Latest / Bloomberg Intelligence / Disney+ Price to Jump 13% to $21.49 Per Month

Transcript

Disney+ Price to Jump 13% to $21.49 Per Month · Bloomberg Intelligence

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  Speaker 2: Are you a Disney Plus subscriber, either of you guys?
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  Speaker 4: I was. I go back and forth.
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  Speaker 2: I think that's a big jump, 13%.
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  Speaker 4: I know.
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  Speaker 3: Double-digit percentage change and, like, to 2149, that's a different
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  Speaker 3: level of, you know, do I want to partake in
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  Speaker 3: this or not? I was just thinking, while you were
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  Speaker 3: reading some of the latest headlines, if you type Top
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  Speaker 3: Worldwide Go on the Bloomberg Terminal, every... not every, but
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  Speaker 3: many of the headlines are all reaffirming this inflation theme.
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  Speaker 3: The big take today is about how a $ 5, 000 bike
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  Speaker 3: shows why it's hard to build in America. You talked
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  Speaker 3: about the Disney Plus price hike, U.S. mortgage rates climbing
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  Speaker 3: above 7%, Treasuries swooning because this PMI data is reviving
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  Speaker 3: inflation woes. You can't get away from it.
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  Speaker 2: No, inflation is everywhere seemingly, and including in the streaming business.
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  Speaker 2: So let's check out this Disney News here. We can
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  Speaker 2: do that with Geetha Ranganathan. She covers all the media
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  Speaker 2: stocks for Bloomberg Intelligence. Geetha, I don't know, 13% seems
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  Speaker 2: like a big jump here. What's behind it for Disney
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  Speaker 2: raising the prices here on Disney Plus?
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  Speaker 5: Yeah, they're just keeping up here with the Joneses, Paul. So,
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  Speaker 5: you know, everybody in the streaming world has obviously been
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  Speaker 5: raising prices. And really the narrative for all of the
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  Speaker 5: streamers and all of the media companies has shifted away from,
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  Speaker 5: you know, chasing subscriber growth to chasing profitability. And the
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  Speaker 5: one way that you chase profitability is implement these price
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  Speaker 5: increases from time to time. But I will point out that, yes, while,
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  Speaker 5: you know, all of the streamers have been, you know,
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  Speaker 5: increasing prices.
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  Speaker 4: At periodic intervals.
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  Speaker 5: Disney, in fact, has been one of the most aggressive
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  Speaker 5: in terms of pricing increases. So they introduced Disney Plus
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  Speaker 5: in 2019. And just before this price increase that was
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  Speaker 5: just announced, they have actually increased their prices by about
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  Speaker 5: 170 percent. So it's been a really steep increase from
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  Speaker 5: $ 6. 99 to almost $ 19 right before this price hike today.
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  Speaker 5: You compare that to an established player like Netflix, which
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  Speaker 5: has only probably raised its prices by about 45% over
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  Speaker 5: the past five years. So Disney definitely has been one
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  Speaker 5: of the most aggressive. But again, this all goes back
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  Speaker 5: to that profitability equation and them chasing those high operating
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  Speaker 5: margins in the streaming business.
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  Speaker 3: Just for context here, the Disney Plus and Hulu with
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  Speaker 3: advertising will cost $ 12. 49 per month on a standalone basis.
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  Speaker 6: Okay.
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  Speaker 3: And that's quite a bit to have to pay to
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  Speaker 3: watch for commercials, too. Geetha, you mentioned that. Disney Plus
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  Speaker 3: is now chasing profitability as opposed to chasing eyeballs, which
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  Speaker 3: kind of was the former business model. At that time,
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  Speaker 3: it was all about subscriber additions, and you got that
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  Speaker 3: through global markets.
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  Speaker 4: The U.S.
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  Speaker 3: Was always seen as the more profitable user base. Does
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  Speaker 3: that mean that these streamers are now recommitting to monetizing
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  Speaker 3: their U.S. base and trying to target that U.S. base
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  Speaker 3: more than they are looking to build on gaining market
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  Speaker 3: share globally?
