Vodka Mandarin, Doordash, Regrown Teeth, Costco and Rick Ross teaches you to be a Boss'

Greetings folks and a warm welcome to the 4th edition of Friday Finance Weekly. I trust everyone is gearing up for the weekend, and if you’re in Vancouver, I hope the sun stays up. This week, the word "unprecedented" lost all meaning after former President Trump was found guilty on felony charges. I am surprisingly surprised! Also, it looks like someone read my post last week and hacked TicketMaster.

Florida and Sao Paolo, are responsible for a whopping 85% of the global supply of orange juice. Severe drought conditions in Brazil, and increased cases of citrus greening disease in both countries, indicate severe shortages ahead.

• As orange juice availability reached its lowest point in the last 50 years, the beverage industry is being forced to search for alternatives while bracing for potential price shocks in the near term.

• Concentrated orange juice futures have increased steadily since 2022, when a hurricane followed by a cold snap devastated orange groves in Florida.

• With Brazil’s drought conditions now on the radar, OJ futures hit a record high of $4.92 per pound on Tuesday, nearly double the price from a year ago (FT).

• As manufacturers scramble for alternatives, some experts believe the long-term solution could be to start making orange juice from mandarins – a much more resilient plant.

Think about it, the orange in a vodka orange will be more expense than the vodka. I reread that sentence a few times and it appears to be grammatically correct. Also a vodka mandarin doesn’t have a good ring to it. Time to start stocking up on orange juice just like we did with TP during the pandemic. (Source: Food Navigator)

Tried every delivery app during the pandemic? Maybe that was a problem as its no back firing, there were simply too many new entrants.

• The four largest (standalone) public food delivery businesses in Europe and the US – Deliveroo, Just Eat Takeaway, Delivery Hero, and DoorDash, have suffered cumulative annual operating losses of $20.3B since going public. Note: Rival Uber Eats, who do not disclose standalone operating profits for their delivery unit, reported its first full year of group-level operating profitability in 2023.

• Investors now prioritize profitability (what a concept?) amid tougher economic conditions, shifting away from subsidizing delivery costs for market share.

• Despite challenges, analysts are optimistic about improved financials, emphasizing the importance of generating more cash than spending. Each company has shown some degree of recent financial improvement which continues to drive an optimistic long-term outlook from industry analysts.

• These companies are now shifting their focus on free cash flow as an alternative measure of profitability, as certain groups point toward significant write downs and employee share awards as having a pronounced impact on their bottom line. 

Ah the classic trick, let’s create our own valuation metric because we are special. Reminds me of the dotcom boom, but what do I know. Today ordered Church’s Chicken for lunch and it came 7KM’s away. It cost $22 for 3 meals including delivery. DoorDash had a 2-1 special. So how is this sustainable? I am not complaining and I think the offer is there for a week. (Source: FT)

A groundbreaking drug that can regenerate teeth will undergo its first human trial at Kyoto University Hospital from September 2024 to August 2025. The trial will involve 30 males aged 30-64 who are missing at least one molar. The treatment works by deactivating the USAG-1 protein, which suppresses tooth growth, thereby promoting new tooth formation. I wonder what will happen when we deactivate the USAG-2 protein? If successful, this therapy could be available for those with permanently missing teeth by 2030. Unfortunately, there doesn’t seem to be a way to profit from this news as it's being developed by the University of Kyoto. I suggest going to meth dealers and asking them to cross-sell tooth-growing services, then using Affirm to offer interest-free financing over 6 months. What do you think? (Source: New Atlas)

Are you a costy (I am trying to create a new name for Costco fans)? Costco on Thursday beat all market expectations for sales (actual of $58.52 vs forecast of $57.98B) and adjusted earnings (actual of $3.78 vs forecast of $3.70). To be fair, they beat all expectations on pretty much every category including e-commerce and YOY same store growth. They do call it the Cult of Costco. So what’s the secret sauce –

• Costco also achieves cost savings for its customers through its procurement strategy. By placing very large orders with narrower assortment, their suppliers can provide their goods faster and cheaper.

• Costco is also choosy about its product offering, typically carrying ~3,800 unique items (SKUs) versus Walmart’s +120,000. This is a psychological tactic designed to minimize the customer’s difficulty of decision and ensure a purchase is made.

So what can you buy at Costco?

• Gold Bars: The company sells one-ounce 24-karat gold bars for $2,000 each, which generates ~$100M in monthly revenue.

• Automobiles: The company sells about 500,000 new cars annually in addition to ~$30B in fuel sales.

• Jewelry: Costco is the no. 6 jeweler in the US by sales, with revenue comparable to Tiffany & Co.

• Wine: Costco is the no. 1 seller of fine wines, with products ranging from a $20 bottle up to the 48-bottle collector’s set of Château Haut-Brion for $49,000.

Apparently, you can buy coffins at Costco. I was going to pre-buy a coffin but was concerned about shrinkflation. I guess the embalmer can always cut my legs shorter. Sorry, was this too morbid for a Friday? (Source: Yahoo Business News)

Did you know Rick Ross has a book (its well rated on Amazon)? Its called ‘The Perfect Day to Boss Up’. If you don’t have time to read it, here are some take aways –

• Ross’ seven principles for achieving success comprise basic ideas like constant learning, regular self check-ins, abiding by your moral compass, etc. The universal takeaway from those philosophies is that focusing on self-betterment will yield far greater results than public perception of one’s success.

• Authenticity is a long-term investment: everyone has a different path and it’s important to stay true to yourself, even if replicating someone else’s blueprint feels less complicated or uncertain. Criticism is inevitable so identify your niche, strive to excel in it, and find comfort in doing the things you truly enjoy.

• Overnight success often disappears as quickly as it comes, but dedication to consistent and organized practice will help prepare for greatness. Achieving success takes time, so set achievable goals but avoid planning a deadline.

• Acting on emotions often leads to harmful outcomes. Employ measured responses rather than knee jerk reactions and remember to always learn from your mistakes.

• Ambition is more important than aptitude as it’s our internal motivation that helps us weather the storms and grasp each opportunity. This truth, however, must be held in balance with the understanding that life is more than any singular thing you’re chasing.

• Being a boss requires no subordinates or affluence; it means acting as the CEO of your life. 

If Rick Ross is the boss and the boss is Bruce Springsteen, who is the boss? I attribute Rick Ross’s success to all the gold chains he wears, making his neck muscles abnormally strong and thus increasing his brain capacity. Just a thought. (Source: Rick Ross).

Have a fantastic weekend, and please don’t hesitate to forward this newsletter as you see fit.

Cheers, Sam