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- [00:00]
Anne Barry
I have created the most advanced AI soldier.
- [00:04]
Voice Actor / Advertiser
The wait is over. Tron Ares now streaming on Disney plus. We are looking for something, something you've discovered. Give me something to believe in and some of us will stop at nothing
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Anne Barry
to get it ready.
- [00:19]
Voice Actor / Advertiser
The countdown is complete.
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Anne Barry
There's no going back.
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Voice Actor / Advertiser
Our directive is clear.
- [00:25]
Anne Barry
Hang on.
- [00:26]
Voice Actor / Advertiser
Tron Ares now streaming on Disney Plus. Rated PG 13.
- [00:32]
Anne Barry
My goodness. My Guinness. The perfect Pints parent company is in a slump. We've got the latest turnaround plan from its new CEO. OKLO receives new guidance from the Nuclear Regulatory Commission. We explore why it could be a revenue game changer for the reactor startup and airline travel. The latest proof that the K shaped economy isn't losing steam. Even with higher jet fuel prices, extreme weather and TSA delays, some travelers just keep on flying. For Tuesday, March 17th is Blue Markets Daily and I'm Ann Ferry. More market details to come. But first, the K shaped economy is alive and kicking and manifesting now in slightly unexpected places. One that caught our eye, airline travel. Because despite higher jet fuel prices since the war with Iran began today, both Delta and American Airlines raised their revenue expectations for the first quarter, which frankly feels counterintuitive given the fact that headlines have exploded with warnings that airfares for travel this month have as much as doubled and that those high price points are expected to continue as war in the Middle east and airspace disruptions as a result remain. And there's more to why that revenue outlook raise is surprising. The airlines were hit with a ton of disruptive weather in the US this quarter. Remember, we have the major blizzard that hit the Northeast last month, grounding thousands of planes. And even as of this morning, more than 750 flights scheduled to fly into, out of or within the United States were called off, with about 1300 more delayed. And that's the snowstorms traverse the Midwest and head on east. And then there's the icing on the cake, which is TSA delays caused by employee absences, as roughly 50,000 Transportation Security Officers are being required to work without pay. And that's the result of a partial government shutdown that's caused a lapse in Department of Homeland Security since about mid February. You may have seen images going viral on social media this week of lines literally snaking through terminals at airports like LaGuardia in New York, doubtless leaving folks asking whether to just postpone any unnecessary travel. I know I'm not getting out there anytime soon. Yet Delta CEO Ed Bastian said on CNBC that demand has been, quote, really really great. That's two reallys leading to higher revenue growth this quarter than the airline had originally guided for. And meanwhile, American said in a securities filing that it now expects total revenue to increase by more than 10%. That's compared with prior guidance of 7 to 10% again due to stronger than expected demand. So while earnings haven't been revised upwards, that reflects the fact that oil prices are still hitting the airline's cost base and as a result their profit lines. The strong revenue outlook begs the question who is still flying at these prices in this environment? Well, Delta's been very clear. It's higher spending, individuals who are still hungry for travel and corporate customers filling up those premium seats. Five of the top 10 sales days in the company's history happened within the last two weeks. And a third airline, that's JetBlue, said at a JP Morgan conference today that it also sees robust appetite for its premium and core segments. Now this comes just as retail bellwethers have actually reported a slightly less optimistic outlook for US Consumers. Walmart as one example, the OG noted in its latest earnings cautious guidance for the full year 2026, citing concerns over an unstable economic background and a weak or spl the bifurcated consumer. And as tomorrow we're all ears because we're going to hear from the Federal Reserve what data the central bank is seeing by way of consumer health. The latest Fed rate decision, inflation outlook, labor market assessment and GDP forecast all due out from the Fed in under 24 hours time. Delta stock, by the way, up six and a half percent today in American up to three and a half percent. We'll keep on watching. Well, coming up, it's St. Patrick's Day and we highlight the recent success of Guinness Beer, a standout in an otherwise sobering marketplace for booze. But first, a word from our presenting sponsor, CME Group. No matter what the market is doing, managing risk and capturing opportunities is your top priority. And that's where CME Group comes in.
