Latest / Bloomberg Intelligence / Performance Food Said to Get Takeover Interest From US Foods

Transcript

Performance Food Said to Get Takeover Interest From US Foods · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
• 0:10
  Speaker 1: Bloomberg Intelligence podcast. Catch US Live weekdays at ten am
• 0:14
  Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
• 0:17
  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
• 0:21
  Speaker 1: or watch US live on YouTube.
• 0:23
  Speaker 2: You know, drive in early enough to work. You get
• 0:26
  Speaker 2: to see their trucks on the roadway making deliveries to restaurants,
• 0:29
  Speaker 2: A Performance Food Group and US Foods.
• 0:33
  Speaker 3: Oh you see, No, I see all the time. I
• 0:35
  Speaker 3: don't come as early as you I should probably.
• 0:37
  Speaker 4: Anyways, three am, there's like.
• 0:41
  Speaker 2: Talk about a possible deal takeover one by the other.
• 0:46
  Speaker 2: Crystal C is our US deals reporter. Who's taking over? Who?
• 0:51
  Speaker 2: Do we know?
• 0:51
  Speaker 4: Or is this this rumor at this point?
• 0:53
  Speaker 5: So we're reporting that US Foods has made and has
• 0:56
  Speaker 5: shown interest in tie up. So the companies are actually
• 1:02
  Speaker 5: pretty similar in size in terms of enterprise value. They
• 1:05
  Speaker 5: have a lot of debt, both of them. So at
• 1:07
  Speaker 5: this point it's early. We don't know who'shitting over who
• 1:10
  Speaker 5: just yet. But what we know is if this deal
• 1:13
  Speaker 5: does go through, or if this deal does go ahead,
• 1:16
  Speaker 5: it will face a lot of regulatory scrutiny. And eventually
• 1:21
  Speaker 5: the goal is to combine the company into a company
• 1:24
  Speaker 5: that has one hundred billion dollars worth of revenue.
• 1:26
  Speaker 3: Do we think it's more about scale, margins, distribution, overlap,
• 1:30
  Speaker 3: or just really fending off Cisco.
• 1:32
  Speaker 5: So Cisco is actually currently the number one, the top
• 1:36
  Speaker 5: three four players.
• 1:37
  Speaker 4: Actually that's Cisco with an S an S.
• 1:40
  Speaker 5: That's right, and that actually I see those trucks more
• 1:43
  Speaker 5: than I see the others, at least in the city.
• 1:45
  Speaker 5: So Cisco US Foods performances. They all have their moment
• 1:49
  Speaker 5: like in the past decade or so. Actually they have
• 1:51
  Speaker 5: each like taken top spot and it's moved around. So
• 1:55
  Speaker 5: there are moments where you know, they have had activists
• 1:58
  Speaker 5: attack at various different points. So it's interesting that this
• 2:01
  Speaker 5: is the moment where you see that US Food is
• 2:05
  Speaker 5: performing better than Performance Food despite the name. So it's
• 2:09
  Speaker 5: it's it's going to be a very challenging deal in
• 2:12
  Speaker 5: twenty fifteen when Cisco and US try for a tie up.
• 2:15
  Speaker 5: That that deal got struck by antitrust. So definitely is
• 2:18
  Speaker 5: a market where scale matters, margin matters. You can combine regions,
• 2:24
  Speaker 5: you can combine your fleets, so all of those things
• 2:26
  Speaker 5: make it a very good synergetic.
• 2:30
  Speaker 4: Margins right now, or like you said, the razor thin right.
• 2:33
  Speaker 5: So it depends on the market that you surface, like
• 2:36
  Speaker 5: depending on whether you're going after restaurants, is its cafes
• 2:39
  Speaker 5: or is it like uh should back up school?
• 2:42
  Speaker 2: What do these companies do? They prepare food, they bring
• 2:47
  Speaker 2: explain that.
• 2:47
  Speaker 5: So there are various different things that they do. They
• 2:50
  Speaker 5: it comes from, they do produce, they do prepared food,
• 2:53
  Speaker 5: and they supplied to places like restaurants, hospitals, schools, hotels.
