Latest / What the Flux / Fonterra milks more cash | Netflix's "ad"-ventures | Converse's All Star dims

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Fonterra milks more cash | Netflix's "ad"-ventures | Converse's All Star dims · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm justin and I'm harsh Deep, and it's Friday, the
• 0:09
  Speaker 2: seventeenth of May.
• 0:10
  Speaker 1: HG. The jobless rate has jumped back up to a
• 0:13
  Speaker 1: two year high of four point one percent in April
• 0:15
  Speaker 1: this year, which was actually a bit of a relief
• 0:17
  Speaker 1: for investors. I know, it sounds kind of strange that
• 0:19
  Speaker 1: higher jobless rate should likely mean a lower inflation figure,
• 0:23
  Speaker 1: which means hopefully no cash rate rises this year.
• 0:26
  Speaker 2: Pluxpam. If you like a bit of friendly competition and
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  Speaker 2: you like to win money, then we have the game
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  Speaker 2: for you. Our weekly quiz quick Sticks is live today.
• 0:34
  Speaker 2: Each Friday, we send a notification to your phone at
• 0:37
  Speaker 2: a random time, and the first person to answer three
• 0:39
  Speaker 2: quiz questions correctly wins fifty dollars. It's that simple, So
• 0:43
  Speaker 2: make sure down with the Flux app and have your
• 0:44
  Speaker 2: notifications turn.
• 0:45
  Speaker 1: On three gamified stories today, HG.
• 0:49
  Speaker 2: Let's get into it.
• 0:50
  Speaker 1: For our first. The owner of Mainland Cheese and the
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  Speaker 1: distributor of Beiger Cheese is planning to sell its brands
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  Speaker 1: in Australia because it wants to get out of dealing
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  Speaker 1: with consumers.
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  Speaker 2: Don't forget they also own Perfect Italiano cheese that goes
• 1:03
  Speaker 2: on my past, tell me more.
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  Speaker 1: Okay, So Fonterra is actually a New Zealand based dairy
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  Speaker 1: giant that's listed on both the ASX in Australia and
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  Speaker 1: the New Zealand Stock Exchange too.
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  Speaker 2: In fact, this is the largest most dairy delicious company
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  Speaker 2: in the whole of New Zealand.
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  Speaker 1: Now it's she. Fonterra's specialization has always been collecting milk
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  Speaker 1: from dairy farmers and then processing that milk and.
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  Speaker 2: Then on selling it to other companies that would sell
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  Speaker 2: it to consumers and.
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  Speaker 1: That's been a cash cow for them for a very
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  Speaker 1: long time, no pun intended.
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  Speaker 2: But then jaz Fonterra had an idea, with the rivers
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  Speaker 2: of milk at our disposal, why not whip up our
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  Speaker 2: own cheese, butter and create our own milk brands.
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  Speaker 1: And that's where it's brands like Western Star Butter, Mainland
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  Speaker 1: Cheese and Perfect Italiano come in.
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  Speaker 2: Plus they've also had a twenty five year license to
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  Speaker 2: distribute Bigger Cheese.
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  Speaker 1: But now ach Fonterra's announced its plans to sell its
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  Speaker 1: Australian dairy assets.
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  Speaker 2: Including the Director consumer brands and its eight manufacturing sites.
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  Speaker 1: Because they want to focus on their core business of
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  Speaker 1: supplying high value dairy ingredients because they d the highest
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  Speaker 1: value owner of the consumer and jazz.
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  Speaker 2: This is a case when vertical integration isn't quite the
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  Speaker 2: best call for a big business and.
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  Speaker 1: They're expecting to get around two billion New Zealand dollars
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  Speaker 1: for the sale. So what is the key learning here?
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  Speaker 2: Vertical integration is when a company controls multiple stages of
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  Speaker 2: production or distribution within the same industry.
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  Speaker 1: For example, a dairy company cannot only produce milk, but
• 2:25
  Speaker 1: they can also make cheese and yogurt and sell.
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  Speaker 2: These products directly to consumers.
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  Speaker 1: Because, surprise, surprise, both of these products use a ton
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  Speaker 1: of milk.
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  Speaker 2: Owning a large part of the chain gives them increased
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  Speaker 2: control over the supply chain as well as lower transportation costs.
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  Speaker 2: But HG.
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  Speaker 1: Vertical integration can be trickier than turning milk into a
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  Speaker 1: perfect breed because it requires a company to gain expertise
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  Speaker 1: in multiple areas of the value chain.
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  Speaker 2: Which can be significantly different from its core competencies. So
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  Speaker 2: by divesting these assets, Fontera can focus on its core
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  Speaker 2: competencies in very unsexy but utterly profitable milk collection.
• 2:59
  Speaker 1: For our second story, Netflix has announced it's good to
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  Speaker 1: build its own advertising tech platform to compete against the
• 3:05
  Speaker 1: big players like Google, Meta, and Amazon.
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  Speaker 2: This is how you know ads are a big part
• 3:10
  Speaker 2: of the Flix's future. Do tell me what's the story here?
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  Speaker 1: Yes, we know Netflix, the OGTV and movie streaming service
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  Speaker 1: who was hit hard by a drop in revenue and
• 3:19
  Speaker 1: subscribers in twenty twenty two.
