provider VillageMD to bring sleek, zen-themed clinics into your Walgreens locations (half in medically underserved areas). Walgreens is splurging for the "short-term pain, long-term gain" strategy:
- Sales of prescription drugs account for most of Walgreens' sales, but they've dropped off in the corona-conomy.
- 60% of Americans live with at least one chronic condition that requires multiple daily medications.
- By adding easy-access clinics, Walgreens can drive sales for its profit-puppy prescriptions (and sell you toothpaste, while you're at it).
Healthcare is big retailers' Big Bet... for big profits. CVS acquired Aetna insurance in 2018 and is planning 1.5K "HealthHUB" clinics by 2021 (no doctors though). Walmart is doing something similar with its flat-fee primary care clinics (and it just launched a health insurance biz this week). All these retailers already have big physical footprints, and they figure adding healthcare into one-stop-shopping could drive growth.
Lend
Rocket Companies files to IPO on the wings of its mortgage app
How to make mortgages sexy... Thinking, thinking.... Include some space-travel imagery. Rocket Companies (formerly less-sexy Quicken Loans) is the largest mortgage lender in the US. Back in 2010, Cleveland Cavs owner Dan Gilbert chose downtown Detroit for Quicken's HQ. That kinda catalyzed a renaissance for the Motor City because Quicken brought some fast-paced business growth with it. Now:
- Rocket Cos just filed to go public: The target valuation hasn't been announced, but it's likely in the tens of billions of dollars, according to #PFWTM (people familiar with the matter).
- Rocket Mortgage, the flagship biz, has doled out over $1 Trillion in home loans. Last quarter, sales more than doubled from a year ago — Now it controls 9% of the mortgage market.
How to make mortgages sexy (part 2)... There's an app for that. The Rocket Mortgage app was so popular, that Quicken decided to rebrand itself to Rocket. Kind of like the TurboTax of mortgages, Rocket's calculators hand-hold your way into seeing what home ownership means for your wallet. You can see how the digital-first focus is working with its target:
- 75% of Rocket users are 1st-time homebuyers, encouraged by low interest rates right now.
- But the risk facing Rocket (and the whole mortgage industry) is how home sales could change dramatically in a longer recession.
Local mortgage providers have big competition... Historically, getting a mortgage required meeting a guy/gal at a local bank in town. But in-person transactions have declined with the rise of financial software — and this decline is accelerating quickly in the corona-conomy. Rocket's app-based approach helps it lower costs and scale quickly, which is why it processed 3X as many mortgages monthly as a typical lender.
What else we’re Snackin’
- Ouch: Mobile streamer Quibi reportedly lost 90% of its early users after their free 3-month trials expired.
- Goofy: Disney will partially reopen Disney World in Orlando on Saturday after a 117-day closure.
- Bitty: Coinbase could become the 1st major US crypto exchange to go public — it's reportedly starting IPO plans as soon as this year.
- Remix: TikTok considers changing its corporate structure (and possibly adding a non-China HQ) after skepticism from the US government on its Chinese connections
- Cruise: Rivals Royal Caribbean and Norwegian team up to develop safety standards for cruising again.
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Friday
- Earnings expected from Infosys
Disclosure: Authors of this Snacks own shares of Apple and Beyond Meat
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