• 2:59
  Speaker 5: So depending on your end customers and what your products are,
• 3:03
  Speaker 5: the margins slightly different also means your production would be
• 3:07
  Speaker 5: different and it impacts costs. So I'm sure there is
• 3:11
  Speaker 5: in these CEO's head the dream combination of you know,
• 3:15
  Speaker 5: what the composition of each product or each geographic should be,
• 3:20
  Speaker 5: and well, if so this in this case, US would
• 3:24
  Speaker 5: clearly think that a tie up with performance would get
• 3:27
  Speaker 5: them closer to that ideal business portfolio.
• 3:31
  Speaker 3: And regarding the why, now, do you think it has
• 3:33
  Speaker 3: something to do with software regulatory regulations with the TRAP
• 3:38
  Speaker 3: administration as compared to the bidens.
• 3:40
  Speaker 5: Yeah, that's definitely one big concern. It is a very
• 3:44
  Speaker 5: consolidated industry. So my gut feeling is either way, under
• 3:49
  Speaker 5: whatever administration, it will be looked at by d ANTI trust.
• 3:54
  Speaker 5: That said, the M and A deal maker had been
• 3:58
  Speaker 5: expecting twenty twenty five since Inauguration Day that this would
• 4:01
  Speaker 5: be a much friendlier M and A market under President
• 4:05
  Speaker 5: Trump and Liberation Day hit and that put a lot
• 4:09
  Speaker 5: of things on pause. In the past month or so,
• 4:12
  Speaker 5: we have seen people warming up to the idea of
• 4:16
  Speaker 5: exploring deals or like you know, pulling triggers. So there
• 4:20
  Speaker 5: isn't a there is an element of a friendlier regulatory environment.
• 4:24
  Speaker 2: All right, Crystal appreciated. Crystal sed the US deals reporter
• 4:28
  Speaker 2: from Bloomberg News talking about Performance Group attracting a takeover
• 4:33
  Speaker 2: interest from US Food. Again, this is a potentially could
• 4:36
  Speaker 2: create a distribution company with combined sales of something on
• 4:39
  Speaker 2: the order of like one hundred billion dollars.
• 4:43
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch US Live
• 4:47
  Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android
• 4:50
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 4:54
  Speaker 1: you get your podcasts, or watch US Live on YouTube.
• 4:57
  Speaker 2: Did you know the use remnants from the manufacture of
• 5:02
  Speaker 2: denim in the US currency.
• 5:04
  Speaker 3: No.
• 5:05
  Speaker 2: Really, Well, if you hold up a bill you'll see
• 5:07
  Speaker 2: like little shreds. It looks like, you.
• 5:09
  Speaker 3: Know, is that only in the US or does that
• 5:12
  Speaker 3: happen all?
• 5:13
  Speaker 4: I don't know.
• 5:14
  Speaker 2: I know that's definitely the case with US currency. And
• 5:19
  Speaker 2: that brings us to a discussion about Levi Strauss with
• 5:22
  Speaker 2: their herrings. Mary Ross Gilbert is senior equity analyst covering
• 5:25
  Speaker 2: retail for Bloomberg.
• 5:27
  Speaker 4: Did you know that?
• 5:29
  Speaker 6: I did not.
• 5:30
  Speaker 7: I mean, I know what you're talking about, those little threads, and.
• 5:33
  Speaker 2: Yes, no, that's from that's from the byproduct of manufacturing Denham.
• 5:38
  Speaker 2: They use it at the Treasury. Mary was Mary Ross
• 5:42
  Speaker 2: Gilbert yesterday? Was she was wearing?
• 5:45
  Speaker 4: Where were you wearing yesterday?
• 5:47
  Speaker 5: Uh?
• 5:48
  Speaker 2: Ralph Lauren? And today the Brooks brothers No gap, Okay.
• 5:53
  Speaker 7: Very nice, but it's a it's a it's a malbond
• 5:56
  Speaker 7: gap collab so sold out.
• 5:59
  Speaker 2: It looked like the Brooks Brothers thing. But anyway, so
• 6:03
  Speaker 2: Levi what did we learn from Levi Strauss and their earnings?