- [04:52]
John Carteau
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- [05:02]
Anne Barry
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- [05:17]
John Carteau
Get started@cmegroup.com podcast. That's cmegroup.com podcast.
- [05:24]
Anne Barry
Well, today as I said is St. Patrick's Day. I'm not wearing green. I regret not wearing green on the show today, but it is a day of celebration for many, featuring corned beef and cabbage chased down by a proper pint of Guinness. So Guinness, the iconic beverage was established in 1759 and fun fact, it was established at the St James's Gate Brewery in Dublin, infamously signing a 9,000 year lease on that property. Well, in 1997, Guinness was merged under the Diageo corporate umbrella. And by the luck of the Irish, we recently got this note from a listener. Allison Alison wrote. Hi Anne, I'd love to hear your POV on some of the recent commentary coming out of Diageo. The company's new CEO has suggested that the company needs to reach consumers beyond the traditional premium space and pursue more accessible price points. This prompted a bit of a panic in the industry. Might it be a race to the bottom? Curious. Your take. Well, Alison, it's great to hear from you and I will say we did take a quick look to see where perhaps you may work. And we do note that you work in the beverage industry. So it's a very informed. So the bar is particularly high for us as we dig into this day. And we're going to get into the messaging from the CEO in a moment and broader industry trends. But John, first give us some background on Diageo. While you're rocking your green shirt, you're in the spirit of St. Patrick's Day.
- [06:46]
John Carteau
I'm very much in this spirit. I am Irish and I ate some soda bread this morning. Here we go.
- [06:51]
Anne Barry
But how Irish are you?
- [06:53]
John Carteau
I am full on my mother's side, fully Irish and half on my dad's side.
- [06:58]
Anne Barry
Oh, well, that's three quarters, three quarters Irish. That's very Irish. Good for you.
- [07:01]
John Carteau
Thank you.
- [07:02]
Anne Barry
Welcome.
- [07:03]
John Carteau
Diageo is the British multinational premium spirits distiller headquartered in London, founded in 1997, now owns over 200 brands. This includes Guinness, Johnnie Walker, Smirnoff, Don Julio, Tangera, Captain Morgan and Bailey's. I wanted to list so many just to get a sense of how many different brands.
- [07:21]
Anne Barry
Yeah, big portfolio for sure.
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John Carteau
It trades as an ADR on the New York Stock Exchange ticker D E O. And in fact, this morning the company rang the bell down on the floor. Market cap of $43 billion. Share prices down 28% year over year and down 50% from its Covid peak.
- [07:37]
Anne Barry
Absolutely extraordinary. So I was very excited that we were going to have a chance to talk about Diageo. First of all headquartered in London. It's my hometown, but specifically I grew up really close to the Diageo headquarters and it's a really striking building. I remember when this thing was built, it was meant to be shaped like Noah's Ark to the point there's even what looks like a little giraffe head poking out on the top of it on the roof. It's really. It was sort of magical actually, but it was a sort of mystical building. And so what London has once or twice a year, and I think New York has this too, is something called an open house day, which is where really iconic buildings that are usually closed to the public sort of open up for this one day. And so I went to go and visit it actually, and it's architecturally stunning. It's got lots of open spaces and all these sort of open sort of balconies cascade down inside. Again, what's meant to be Noah's Ark. So Diageo has always, for me been associated with creative architecture.
- [08:28]
John Carteau
Very interesting.
- [08:29]
Anne Barry
Yeah, it's very cool. Well, let's take a quick look at Diageo's new leadership. Sir Dave Lewis officially became CEO on January 1st and he was previously known as a turnaround expert at Tesco, the UK's largest retailer. Think of that almost like the British Walmart in terms of its heritage and its, and its scale for the United Kingdom. And Diageo's latest earnings were released in February covering a six month period that ended on December 31st. So it was the last half of 2025 before the new CEO, Sir David Lewis came on in. And what that earnings report release, you know what their earnings report said, is that net sales had declined 4%, profit had declined 1.2%. And Lewis when he came into the seat highlighted the following quote, strong performance in Europe, Latin America and Africa was offset by a weakening performance in North America. U S spirits performance reflected pressure on disposable income and competitive pressure for more affordable alternatives addressing almost stretched consumer wallets. So again, the theme of just how much disposable income does this consumer have? The K shaped economy again. So we're seeing that the kind of premium brands that Diageo is associated with very much getting hit by incomes and inflation pressure here in the United States. The company lowered its guidance for full year sales in the United States and the board made headlines because it reduced its dividend, which is never a good sign, particularly with something that's historically been a pretty stable business like this one. And shares dropped 13% as a hefty decline on the day that those earnings came on out. So it's a tough set of circumstances to join in when you're a new CEO on January 1st, and even though this wasn't your performance, you're kind of presenting the results in a backward looking fashion. But, you know, maybe it's troughed and it's only upwards from here, but we're going to dig into that.
