Latest / What the Flux / Bottom's up for big brewery | Microsoft's AI challenge | Procter & Gamble's sales hit

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Bottom's up for big brewery | Microsoft's AI challenge | Procter & Gamble's sales hit · What the Flux

• 0:05
  Speaker 1: This is at the Flux.
• 0:06
  Speaker 2: I'm bread and aur Justin and it's Friday, the second
• 0:09
  Speaker 2: of August.
• 0:10
  Speaker 1: Not so fast their inflation you thought you could run
• 0:12
  Speaker 1: away from us, juzzy boy. The June quarter's inflation rate
• 0:15
  Speaker 1: was released yesterday and inflation dropped from four percent to
• 0:19
  Speaker 1: three point nine percent. And juzy boy, many investors are
• 0:22
  Speaker 1: thinking this could put to rest any talk of a
• 0:25
  Speaker 1: rate rise next Tuesday.
• 0:27
  Speaker 2: Interesting man, did you know that twenty percent of tax
• 0:30
  Speaker 2: pays in Australia own an investment property? No, it is true,
• 0:33
  Speaker 2: absolute fact and fluxdam. We've rolled out a brand new
• 0:36
  Speaker 2: academy this month all about investing in the property market.
• 0:40
  Speaker 2: We take you through all the steps you need to
• 0:42
  Speaker 2: understand your goals, what to look for when evaluating investment properties,
• 0:45
  Speaker 2: and also how to get access to investment property funds.
• 0:48
  Speaker 2: So if you want to check it out, it is
• 0:50
  Speaker 2: all in there. Check it out in the Flux Academy.
• 0:52
  Speaker 1: Three insightful stories today, juzzy boy, let's do it for
• 0:55
  Speaker 1: our first. An Aussie vodka maker that makes a popular
• 0:58
  Speaker 1: ready to drink vodka has gone into voluntary administration.
• 1:02
  Speaker 2: Always sad to hear stories like this. Be Man had
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  Speaker 2: quite a few lately, so tell me more some background.
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  Speaker 2: Bilson's Brewery was established in eighteen sixty five in northeast
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  Speaker 2: Victoria and is one of the oldest continuing beverage manufacturers
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  Speaker 2: in all of Australia. In twenty seventeen, the company behind
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  Speaker 2: the brewery that operated under the name Bilson's Beverages was
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  Speaker 2: taken over by new.
• 1:22
  Speaker 1: Owners and get this, juzzy Boy. In the years after
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  Speaker 1: twenty seventeen, business was booming, largely thanks to a ready
• 1:29
  Speaker 1: to drink vodka product that it sold. They sell their
• 1:31
  Speaker 1: stuff in Dan Murphy's BWS, many other stores and be Man.
• 1:35
  Speaker 2: Their annual sales actually reached around one hundred and twenty
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  Speaker 2: million bakarnis in the twenty three twenty four financial year.
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  Speaker 1: Not bad. But this year things started to become real
• 1:43
  Speaker 1: tough for old bilson yep. The company experienced a big
• 1:46
  Speaker 1: fat slowdown in demand and also also juzzy boy chunky
• 1:50
  Speaker 1: increases in the government xcise for alcohol and.
• 1:53
  Speaker 2: Now Bilson's Beverages has been put into administration.
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  Speaker 1: And unfortunately for Bilson's it encountered a triple whammy of
• 2:00
  Speaker 1: negative factors that ultimately brought on its demise.
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  Speaker 2: So be man. Tell me what is the key learning here?
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  Speaker 1: When a company is in the wrong place at the
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  Speaker 1: wrong time, survival can be very challenging.
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  Speaker 2: Yeah, we know for small and medium sized businesses, whether
• 2:13
  Speaker 2: in one challenge at a time can be hard.
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  Speaker 1: But Bilsons they face three. Firstly, they face the cost
• 2:18
  Speaker 1: of living pressures that are basically facing all consumer facing companies.
• 2:21
  Speaker 2: Yet reditary vodcas aren't quite necessary in the current market conditions.
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  Speaker 1: Secondly, the company struggled to manage it costs as it
• 2:28
  Speaker 1: scaled up its production over the last few years. And Thirdly,
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  Speaker 1: Bilson's faced big increases in the excise paid to the government, the.
• 2:35
  Speaker 2: Tax paid by alcohol companies.
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  Speaker 1: Now get this, jazzy boy, alcohol makers paid the third
• 2:40
  Speaker 1: highest rate of tax in the world in Australia.
• 2:43
  Speaker 2: And now, sadly, Bilson's is in the hands of administrators.
• 2:46
  Speaker 2: For our second story, Microsoft saw its shares drop seven
• 2:50
  Speaker 2: percent in its worst day since October twenty twenty two
• 2:53
  Speaker 2: because it's AI revenue just missed its forecasts.
• 2:56
  Speaker 1: When you position yourself as AI royalty, you just can't
• 2:59
  Speaker 1: be missing your numbers. Tell me more.
• 3:01
  Speaker 2: Okay, so we know Microsoft for its famous Microsoft Offer Suite.
• 3:04
  Speaker 1: Don't forget it's now infamous and uncoordinated Windows ninety five
• 3:08
  Speaker 1: launch dancing, and of.
• 3:09
  Speaker 2: Course, more recently for making the big switch into cloud
• 3:12
  Speaker 2: and AI.
• 3:13
  Speaker 1: And Jessie boy they have done so very successfully. In fact,
• 3:16
  Speaker 1: their shares have jumped over fifty percent just over the
• 3:18
  Speaker 1: last two years.