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  Speaker 5: Yes, I think you absolutely hit the nail there on
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  Speaker 5: the head, Scarlett. It has become all about monetization. And again,
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  Speaker 5: you pointed to the advertising part of the business, the
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  Speaker 5: Disney and Hulu bundle with ads. Advertising is another big
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  Speaker 5: monetization mechanism. So for those subscribers who are unwilling to
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  Speaker 5: pay the much heavier price for the ad-free product, you know,
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  Speaker 5: they still do have that cheaper ad-supported version that they're
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  Speaker 5: kind of pushing customers to. The one thing that I
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  Speaker 5: would kind of try to point out with Disney, which
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  Speaker 5: is different from other streamers, is Disney still gets majority
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  Speaker 5: of its subscriber additions through the bundle. So the Disney
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  Speaker 5: bundle is still kind of this inherent value proposition, which
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  Speaker 5: none of the other streamers really have. I mean, you know,
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  Speaker 5: Netflix doesn't have that, HBO doesn't have that, but Disney
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  Speaker 5: has this unique value kind of value proposition with Hulu,
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  Speaker 5: Disney +, as well as ESPN. And so, you know,
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  Speaker 5: we have seen time and time again that even if
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  Speaker 5: prices have gone up, churn necessarily hasn't because they've been
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  Speaker 5: able to sell the bundle. But you're absolutely right. Monetization
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  Speaker 5: is the new mantra for all of these streamers.
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  Speaker 2: So, Geetha, how profitable is the streaming business today in
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  Speaker 2: terms of maybe like profit margins and maybe where do
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  Speaker 2: they want to get to?
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  Speaker 4: Yeah.
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  Speaker 5: So, you know, Paul, we've spoken about this so many times,
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  Speaker 5: but just like two years ago, Disney actually posted about
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  Speaker 5: a $ 4 billion loss on the Disney Plus streaming business. Today,
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  Speaker 5: we're looking at almost about $ 2. 5 to $ 3 billion of profit.
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  Speaker 5: But ultimately, the number, it all comes down to the margins.
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  Speaker 5: So with that $ 3 billion of profit, they're going to
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  Speaker 5: be posting about maybe 11%, 12% operating margin profit. But
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  Speaker 5: the number that everybody is chasing in the industry is
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  Speaker 5: the Netflix number, which is 30 percent operating margin. And
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  Speaker 5: Netflix itself is trying to get to a 40 percent
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  Speaker 5: operating margin. So everybody has, you know, the goalposts are
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  Speaker 5: constantly moving. But really, the 30 percent or anything even
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  Speaker 5: above 25 percent, it would really be very, very desirable
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  Speaker 5: for any of these rather relatively newer streamers.
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  Speaker 3: How does a Netflix get to 40% margins? Is that,
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  Speaker 3: I mean, Netflix is now going to hike its price
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  Speaker 3: as well? Is that the only way to do it?
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  Speaker 5: Yeah, they're going to have to hike their prices, but
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  Speaker 5: they're going to have to do it very, very carefully
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  Speaker 5: because Netflix over the past few months, they've really been
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  Speaker 5: battling this whole weakness in engagement. So people not engaging
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  Speaker 5: with Netflix content as much as they used to before,
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  Speaker 5: And there's a real worry on the streets, Scarlett, that
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  Speaker 5: that is ultimately going to lead to a revenue decline
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  Speaker 5: and possibly put pressure on margins. So this is something
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  Speaker 5: that they're going to have to address. They do have
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  Speaker 5: a few growth levers in terms of advertising, in terms
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  Speaker 5: of price hikes. But again, it's going to be a very,
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  Speaker 5: very careful balancing act, especially as their content budget keeps climbing.
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  Speaker 5: So remember, this year, it is going up 10% to
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  Speaker 5: $ 20 billion. So they are one of the hugest content
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  Speaker 5: spenders in the media industry today.
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  Speaker 4: All right.
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  Speaker 2: We've got for the stock of Disney, 35 buy ratings,
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  Speaker 2: three holds, and one sell. Why we have 39 analysts
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  Speaker 2: following one stock, I have no idea. I'm assuming 35
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  Speaker 2: of them are not getting paid commissions, but they're still
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  Speaker 2: covering it. So yet the stock is down 8%, 9%
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  Speaker 2: year to date. Geetha, what's the investor consensus about the
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  Speaker 2: Disney story these days?