- [10:20]
John Carteau
Sure. And I saw one analyst say that they appreciated that the new CEO felt impatient in a good way, like he wants to get in there and mix things up.
- [10:27]
Anne Barry
I think it's a national trait. Impatience bias to action is how it's more diplomatically called in the United States.
- [10:33]
John Carteau
Quite a bit of a way of putting.
- [10:34]
Anne Barry
Exactly.
- [10:35]
John Carteau
So I thought this was interesting because we've been hearing the narrative that young, younger Americans drink less alcohol. There was a famous Gallup study that came out this summer that was highlighted with that information. And that can be for health reasons. There can also be, we've seen this in press releases, alternatives for relaxing and socializing, which means decriminalized marijuana, essentially alternatives and GLP1 disruption. So all these reasons that maybe folks are drinking less alcohol in the United States. But we heard the company say the issue is price. That was what the word out of the CEO was. And Diageo's brands in the US are mostly concentrated in the $45 and above seg, as you mentioned. And Louis said that the company is, quote, significantly underrepresented in mass market products.
- [11:15]
Anne Barry
Yeah. So there it is right there. And mass market. Mass market. It's interesting actually, because you would think that the 45 and above segment, which is a premium product or the narrative has been that consumers in the higher income brackets are actually still spending, they are value conscious, they're looking for bang for their buck. So it's sort of talking out of both sides of your mouth here, which is they're meant to be in the more protected segment. But on the other hand, consumers are still feeling the pinch. Well, last week Diageo announced the rollout of Johnnie Walker Red Soul, a more quote, accessible Scotch under its Johnnie Walker Red label brand. So it's heading on, going head on onto this price issue. It's a sweeter and smoother beverage for non whiskey drinkers and available at a lower price point. So it's interesting when you start to see these brands start putting together portfolios of sub brands and attempt to try and reach more consumers and sort of be all things to more people.
- [12:06]
John Carteau
And I'm starting to worry that pun intended it's diluting the brand because if you think of Johnnie Walker as a specific thing and then your Johnnie Walker Red Soul, I mean, at what point do you know what's in the bottle and Johnnie Walker master blender Emma Walker? I googled it. It's no relation.
- [12:21]
Anne Barry
Oh, that's disappointing.
- [12:22]
John Carteau
I know. It would have been exciting. Said that the new whiskey quote deliberately moves away from smoky notes to create something brighter with flavor being developed to appeal to a younger audience who had perhaps not tried whiskey. So basically, it's whiskey. It's not whiskey.
- [12:36]
Anne Barry
It's not whiskey.
- [12:37]
John Carteau
It's people who don't. And it reminded me, Anne, of like Bartles and J. James wine coolers or something like that, you know, for younger people who were drinking wine. But really it was some sort of fortified wine with high fructose corn syrup added to it. It wasn't wine, but they call it a wine cooler. And I'm just worried that this gets confusing.