• 6:07
  Speaker 7: So I think what we learned in the earnings report
• 6:11
  Speaker 7: first of all, you know, very optimistic view. But if
• 6:14
  Speaker 7: you really dissect it, for example, the guidance that they
• 6:16
  Speaker 7: raised on the revenue line. They now expect full your
• 6:19
  Speaker 7: revenue to be up one to two versus down one
• 6:22
  Speaker 7: to two. Most of it looked like a change a
• 6:25
  Speaker 7: shift in their view on the currency headwind, and then
• 6:28
  Speaker 7: the other piece was because they had a strong second quarter.
• 6:32
  Speaker 7: So the way we look at it is there's probably
• 6:35
  Speaker 7: upside above their guidance and consensus view, which is in
• 6:40
  Speaker 7: that range. So you know, we think that the way
• 6:44
  Speaker 7: the business has been reset, look, Dockers is out of
• 6:47
  Speaker 7: the picture now.
• 6:48
  Speaker 6: They got rid of some underperforming lines.
• 6:50
  Speaker 7: They really honed in their skew count, their stock keeping
• 6:54
  Speaker 7: u an account, and really honed on profitable merchandise, and
• 7:01
  Speaker 7: they've really taken their tops business. They've infused more fashion
• 7:08
  Speaker 7: and style and it's a growing category for them, as
• 7:12
  Speaker 7: is non den and bottoms, and of course their core
• 7:15
  Speaker 7: denim business jeans business, which.
• 7:17
  Speaker 6: They are at the leading edge of the latest trends.
• 7:19
  Speaker 7: And you know, even slim and straight are still a thing,
• 7:25
  Speaker 7: but the biggest growth is really coming from loose and
• 7:28
  Speaker 7: baggy and that actually translated with shorts too for summer,
• 7:32
  Speaker 7: and that kind of explains why they also had a
• 7:35
  Speaker 7: strong second quarter and they saw it globally, so you know,
• 7:40
  Speaker 7: very very good and across wholesale too, So that was
• 7:44
  Speaker 7: nice to see that. But DTC directed consumer really led
• 7:47
  Speaker 7: and that was up double digits.
• 7:49
  Speaker 3: Have you heard John skin and jeans are out and
• 7:52
  Speaker 3: baggy is in. If you look at all the young
• 7:54
  Speaker 3: folks like gen Z, they do wear baggy.
• 7:58
  Speaker 2: I've got these stretch fabrics. Okay, good's disappointed, which I
• 8:02
  Speaker 2: find myself.
• 8:03
  Speaker 3: Okay, that's good. Levi's welcomes all styles. Okay, so more
• 8:07
  Speaker 3: than half of Levi's merchandise merchandise needs for the rest
• 8:10
  Speaker 3: of the year according to the company, they've already been imported.
• 8:14
  Speaker 3: But what will happen when that runs out? Have they
• 8:17
  Speaker 3: released any plans when that happens? And with tariffs set
• 8:21
  Speaker 3: in place by then?
• 8:22
  Speaker 7: Assuming yeah, Isabelle, So you brought up a key point
• 8:26
  Speaker 7: and that is what is the impact of terriffs? So
• 8:29
  Speaker 7: just to give you a little perspective, Levi's is very
• 8:31
  Speaker 7: well diversified. They only source about one percent from China,
• 8:35
  Speaker 7: so very little exposure there. Vietnam is probably five to
• 8:39
  Speaker 7: nine percent. Of course, we have news that that tariff
• 8:42
  Speaker 7: freight Trump has set, but it's not carved in stone
• 8:45
  Speaker 7: and there's no effective date yet.
• 8:47
  Speaker 6: And as we got news today.
• 8:48
  Speaker 7: That Vietnam is saying, hey, we don't want a twenty
• 8:51
  Speaker 7: percent tariff.
• 8:52
  Speaker 6: We wanted to be ten to fifteen.