• 3:19
  Speaker 2: And Microsoft's twenty three twenty four revenue was on part
• 3:22
  Speaker 2: with the entire economies of Greece and New Zealand.
• 3:25
  Speaker 1: But josebait, Microsoft has just released its quarterly results which
• 3:28
  Speaker 1: really spooked investors quite a fair bit.
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  Speaker 2: Revenue of fifteen percent year of year and well ahead
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  Speaker 2: of forecast. I would say that's pretty good. Earnings per
• 3:36
  Speaker 2: share also above the forecast, I would say that is
• 3:38
  Speaker 2: very very good. But Microsoft reported only a twenty nine
• 3:42
  Speaker 2: percent growth in its a zuo cloud computing year when
• 3:45
  Speaker 2: it was projected to grow thirty one percent. Next minute,
• 3:48
  Speaker 2: Microsoft shares dropped seven percent, but be man. Apart from
• 3:51
  Speaker 2: missing its cloud growth target, Microsoft is also spending a
• 3:54
  Speaker 2: pretty penny on its AI capabilities.
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  Speaker 1: That is a big claim by you, Josie Boyce. So
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  Speaker 1: what is the key learning here?
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  Speaker 2: When exhaust roorbitan spending doesn't turn into exorbitant revenue, it
• 4:03
  Speaker 2: can create doubts in a company's biggest believers.
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  Speaker 1: Yep, all the major tech companies chasing AI glory are
• 4:09
  Speaker 1: spending a ton of cash on software infrastructure and software
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  Speaker 1: development right now.
• 4:13
  Speaker 2: Get this, Microsoft invested nineteen billion US dollars in the
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  Speaker 2: June quarter into capital expenditure related to AI and a
• 4:20
  Speaker 2: man For the true believers, this is all necessary to
• 4:23
  Speaker 2: fund the AI long game.
• 4:25
  Speaker 1: But for many investors, AI spending just isn't converting into
• 4:28
  Speaker 1: AI earnings fast enough. In fact, the man AI revenue
• 4:31
  Speaker 1: hasn't grown into a big enough revenue stream to even
• 4:34
  Speaker 1: be disclosed on Microsoft's financial results. And the pressure isn't
• 4:38
  Speaker 1: just on Microsoft, but think also pressure on Amazon alphabet Meta.
• 4:42
  Speaker 2: Who shares all slid and average of eleven percent over
• 4:45
  Speaker 2: the past month.
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  Speaker 1: So Microsoft's drop in share price is just a little
• 4:48
  Speaker 1: reminder that if they don't start making serious moll as soon,
• 4:51
  Speaker 1: the heat will be on.
• 4:53
  Speaker 2: For our third and final story, Procter and Gamble suffered
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  Speaker 2: its slowest sales growth in six years as consumers started
• 5:00
  Speaker 2: cutting back on brand name products.
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  Speaker 1: Not your cheapest products on the market. So kind of
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  Speaker 1: does make sense what is going on herekab.
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  Speaker 2: Man, you might not have heard of Procter and Gamble,
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  Speaker 2: but you've most certainly heard of the brands they own.
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  Speaker 1: Well, let's just run me through them. Juzzy boy, We're.
• 5:13
  Speaker 2: Talking Joette, We're talking oralb, Vicks, Vapor Drops, Panteen, Head
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  Speaker 2: and Shoulders, just to name a few.
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  Speaker 1: Also used to own Pringles and Kelloggs as well.
• 5:21
  Speaker 2: But Procter and Gamble's brands have been whacked in the
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  Speaker 2: fourth quarter sales.
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  Speaker 1: While they saw volumes grow by one percent, it's net
• 5:28
  Speaker 1: sales fell behind expectations and I'm talking more than two
• 5:31
  Speaker 1: hundred million US dollary doo wow.
• 5:33
  Speaker 2: So what is the key learning here?
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  Speaker 1: Well, in times of need, retailers often turn to promotions
• 5:38
  Speaker 1: or discounts to attract consumers and juzzy boy, this strategy
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  Speaker 1: can be effective in driving short term sales spikes.
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  Speaker 2: But be man. When a company uses promotions and discounts
• 5:48
  Speaker 2: to get the attention of consumers, it might.
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  Speaker 1: Help their volumes, but it comes at a price. Just
• 5:52
  Speaker 1: a little example for you. P and G saw an
• 5:54
  Speaker 1: improvement in the number of units sold, but their revenue
• 5:57
  Speaker 1: was still down.
• 5:58
  Speaker 2: But not only that, discounting all the time can devalue.
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  Speaker 1: A brand YEP, consumers might start to associate the brand
• 6:04
  Speaker 1: with constant sales, and for some.
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  Speaker 2: Consumers, lower prices may mean lower perceived value in the products.
• 6:09
  Speaker 1: Which all means they may wait for the next promotion
• 6:12
  Speaker 1: rather than purchasing at the full price right now. Hello,
• 6:15
  Speaker 1: can man do a seventy five percent off the price
• 6:19
  Speaker 1: one hundred percent of the time?
• 6:21
  Speaker 2: So B ANDNG needs to balance their short term benefits
• 6:24
  Speaker 2: of promotions with the long term health of their brand.
• 6:26
  Speaker 2: Flex Sam if you are looking at investment property, we
• 6:29
  Speaker 2: take you through house verst apartment location factors, researching suburbs
• 6:33
  Speaker 2: and everything you need to know when it comes to
• 6:35
  Speaker 2: investing in property. It's all in the Flux Academy this
• 6:37
  Speaker 2: month and it is an absolute corker.
• 6:39
  Speaker 1: Thanks for listening and we'll see you on Monday.