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  Speaker 5: Yeah, we really need some kind of catalyst, Paul, some
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  Speaker 5: kind of really big catalyst that can move this name. And,
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  Speaker 5: you know, earlier this year, I think the big concerns
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  Speaker 5: around Disney was, is consumer demand slowing? Are we going
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  Speaker 5: to see weakness at the parks? We heard a lot
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  Speaker 5: of noise about international visitation really kind of weakening. We
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  Speaker 5: heard comments from Comcast about, you know, their universal parks
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  Speaker 5: kind of seeing some weakness in Orlando. Somehow Disney has
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  Speaker 5: managed to steer clear of all of that. They've kind
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  Speaker 5: of shown us that they can grow park attendance, they
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  Speaker 5: can grow park profitability. But there is this looming concern
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  Speaker 5: about what is going to be the next big growth catalyst.
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  Speaker 5: Is it going to be streaming? How are they going
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  Speaker 5: to be able to achieve that? Especially as every day
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  Speaker 5: you have newer and newer concerns especially with any of
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  Speaker 5: these subscription models. The latest concern, of course, has been
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  Speaker 5: with Muse, you know, the new meta AI agent, which
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  Speaker 5: can basically go and, you know, cut out some of
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  Speaker 5: your pricey subscriptions. So I think anybody with a subscription
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  Speaker 5: model is going to have to be really, really careful here.
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  Speaker 2: I didn't even think of that.
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  Speaker 3: Okay, that is kind of a useful thing for that app.
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  Speaker 3: Maybe I will download it. I will concede to that point. Geetha,
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  Speaker 3: of course, there's a lot of big news around Paramount Skydance,
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  Speaker 3: you know, settling with California and other states, but I...
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  Speaker 3: Notice there was one story here, and this kind of
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  Speaker 3: ties in with our conversation about streaming overall, about Pluto TV,
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  Speaker 3: which is part of Paramount Skydance. There's a new ad
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  Speaker 3: campaign for Pluto TV, which is a free streaming service
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  Speaker 3: with the slogan, free is only getting more popular. And
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  Speaker 3: it ties in nicely with everything we've been talking about
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  Speaker 3: with Disney +, hiking its prices, Netflix having no choice
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  Speaker 3: but to.
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  Speaker 2: Do that as well.
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  Speaker 3: I mean, what does Pluto TV do? Is it a
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  Speaker 3: replacement for HBO, for Netflix, for Hulu?
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  Speaker 5: It is not a replacement, unfortunately, for Netflix or Hulu.
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  Speaker 5: But it does give you some of your older shows,
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  Speaker 5: what people call comfort food television. And you're not really
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  Speaker 5: going to be paying anything for it. Of course, you
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  Speaker 5: have to watch a bunch of ads. Some people are
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  Speaker 5: okay with that as long as they just want to
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  Speaker 5: put something on their television but don't want to be
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  Speaker 5: paying like $ 100 or $ 200 and all of these different
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  Speaker 5: streaming subscriptions. So it kind of works well. We've seen
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  Speaker 5: some of these services actually do really well. Roku Channel
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  Speaker 5: is a great example. Tubi from Fox is a great example.
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  Speaker 5: Pluto TV had a great run initially, but then fell
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  Speaker 5: off the bandwagon a little bit. But I think with
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  Speaker 5: the new management, with Paramount Skydance, with David Ellison, You know,
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  Speaker 5: I think he's going to try and reinvigorate that whole
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  Speaker 5: business just as things are kind of heating up with
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  Speaker 5: Fox and its Roku acquisition. So I think all of
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  Speaker 5: this is kind of going to tie in together nicely
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  Speaker 5: once they all come together.
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  Speaker 3: Stay with us.
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  Speaker 1: More from Bloomberg Intelligence coming up after this. You're listening
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  Speaker 1: to the Bloomberg Intelligence Podcast. Catch us live weekdays at
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  Speaker 1: your podcasts or watch us live on YouTube.
• 9:40
  Speaker 2: While I'm taking Scarlett, my first cruise ever. in about
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  Speaker 2: 10 days.
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  Speaker 3: Which one did you pick, by the way?
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  Speaker 2: Viking cruise in France.
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  Speaker 3: Okay. What prompted you to decide to take the plunge?
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  Speaker 2: I was told I'm taking the plunge.
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  Speaker 5: Oh, okay. All right.
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  Speaker 2: That's the easiest way. I said, okay, I'm going with
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  Speaker 2: an experienced cruiser, so I figured... And a river cruise,
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  Speaker 2: I was told you need to walk before you can run,
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  Speaker 2: before you take a big ocean.