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  Speaker 2: So it announced its radical plans to offer a cheaper
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  Speaker 2: streaming subscription with ads.
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  Speaker 1: And since that move, as well as password crackdown rete,
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  Speaker 1: Netflix's revenue has gone gangbusters.
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  Speaker 2: Yeah, Netflix has seen forty million users jump onto the
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  Speaker 2: ad supported plans.
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  Speaker 1: That's up from just five million ad supported users just
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  Speaker 1: twelve months ago.
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  Speaker 2: And you know that Netflix is taking this seriously because
• 3:41
  Speaker 2: it's ditched its partnership with Microsoft, who it used for
• 3:44
  Speaker 2: its initial ad tech capabilities.
• 3:46
  Speaker 1: And it will now develop them in house NHD. Netflix's
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  Speaker 1: plan is to experiment with episodic campaign, which would mean
• 3:52
  Speaker 1: an advertiser could run a series of ads throughout shows
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  Speaker 1: that tell a story.
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  Speaker 2: As opposed to the generic, repetitive ads that it runs today.
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  Speaker 1: This goes to show even if you start by buying,
• 4:02
  Speaker 1: you can still build later on.
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  Speaker 2: So tell me, Jazz, what is the key learning.
• 4:06
  Speaker 1: When a business is building out a new feature or project,
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  Speaker 1: there's one key dilemma. Do we build or do we buy?
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  Speaker 2: Do we keep things in house or outsource.
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  Speaker 1: It to the professionals CG. For Netflix, outsourcing to Microsoft
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  Speaker 1: meant it didn't quite have as much control over its
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  Speaker 1: new AD system. That's bad, bad HD. Outsourcing a project
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  Speaker 1: also means you don't need to make an initial investment
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  Speaker 1: like you would if you built it from scratch.
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  Speaker 2: You can also learn from someone who already knows what they're.
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  Speaker 1: Doing and then build it yourself later or with all
• 4:33
  Speaker 1: those insights.
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  Speaker 2: And given Netflix recons its AD revenue could grow to
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  Speaker 2: five billion USD per year in the near future. It
• 4:39
  Speaker 2: can't be relying on external parties. For our third and
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  Speaker 2: final story, Nike is cutting jobs at its subsidiary company
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  Speaker 2: Converse as part of its cost cutting plan.
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  Speaker 1: I gotta be honest, I didn't even know the Nike
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  Speaker 1: owned Converse. So what is the story here?
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  Speaker 2: Well, Jazz, Nike is the world's biggest sneak of brand,
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  Speaker 2: with arguably one of the most iconic logos ever.
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  Speaker 1: Gotta that, but HD, Nike's growth has actually seen itself
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  Speaker 1: suffering during this period of reduced consumer spending.
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  Speaker 2: So to push through this period, Nike's been going hard
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  Speaker 2: on cost cutting, with a plan to cut two billion
• 5:12
  Speaker 2: dollars of costs over the next three years.
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  Speaker 1: And as part of that plan, Nike is expected to
• 5:16
  Speaker 1: cut two percent of its workforce. And right now it's
• 5:19
  Speaker 1: the Converse staff who are in the firing line, you.
• 5:21
  Speaker 2: See, Jazz, Converse has struggle to move on to new
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  Speaker 2: trends that appeal to younger generations.
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  Speaker 1: In fact, their revenue dropped nearly twenty percent in the
• 5:28
  Speaker 1: most recent quarter.
• 5:30
  Speaker 2: Yep, all those all SOA sneakers just aren't ugly enough
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  Speaker 2: like crocs to sell well.
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  Speaker 1: Sounds like Nike's too caught up with these layhoffs and
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  Speaker 1: cost cards to focus on anything else.
• 5:38
  Speaker 2: So tell me, Jazz, what is the key learning here?
• 5:41
  Speaker 1: Even as an industry titan, you can't rest on your laurels.
• 5:44
  Speaker 2: You see, while the slow global economy has impacted all shoemakers,
• 5:48
  Speaker 2: not all of them are struggling to the same extent
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  Speaker 2: as Nike.
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  Speaker 1: The past, consumers would generally sport one of two brands
• 5:54
  Speaker 1: for athletic activities either Nike or as, but.
• 5:58
  Speaker 2: Now running shoe brands like and Hawker have been dominating.
• 6:01
  Speaker 1: Get This earlier this week, On, which is a Swiss
• 6:04
  Speaker 1: shoe brand backed by Roger Federer, so a twenty nine
• 6:06
  Speaker 1: percent jump in its first quarter revenue compared to the
• 6:09
  Speaker 1: same time last year.
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  Speaker 2: I do hear that run clubs are the new tender.
• 6:12
  Speaker 2: Got to impress your date with the latest kicks, right.
• 6:15
  Speaker 1: So while consumers are more conscious with their spending, shoe
• 6:17
  Speaker 1: manufacturers need to work even harder to tempt them. Flux, Am,
• 6:21
  Speaker 1: make sure you play your phone, you've got the Flux out,
• 6:23
  Speaker 1: and you've turned on your notifications, because you could win
• 6:25
  Speaker 1: fifty bucks for the weekend. All you've got to do
• 6:28
  Speaker 1: is be the first person to answer three quiz questions
• 6:30
  Speaker 1: correctly and it's all yours.
• 6:31
  Speaker 2: Thanks for listening, and we'll see you on Monday.