• 8:54
  Speaker 7: Nonetheless, with Vietnam being five to nine percent, and then
• 8:59
  Speaker 7: Mexico's probably that is under their Canada agreement, so chances
• 9:06
  Speaker 7: are they're not affected, and then everywhere else they're assuming
• 9:09
  Speaker 7: ten percent. So the unmitigated impact is only about fifty
• 9:12
  Speaker 7: basis points for the year, but with mitigation mitigation measures
• 9:18
  Speaker 7: already taken effect, that's going to reduce it down to
• 9:22
  Speaker 7: just twenty basis points. So they are one of the
• 9:25
  Speaker 7: companies if I look at my universe of apparel branded
• 9:28
  Speaker 7: retailers that are sort of the least impacted by tariffs.
• 9:33
  Speaker 7: LUs things change, but we still think that the impact
• 9:37
  Speaker 7: will will still not be as significant as it might
• 9:40
  Speaker 7: be for others.
• 9:41
  Speaker 2: I mean, is a company like this willing to take
• 9:43
  Speaker 2: a hit to margins before raising prices for consumers? Is
• 9:49
  Speaker 2: it like thirty seconds?
• 9:51
  Speaker 7: Yeah, John, you know, they're actually strategically raising prices on
• 9:55
  Speaker 7: some of their new innovation, and that's where they're able
• 9:58
  Speaker 7: to sort of build it in with that product.
• 10:00
  Speaker 6: And I think that's working effectively.
• 10:02
  Speaker 2: All right, Mary, boy, he's a pleasure. I can't wait
• 10:04
  Speaker 2: to see what you're wearing next week. Mary Ross Gilbert,
• 10:07
  Speaker 2: a senior equity analyst covering that sounded kind of creepy, sorry,
• 10:12
  Speaker 2: covering retail for us here at Bloomberg Intelligence.
• 10:17
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 10:21
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 10:24
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 10:27
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 10:31
  Speaker 2: You know what time of the year it is. It's
• 10:33
  Speaker 2: time for the mid year assessments for the global communications
• 10:37
  Speaker 2: and network equipment specifically. Who better to do that than
• 10:41
  Speaker 2: Wujin Ho. He's the senior technology analyst from Bloomberg Intelligence
• 10:46
  Speaker 2: and joining us on this Friday morning from our campus
• 10:50
  Speaker 2: in Princeton, New Jersey. All right, midyear updates. So what's
• 10:54
  Speaker 2: the update, Wou Jin.
• 10:56
  Speaker 8: Well, I will tell you. Look, the fundamentals are actually
• 11:01
  Speaker 8: fairly positive. You have AI drivers driving certain names like
• 11:05
  Speaker 8: Arista Networks and Celestica, and also the enterprise campus switching
• 11:10
  Speaker 8: and the data center searching have upgrade drivers as well.
• 11:13
  Speaker 8: That's going to benefit someone like a Cisco and an HPE.
• 11:18
  Speaker 8: Now the issue is, and your prior guest was talking
• 11:21
  Speaker 8: about tariffs and export restrictions. Tariffs actually really spooked me out.
• 11:26
  Speaker 8: And does that throw a monkey ranch and enterprise IT
• 11:29
  Speaker 8: spending into the second half of the year and temper
• 11:31
  Speaker 8: the growth and earnings expectations.
• 11:34
  Speaker 3: So how much could tariff's and economic uncertainty really trip
• 11:37
  Speaker 3: up the global networking sector sales in the latter half
• 11:40
  Speaker 3: of the year. Do we have a number in mind, Yeah.
• 11:42
  Speaker 8: Don't have a number in mind. There's a couple of things.
• 11:46
  Speaker 8: The networking sector has actually done a very very good
• 11:49
  Speaker 8: job in managing and navigating tariffs. Right from a sales perspective,
• 11:55
  Speaker 8: we really haven't seen estimate cuts as a result of it.