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  Speaker 4: Ah, okay, smart, smart.
• 10:04
  Speaker 5: So there you go.
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  Speaker 2: So anyway, this story jumped out at me today. Royal
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  Speaker 2: Caribbean buys a 50% stake in Sandals Resorts for about
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  Speaker 2: $ 3 billion. So I figured we've got to get Brian
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  Speaker 2: Egger on here to talk about this. Brian covers all
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  Speaker 2: the cruise companies, the gaming companies, all the fun stuff
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  Speaker 2: out there, the hotels, motels, all that stuff. Brian, what's
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  Speaker 2: Royal Caribbean doing here? This is a little bit unusual.
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  Speaker 4: Royal Caribbean, along with Carnival and Viking, have been developing
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  Speaker 4: island-based destinations. This is part of a continued, maybe you'd
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  Speaker 4: call it a land-based strategy, to augment their cruise assets
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  Speaker 4: with destination ports of call and land-based assets. This is
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  Speaker 4: a bit different because, obviously, they are all-inclusive, dedicated resorts.
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  Speaker 3: Which are seeing a moment, right? Which are a big
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  Speaker 3: thing right now.
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  Speaker 5: Yes, exactly.
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  Speaker 4: So while it is a departure, it's not entirely far
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  Speaker 4: afield for them because they are already involved in island-based destinations.
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  Speaker 3: I like that idea. Land-based strategy, island-based destinations. This is
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  Speaker 3: a purchase of 50% of sandals. Why not go all in?
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  Speaker 4: So, I mean, we don't know exactly the strategic reasons,
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  Speaker 4: but I would say from our perspective, having that equity
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  Speaker 4: exposure while... maybe only tapping part of its existing liquidity
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  Speaker 4: and not having to lever up. And at the same time,
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  Speaker 4: you know, it may be part of the consideration. They
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  Speaker 4: get tax exemptions from being an international shipping operator. This
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  Speaker 4: basically keeps that part of a separate joint venture. So
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  Speaker 4: I think the scale of it makes sense. I think
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  Speaker 4: had they done something that was more than 50 percent
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  Speaker 4: of control would have levered up quite a bit.
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  Speaker 2: All right, so I'm paying, I don't know, $ 4. 50 a
• 11:50
  Speaker 2: gallon to fill up the Vespa. If I've got a
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  Speaker 2: big cruise ship and I'm loading, I could pull up
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  Speaker 2: and I've got to fill up with, I guess it's
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  Speaker 2: bunker fuel?
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  Speaker 4: Yeah, yeah.
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  Speaker 2: That's really expensive, too. What is going on there? How
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  Speaker 2: did the cruise ship industry, how did they deal with
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  Speaker 2: these rising fuel costs?
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  Speaker 4: So, short answer to the question, they do some hedging.
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  Speaker 4: Not Carnival, but Royal Norwegian. And we had a note
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  Speaker 4: out this morning actually talking about the fuel cost exposure,
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  Speaker 4: which we were more concerned about maybe a week ago
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  Speaker 4: with brand of 110. Now it's down just about 100. But,
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  Speaker 4: you know, we are aware of this fact because Carnival
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  Speaker 4: reports earnings next week. When they last reported in June,
• 12:29
  Speaker 4: Brent was at 77 bucks. So they're all updated. There
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  Speaker 4: are fuel cost exposure. They can mitigate it with some efficiencies.
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  Speaker 4: This is only part of the picture, but obviously higher
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  Speaker 4: fuel costs are challenging. There is a ticker on the
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  Speaker 4: Bloomberg terminal for this bunker fuel stuff. I'm not sure
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  Speaker 4: if I picked up the right one, but January, it was,
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  Speaker 4: call it $ 425 per metric ton.
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  Speaker 2: Now it's $ 845 per metric ton. Imagine pulling up and
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  Speaker 2: filling up your....
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  Speaker 4: Tank.
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  Speaker 3: And have it be double what it was before. So
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  Speaker 3: that raises a good point because we know that Paul
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  Speaker 3: booked his Viking cruise, what, like a year ago?
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  Speaker 4: Yeah. Okay.