- [12:53]
Anne Barry
It's actually very interesting because marketers talk about this all the time. So those of you who work in marketing, you know, chief marketing officers of umbrellas that oversee lots of different brands, are constantly trying to figure out, can you launch new sub brands? Does it dilute, to your pun intended point, the overall brand? It can be done. It has been done just in beverages, across other categories. Apparel, for example, moving into accessories. But it is a very fine art and not everyone does it successfully, to your point. So the jury's still out on this particular form of diversification. There's another way in which the company is trying to figure out where it wants to lean in and really double down, for example, on Johnnie Walker and where it wants to just cut, cut, you know, cut its losses and get out. Lewis has said that the company will not sell brands cheaply, but it is willing to sell. So in December, when you take a look at what Diageo has been, the company did agree to sell a majority stake in East African Breweries. That was to Japan's Asahi Group, netting $2.3 billion. That wasn't under Lewis's watch per se. Certainly not the negotiation of that deal when you look at the timing. But it just shows that the precedent is set and Diageo again, willing to try and get some cash, sell some of his assets and think about where to reinvest. Interestingly, the Chinese market has also been soft for the company. And Bloomberg reported last month that Diageo is considering selling its stake in the Shanghai listed Sichuan SW fund companies. So not the first business that we've talked about struggling in China. Starbucks is another one, Nike is another one. So again, across categories, this has been a bit of a recurring theme.
- [14:25]
John Carteau
Yeah. Looking at divestment, looking back, and it's not working. Now. One other challenge that I think Diageo has going for it. I was looking at the list of brands in prep for this and I saw that they hold Casamigos.
- [14:36]
Anne Barry
Right. Yeah.
- [14:36]
John Carteau
Which I didn't remember was sold because it was started in 2013 by George Clooney, one of the first big celebrity alcohol brands. And there's been so many of them. Diageo bought it for $700 million just four years after it was founded in 2017, plus another 300 million based on sales targets. So the headlines I saw was acquired for a billion dollars.
- [14:55]
Anne Barry
That's right.
- [14:56]
John Carteau
You know, George Clooney getting a billion dollars in his pocket, you would think. And in 2020 it spent $610 million for Aviation American Gin Co owned by actor Ryan Reynolds. So looking back at 2020, that, that closed in August, it was the pandemic. Folks were at home, they were drinking, checks were coming in the mail and it seemed like Diageo was on a bit of a buying spree that now looking back May, it was also the
- [15:20]
Anne Barry
halcyon days of celebrity backed brands. Yes. Right. And here, as you said, Casamigos, George Clooney, Ryan Reynolds. It's funny, I always thought that Blake Lively, his wife should have founded a tonic water brand to fit his gin brand so they could use like couple GMTs. Oh, that's great. But so, and it was across categories, we saw celebrities dubbing down in beauty, they were getting into apparel. So there are lots of different factors the stars were aligning for this particular strategy. But since then we have seen challenges for the whole alcohol industry. We've seen Bud light maker Abe InBev, which is the world's largest brewer, seeing continued falls in sales volumes over the last months of 2025. Pernod Ricard is the French distiller that makes absolute vodka and Jameson whiskey. Saw big drops in sales in the key US and China markets. And that was in the first, the most recent fiscal half, 15% plunge in total revenue. There is a little bit of tariff noise in here too. I would just sort of throw that into the mix.
- [16:16]
John Carteau
Especially with China.
- [16:17]
Anne Barry
Especially with China. But there is this overall feeling that there is a generational shift in how much people consume alcohol. And one place, actually there was a very interesting set of articles I read recently where the luxury wine market, which has really grown as you look back over time because of wine collectors, like paying up huge amounts of money and you've got people sitting on these huge wine collections who are really investing in it as an asset. It wasn't necessarily to consume it, wondering who's going to turn up and buy it, because there isn't going to be necessarily a next generation of wine collectors that you'd seen in the past. So lots of different dynamics feeding into the pressure that's been seen by Diageo and others here.
- [16:54]
John Carteau
And there's one bright spot for Diageo. In the second half of 2025, Guinness delivered organic net sales growth of 11% with growth in all regions apart from Asia Pacific. And Avani, our new teammate, who is the most connected to social media of, I think of at least me and you.
- [17:14]
Anne Barry
Yes.
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John Carteau
She was explaining to me the Splitting the G challenge that has gone viral over the last two years.
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Anne Barry
What is that?
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John Carteau
And so if you learn to pour the perfect pint of Guinness, which I did, I went to Ireland two years ago. There's a picture of me splitting the
- [17:31]
Anne Barry
G. Oh, it's so green in the background of your pictures. A picture of John doing this in a brewery. And it's a green background.