• 11:58
  Speaker 8: From a gross margin perspective, we're thinking about one hundred
• 12:01
  Speaker 8: and two hundred basis points, and that's already reflected into
• 12:03
  Speaker 8: consensus expectations. What I don't know right, but there are
• 12:08
  Speaker 8: a lot of enterprise IT spending surveys that are out
• 12:11
  Speaker 8: there saying that they are going to start ciphoning, potentially
• 12:14
  Speaker 8: siphoning off some of their spending plans. One of the
• 12:18
  Speaker 8: things that I will say is that enterprise enterprise networking
• 12:21
  Speaker 8: tends to be a more mature and commoditized market. So
• 12:26
  Speaker 8: if there's going to be a couple of areas of
• 12:28
  Speaker 8: spending that could be curtailed, PCs obviously, but also networking
• 12:34
  Speaker 8: would be second in line.
• 12:36
  Speaker 2: Hey, Wujin, we've been making a big deal about well,
• 12:38
  Speaker 2: it is a big deal that in Vidia across the
• 12:41
  Speaker 2: ford trillion dollar market cap. Can that be sustained given
• 12:47
  Speaker 2: what you just said, Let's let's talk about the multiple expansions.
• 12:53
  Speaker 4: Sure.
• 12:53
  Speaker 8: So I'm not the Invidia analyst, I can talk from
• 12:56
  Speaker 8: a high level in terms of what's going on in
• 12:58
  Speaker 8: Nvidia as well as some of the drivers to earnings growth.
• 13:03
  Speaker 8: If we look at some of the AI initiatives that
• 13:07
  Speaker 8: are going on, whether it's by the hyperscale cloud guys
• 13:11
  Speaker 8: or some of the sovereigns and these neo clouds like
• 13:15
  Speaker 8: core Waves, they're building out these one hundred thousand GPU
• 13:19
  Speaker 8: type of installments. This is the lasting based on my
• 13:23
  Speaker 8: work and my colleagues works, this is lasting over the
• 13:26
  Speaker 8: next couple of years. The only gaming time town for
• 13:30
  Speaker 8: high end GPUs to train AI models is in Vidia.
• 13:35
  Speaker 8: So is there a sales momentum as well as earnings
• 13:38
  Speaker 8: momentum to support it. Yes, there is for Nvidia as
• 13:40
  Speaker 8: well as the rest of the supply chain.
• 13:43
  Speaker 3: In the note you mentioned or it was mentioned that
• 13:46
  Speaker 3: we aren't seeing any trade overhang risks when it comes
• 13:49
  Speaker 3: to demand in the latter half of the year, and
• 13:51
  Speaker 3: they aren't really reflected in consensus and invaluations. Why do
• 13:55
  Speaker 3: you think that's the case?
• 13:56
  Speaker 8: Yeah, I don't know, right. I think what happened was
• 14:00
  Speaker 8: in the after following the first quarter results. You know,
• 14:06
  Speaker 8: the companies have not yet really fully reflected the tariff
• 14:12
  Speaker 8: impacts into their expectations and consensus have carried that through
• 14:16
  Speaker 8: through the through the rest of the year. There has
• 14:19
  Speaker 8: been very little indication after following first quarter results with
• 14:23
  Speaker 8: regards to a pullback in demand or more importantly, a
• 14:27
  Speaker 8: pull forward in demand that's going to affect the second half. So,
• 14:31
  Speaker 8: you know, my guess is is that I'm waiting for
• 14:35
  Speaker 8: what the second quarter results according to tell Us in
• 14:37
  Speaker 8: terms of the second half.
• 14:38
  Speaker 4: We thanks, so I appreciate it.
• 14:40
  Speaker 2: Woljin the hold the senior technology and it's from Bloomberg
• 14:44
  Speaker 2: Intelligence joining us there from our Princeton, New Jersey canvas.
• 14:50
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 14:54
  Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
• 14:57
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 15:00
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 15:04
  Speaker 4: Do you have a pet?
• 15:06
  Speaker 9: I used to growing up?
• 15:07
  Speaker 3: Now I live alone in and I used to growing up,
• 15:09
  Speaker 3: but now it's hard in New York City. You have
• 15:11
  Speaker 3: to take them out in the morning, at noon, after work,
• 15:14
  Speaker 3: and for some even before bed. Do you have a pet.
• 15:18
  Speaker 4: Used to to? You know?
• 15:20
  Speaker 2: I was so upset when we lost her that I
• 15:22
  Speaker 2: just I can't bring myself to heartbreak replacer.