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  Speaker 3: So, I mean, Viking had that booked for them. They
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  Speaker 3: knew it was coming up and they have visibility. But
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  Speaker 3: for the cruise line operators that are now booking people
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  Speaker 3: for a year out, have those prices gone way up
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  Speaker 3: because of the fuel prices?
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  Speaker 4: They're not doing anything like fuel price surcharges. But that
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  Speaker 4: being said, the underlying demand for leisure-based vacations for cruises
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  Speaker 4: has been really strong. Overall, the bookings have been really
• 13:31
  Speaker 4: quite robust for cruises generally, with the exception of Eastern
• 13:35
  Speaker 4: Mediterranean cruises affected by the conflict in the Middle East.
• 13:38
  Speaker 4: So the conflict in Iran is- That's a separate thing.
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  Speaker 4: Twofold impact. Although, but that's one of the causes, obviously,
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  Speaker 4: of higher fuel costs. So it really has a dual impact.
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  Speaker 2: Yeah.
• 13:48
  Speaker 6: All right.
• 13:48
  Speaker 2: Enough on that stuff. Let's get to the casinos. How's
• 13:51
  Speaker 2: Vegas doing? How's the strip doing? How are my friends
• 13:53
  Speaker 2: on the strip doing?
• 13:54
  Speaker 4: So better, I guess you could say, better or stabilizing
• 13:57
  Speaker 4: versus last year. 2025 is a tough year for Vegas.
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  Speaker 4: A lot of softer midweek visitation, a little bit of
• 14:03
  Speaker 4: sticker shock from some more price conscious visitors. So visitation
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  Speaker 4: was down last year. It's flattish this year to date.
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  Speaker 4: So it's not exactly robust. The convention business has been strong.
• 14:16
  Speaker 4: But the midweek leisure business, particularly for more value-conscious consumers,
• 14:21
  Speaker 4: lower-priced casinos is softer. Where you stay, they don't lower
• 14:24
  Speaker 4: the prices.
• 14:25
  Speaker 5: Well, the Bellagio.
• 14:26
  Speaker 2: I state the High Roller Suite, of course.
• 14:27
  Speaker 4: Or the Bellagio. You have a lot of pricing stability.
• 14:29
  Speaker 2: Where does the lower-end... Because when I started going to Vegas,
• 14:33
  Speaker 2: there was a lot of stuff on the Strip that
• 14:34
  Speaker 2: you could go that was not the Mirage, which was
• 14:37
  Speaker 2: a high-end property at the time. Where do people go now?
• 14:40
  Speaker 2: Do they go downtown Vegas or go off Strip?
• 14:43
  Speaker 4: Yeah, I mean, there is a– and there are some
• 14:45
  Speaker 4: Strip properties that are more affordable, relatively speaking, some owned
• 14:49
  Speaker 4: by Caesars, etc., Wynn is the exception on the very
• 14:52
  Speaker 4: high end. But if you look at what's happening in Vegas,
• 14:55
  Speaker 4: it's pretty much analogous to what's happening in hotels. You
• 14:57
  Speaker 4: have the high end a bit stronger, the low end
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  Speaker 4: feeling a bit more price pressure. Luxury high end consumers
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  Speaker 4: are still spending. We're wary of that could change, but
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  Speaker 4: there is that kind of C-shaped economy.
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  Speaker 5: Oh, boy.
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  Speaker 3: Okay, so I guess the question is, how has it
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  Speaker 3: been responding to the flattish visitation growth that it's been
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  Speaker 3: seeing the last few years? Did it change its strategy
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  Speaker 3: in any way?
• 15:24
  Speaker 4: I don't think they've overall changed their strategy, but they've
• 15:27
  Speaker 4: probably been more conscious about consumers reacting to higher prices
• 15:32
  Speaker 4: for certain things that they might take for granted, bottles
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  Speaker 4: of water, et cetera. So the consumer that wants a
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  Speaker 4: luxury experience staying at Wynn they're going to pay those rates.
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  Speaker 4: They expect that experience. For more value-based consumers, I think,
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  Speaker 4: and MGM has even said this, they become more conscious
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  Speaker 4: that that middle-tier consumer or more price conscious is going
• 15:52
  Speaker 4: to block it paying those super high prices. Stay with us.
• 15:55
  Speaker 3: More from Bloomberg Intelligence coming up after this.