• 15:27
  Speaker 4: Well, it's a bummer.
• 15:29
  Speaker 2: Janna Rosario Pena is our consumer staples analysts, and she's
• 15:33
  Speaker 2: here to tell us about just how much we spend
• 15:36
  Speaker 2: on pets.
• 15:37
  Speaker 4: It's like a staggering figure, isn't it.
• 15:39
  Speaker 9: Yes, yes, and it's going to keep growing up over
• 15:42
  Speaker 9: the next five years. We expect globally that the market
• 15:46
  Speaker 9: my reach about five hundred billion dollars by twenty.
• 15:50
  Speaker 4: Only five hundred billion, that's it.
• 15:52
  Speaker 2: What God's name of people's I mean, yeah, it's obvious
• 15:54
  Speaker 2: dog food and stuff like that, But is there anything
• 15:58
  Speaker 2: like else I need to know about, like dressing? Their
• 16:00
  Speaker 2: pets up in little crazy costumes and stuff like that
• 16:03
  Speaker 2: and little boots. Yes, so there's been a couple of things.
• 16:09
  Speaker 9: Food remains the biggest expense for pet ownership. It's about
• 16:14
  Speaker 9: thirty forty percent of the expenditure. But there are other
• 16:19
  Speaker 9: things that come with owning a pet. Now people are
• 16:23
  Speaker 9: more willing to get into discretionary like you know, vests
• 16:29
  Speaker 9: and shoes for their dogs and creates and the things
• 16:34
  Speaker 9: like that.
• 16:35
  Speaker 3: Also, healthcare is a big thing.
• 16:38
  Speaker 9: People are more willing to spend more on the healthcare
• 16:41
  Speaker 9: of their pet than they used to.
• 16:43
  Speaker 3: Why is that Is it because more dogs are getting sick?
• 16:46
  Speaker 3: Or is it more because of the insurance company? Like
• 16:49
  Speaker 3: why does trend? Well, it's a couple of things. First
• 16:52
  Speaker 3: of all, the humanization of pets.
• 16:55
  Speaker 9: Now people consider them as family, so they're willing to
• 16:59
  Speaker 9: spend a little bit more to you know, keep their
• 17:02
  Speaker 9: family member around. So there's a greater acceptance of that
• 17:07
  Speaker 9: kind of attitude.
• 17:10
  Speaker 2: Who benefits the most from all this what particular companies.
• 17:14
  Speaker 2: I think when we used to feed our dog.
• 17:16
  Speaker 3: The human food, actually when I was younger, No, you
• 17:19
  Speaker 3: don't feed them human Yeah, maybe that's why my dog
• 17:22
  Speaker 3: wasn't the healthiest.
• 17:23
  Speaker 9: Well human grade food, I will guess. So it really
• 17:27
  Speaker 9: depends if you're looking at food. The big food companies Nestley, Colgate, Mars,
• 17:33
  Speaker 9: General Males, they have you know, food offerings in different
• 17:38
  Speaker 9: price points. But on the more premium side you have
• 17:41
  Speaker 9: things like fresh pet that they have the fresh frozen
• 17:44
  Speaker 9: which is really like human great food that you just
• 17:48
  Speaker 9: you know, take it out of the.
• 17:49
  Speaker 3: Fridge and you give it to your dog. We know that,
• 17:53
  Speaker 3: I exadly, I shouldn't have said that, So we know
• 17:57
  Speaker 3: that Americans love their pets, and everyone knows that. To
• 18:01
  Speaker 3: your point, people are delaying having children because they have
• 18:04
  Speaker 3: pets are in part because they have pets and because
• 18:06
  Speaker 3: the economy is tough. Where does the US that.
• 18:09
  Speaker 9: Globally, Yes, so we're still about forty percent of the market.
• 18:15
  Speaker 9: You know, we're probably going to grow about thirty five
• 18:18
  Speaker 9: percent compared to like the thirty eight percent that we
• 18:20
  Speaker 9: expect over the next five years. So we're still going
• 18:23
  Speaker 9: to be the biggest, the most mature part of the industry.
• 18:28
  Speaker 9: There's others that might grow faster than that. There's other
• 18:31
  Speaker 9: regions outside of Europe and the United States. However, that
• 18:36
  Speaker 9: size of the pie is smaller.
• 18:38
  Speaker 4: Obviously, you know, it's not just dogs.
• 18:40
  Speaker 2: There was a fascinating Bloomberg profile of a guy I
• 18:43
  Speaker 2: think it must have been Florida who sells designer geckos,
• 18:48
  Speaker 2: and some of them fetch a fortune, like five grand
• 18:52
  Speaker 2: for a little get go.
• 18:54
  Speaker 4: What's the most popular pet? Is it the dog?
• 18:57
  Speaker 9: It's steel dogs and cats, you know, And that is
• 19:00
  Speaker 9: like mainly, you know, where we focused on. Of course,
• 19:04
  Speaker 9: there's like others like hamsters and cobras and things like that,
• 19:08
  Speaker 9: but that doesn't by.
• 19:09
  Speaker 4: The way, just.
• 19:11
  Speaker 2: Parenthetically, don't put the hamster near the cobra.
• 19:15
  Speaker 3: Oh my fish is also I don't want to imagine that,
• 19:17
  Speaker 3: she seem Obviously, fish is also fun. I think it's
• 19:20
  Speaker 3: good training for young kids. You know, they just feed
• 19:22
  Speaker 3: it once today. The cleaning of the aquarium is always tough, though,
• 19:26
  Speaker 3: don't you smell them responsibility for sure. Okay, so we
• 19:30
  Speaker 3: know that e commerce sales. You wrote in your note
• 19:31
  Speaker 3: that in the US it might reach twenty seven percent
• 19:34
  Speaker 3: of the total from twenty percent in twenty twenty. So
• 19:36
  Speaker 3: we have that, we have the pharma market, we have
• 19:38
  Speaker 3: the food market really just growing. What could be what
• 19:43
  Speaker 3: could be the hindrance here. What headwinds are you seeing
• 19:46
  Speaker 3: in this space.
• 19:46
  Speaker 9: Well, we actually see certain pockets of the market being
• 19:50
  Speaker 9: a little bit more conflicted, particularly in the past year
• 19:54
  Speaker 9: discretionary spending. You know, we did make fun of the
• 19:58
  Speaker 9: vests and even you know, popular fashion brands are expanding
• 20:04
  Speaker 9: their their you know, their names into pets. But that
• 20:08
  Speaker 9: part of the spending has been a little bit subdued,
• 20:12
  Speaker 9: I want to say. And part of it is because
• 20:15
  Speaker 9: the population, the pet population has been you know, not
• 20:19
  Speaker 9: growing as much as they used to, like back in
• 20:22
  Speaker 9: at the beginning of the pandemic. But another thing is
• 20:25
  Speaker 9: obviously economic, uh, you know, the economic situation. People are
• 20:29
  Speaker 9: curbing their spending, so that is like one of the
• 20:32
  Speaker 9: first few things. In terms of premium we still think
• 20:35
  Speaker 9: it's gonna premium food. We still continue to think that
• 20:40
  Speaker 9: it's probably going to get to fifty seven sixty percent
• 20:43
  Speaker 9: of the food in the US, like the overall food,
• 20:47
  Speaker 9: but the cadence is probably going to be more like
• 20:50
  Speaker 9: twenty seven on rather than shorter term. We think people
• 20:54
  Speaker 9: are going to probably get with kibbles rather than you know,
• 21:00
  Speaker 9: the fresh frozen part.
• 21:03
  Speaker 2: Diana, thank you, Diana, Rosaria Penya. The consumer staples analyst,
• 21:08
  Speaker 2: how the world is going to spend five hundred billion
• 21:11
  Speaker 2: dollars other pets.
• 21:13
  Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
• 21:18
  Speaker 1: and anywhere else you get your podcasts. Listen live each
• 21:22
  Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,
• 21:25
  Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
• 21:29
  Speaker 1: You can also watch us live every weekday on YouTube
• 21:33
  Speaker 1: and always on the Bloomberg Terminal.