• 16:01
  Speaker 1: You're listening to Bloomberg Intelligence with Scarlett Fu and Paul
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  Speaker 1: Sweeney on Bloomberg Radio.
• 16:09
  Speaker 2: All right, it's Scarlett Philp, Paul Sweeney, live here in
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  Speaker 2: our Bloomberg Interactive Broker Studio in New York City. We're
• 16:14
  Speaker 2: also streaming live on YouTube as well. I'm streaming live
• 16:16
  Speaker 2: at Bloomberg.com as well. General Mills, consumer products company, they
• 16:20
  Speaker 2: reported some numbers. I thought they were pretty darn good.
• 16:22
  Speaker 2: Stocks pretty much unchanged on the day. Stocks down 24%
• 16:26
  Speaker 2: year to date. Consumer products companies hit with concerns about
• 16:30
  Speaker 2: inflation and the consumer and changing different diet habits out
• 16:35
  Speaker 2: there in the world. It's some challenges for those consumer
• 16:37
  Speaker 2: products companies. But we want to get the latest on
• 16:40
  Speaker 2: their results. We turn to Emily Cohn. She's a consumer
• 16:42
  Speaker 2: team leader for Bloomberg News joining us here in studio. Emily,
• 16:46
  Speaker 2: what did General Mills say about their business with their
• 16:48
  Speaker 2: most recent quarterly earnings?
• 16:49
  Speaker 6: Yeah, so they reported a quarterly earnings beat, but a
• 16:53
  Speaker 6: lot of, you know, some doom and gloom there on
• 16:55
  Speaker 6: the consumer and the consumer being stressed, especially the middle
• 17:00
  Speaker 6: to lower consumer. They talked about shoppers waiting to buy
• 17:04
  Speaker 6: products until they're on sale. These are all concerning signs
• 17:08
  Speaker 6: that I think are weighing on the stock.
• 17:11
  Speaker 2: Yeah, so I mean, it's down about half a percent today,
• 17:13
  Speaker 2: but again, down 24% on a year-to-date basis here. I mean,
• 17:19
  Speaker 2: what I've heard from a lot of consumer products companies
• 17:21
  Speaker 2: is some of these private label store brands are actually
• 17:26
  Speaker 2: taking some share away from some of the more branded
• 17:28
  Speaker 2: products out there on the on the shelves in the supermarkets.
• 17:32
  Speaker 2: Is that what General Mills is seeing?
• 17:34
  Speaker 6: It's a really good point. I think this is affecting
• 17:37
  Speaker 6: companies like General Mills and Kraft Heinz, where you see
• 17:40
  Speaker 6: two things happening. You see the private label getting more
• 17:44
  Speaker 6: premium and more people shopping down to private label. And
• 17:47
  Speaker 6: then you see on the premium side, brands like Goodles
• 17:51
  Speaker 6: that cost more than your Kraft macaroni and cheese, but
• 17:54
  Speaker 6: offer things in terms of fiber and protein.
• 17:58
  Speaker 4: So you see.
• 18:00
  Speaker 6: More in the private label, more in the premium side.
• 18:04
  Speaker 6: And then that really puts a squeeze on what I
• 18:07
  Speaker 6: think of as these middle brands, the General Mills. And
• 18:11
  Speaker 6: that's why you see General Mills coming out and saying,
• 18:13
  Speaker 6: I think their approach to pricing is to charge more
• 18:19
  Speaker 6: for things that have extras, Cheerios with protein, other foods
• 18:25
  Speaker 6: with fiber. So that's a way of raising prices with
• 18:30
  Speaker 6: maybe not raising prices across the board.
• 18:33
  Speaker 2: We've now had, I guess, several years of pretty widespread
• 18:37
  Speaker 2: GLP-1 use out there in the marketplace. What are these
• 18:42
  Speaker 2: food companies saying? Has it really impacted their business? Are
• 18:46
  Speaker 2: people really eating less across the board?
• 18:49
  Speaker 6: I think food companies tend to say when you look
• 18:51
  Speaker 6: at a family's basket size, there's not much changing. But
• 18:55
  Speaker 6: you definitely see consumption... habits changing, especially on these ultra-processed foods.
• 19:04
  Speaker 6: I think ultra-processed foods that don't offer any nutrition are struggling.
• 19:10
  Speaker 6: But where you see growth in the snacking area are
• 19:13
  Speaker 6: these what we call better-for-you snacks, snacks that offer some
• 19:17
  Speaker 6: kind of nutritional value, protein, fiber. That's where the growth is,
• 19:23
  Speaker 6: and that's what you see General Mills talking about where
• 19:25
  Speaker 6: they're leaning into.
• 19:27
  Speaker 2: And just so you know, this is a protein-free studio.
• 19:30
  Speaker 2: I hate that term, but all my kids use it.
• 19:32
  Speaker 2: I'm like, well, no, you ask if you want chicken
• 19:33
  Speaker 2: or shrimp or whatever. What protein are we having tonight?
• 19:36
  Speaker 2: That'll get you kicked out of my kitchen pretty, pretty quick. So,
• 19:40
  Speaker 2: but that's kind of where the marketplace is going. And
• 19:43
  Speaker 2: are these food companies keeping up with the, because oftentimes it's,
• 19:47
  Speaker 2: people talk about innovation, product innovation. What are they bringing
• 19:50
  Speaker 2: to the market? Is it a different– food? Is it
• 19:52
  Speaker 2: different packaging? Is it different sizing? How are they trying
• 19:55
  Speaker 2: to react?
• 19:56
  Speaker 6: I think it's all of the above. I think you're
• 19:57
  Speaker 6: going to see changes in sizing and assortment, and then
• 20:01
  Speaker 6: also these more premium products that they can charge more for.
• 20:04
  Speaker 6: We have a story today about Kraft Heinz seeing much
• 20:08
  Speaker 6: faster growth in its Heinz Simply label, which is their
• 20:12
  Speaker 6: ketchup that strips out all the, you know, quote-unquote bad ingredients,
• 20:18
  Speaker 6: and they charge more per ounce for it.
• 20:20
  Speaker 2: Do they? And it's selling.
• 20:21
  Speaker 6: I And the growth of the Simply Ketchup is outpacing
• 20:27
  Speaker 6: the growth of.
• 20:28
  Speaker 2: The regular ketchup. I wonder if my shopping basket has
• 20:31
  Speaker 2: changed much over the last 20 or 30 years. Probably not.
• 20:35
  Speaker 2: But for the younger demos coming in, younger parents coming
• 20:38
  Speaker 2: into the store, they have different tastes. And it's up
• 20:42
  Speaker 2: to the companies to keep up with it, I guess.
• 20:44
  Speaker 6: Totally, totally.
• 20:45
  Speaker 2: How is it in terms of getting shove space these days?
• 20:48
  Speaker 4: It's still.
• 20:49
  Speaker 2: Super duper competitive to get proper shelf space, not to
• 20:52
  Speaker 2: be done on the floor or way up out of reach.
• 20:54
  Speaker 2: Is that still a game they play?
• 20:56
  Speaker 6: Yeah, I think there's a lot of pressure coming from
• 20:58
  Speaker 6: the retailers. We had a story last week about the
• 21:01
  Speaker 6: retailers being warned by the food companies that higher prices
• 21:07
  Speaker 6: are coming. And I don't know if the retailers are
• 21:12
  Speaker 6: willing to play ball. We had a story also this
• 21:16
  Speaker 6: week about Boar's Head and Red Bull disappearing from some
• 21:21
  Speaker 6: Kroger stores over these price negotiations. Because Kroger, their whole
• 21:25
  Speaker 6: strategy right now is to bring prices down. But some
• 21:28
  Speaker 6: products are bringing their prices up. So- It's really a
• 21:33
  Speaker 6: question of who has more power in this negotiation.
• 21:35
  Speaker 2: I was going to say, I mean, Boar's Head and
• 21:37
  Speaker 2: Red Bull, those are major brands. Yeah. Brand value.
• 21:40
  Speaker 6: Well, Red Bull, I mean, that's a really competitive space
• 21:43
  Speaker 6: right now. So Kroger is saying that their energy drinks
• 21:46
  Speaker 6: are up despite not carrying Red Bull.
• 21:49
  Speaker 1: Okay.
• 21:49
  Speaker 6: So there are all these new entrants, Alani New, that
• 21:51
  Speaker 6: are selling like crazy. Maybe they don't need the pricey
• 21:54
  Speaker 6: Red Bulls.
• 21:55
  Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
• 22:00
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• 22:04
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• 22:13
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