- [17:38]
John Carteau
That is the Guinness tour. So if you go to Ireland, it's a great tour. I recommend it. And Avani was, was saying that there were so many celebrities online, online trying to split the G, where you get the amount of beer up to the right amount. Mark on the pint glass. Dua Lipa standing out as getting a lot of attention for it. Skilled splitting the G. Yeah. I don't know how to exactly put numbers around it. They don't break out all the Guinness numbers, but just trends and Google searches. It seems like Guinness got very popular from that.
- [18:06]
Anne Barry
Guinness is back. I love it. I have a funny story. I remember this was actually quite a long time ago and I had fairly recently moved to New York. And there's this moment as a sort of Brit, when you come to the city when you feel as though you're at a very glamorous place. I feel like very glamorous. And I remember going to the speakeasy and I was sitting at the bar and I said to the bartender, I'd like to have a cocktail. And he says, he had an Irish accent. He said, well, let me bring you the perfect cocktail. I said, that's fantastic. I'm so glamorous getting the perfect cocktail. And the barman came back and he literally put on the bar in front of me the perfect pint of Guinness. And I can't do the Irish accent, but he'll try goes, you don't mess with perfection. And he said, you know, I'm not gonna mix you a cocktail. I'm just gonna be the perfect, unadulterated, purest form of Irish perfection. And he me with a pint of Guinness, which wasn't what I was expecting, but I appreciated the gesture.
- [18:59]
John Carteau
What a great experience. I'm going to tell you about one I had in Ireland, and I'm going to invoke a similar voice. When I was traveling there with my wife, we went to several cities and when we ordered a Guinness, we were told by the bartender, we're so embarrassed that we heard that there's a town over where they're selling a Guinness for $10 a pint. Apparently it had made national news that one bar in Ireland had raised the price all the way up to double digits. And it was a national sh. That was all, you're from America. Don't judge us based on the $10 pint because it was typically seven or eight wherever we went. And so they're making it perfect. But still thinking about price, I hope
- [19:36]
Anne Barry
you'll get judged on $10 cups of coffee. I've got to tell you that that's sort of getting ridiculous. Well, we're going to keep following this potential turnaround story. I think there's a lot that's going to come out of this beyond the trends. The new CEO again, that's David Lewis, focusing on more internal efficiency with systems and processes. And he did point out recently that when he took over, he found a whopping pink 60% of orders were still being entered manually. So there's going to be an AI story in there somewhere, is my sense on that one. Well, let's take a break from all of this Irish banter and when we come back, spin through the headlines that are moving the markets today. John, can you turn the phrase semiconductor suppliers growing revenue over 20% year over year into an investable index for me right now?
- [20:20]
John Carteau
Off the top of my head, no.
- [20:21]
Anne Barry
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- [20:33]
John Carteau
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- [20:43]
Voice Actor / Advertiser
Full disclosure and podcast description Score more with the college branded Venmo Debit card and earn up to 5% cash back with Venmo Stash Got paid back with the Venmo Debit card you can instantly access your balance and spend on what's you want like game day, snacks, gear, tickets and more. The more you do, the more cash back you can earn. Plus there's no monthly fee or minimum balance. Sign up now@venmo.com collegecard the Venmo Mastercard is issued by the Bancorp Bank NA Select Schools available Venmo Stash terms and exclusions apply at Venmo me terms max $100 cash back per month There it
- [21:17]
Anne Barry
is, the closing bell. It's 4pm on the east coast and the markets have wrapped up for the day, but we don't have a ticker tape. We'll throw it over though to our human ticker, our producer John that's right,
- [21:26]
John Carteau
The S&P 500 finished up a of a percent, the NASDAQ up half a percent and the Dow end of the day up a tenth of a percent. Some market headlines I love following the movement at Six Flags Ticker Fun. Two weeks ago we learned the amusement park company sold off 7 of its properties and today shares are up over 7% after a Reuters report that activist investor Jana Partners is urging the amusement park company to explore a complete sale. Jana is reportedly calling for immediate changes in the board, citing several missteps under the current leadership, including a criminal quote, alarming pattern of dysfunction and disjointed decision making.
- [22:01]
Anne Barry
Pretty damning words there. Now the activist investor, you may remember, acquired a 9% stake in the amusement park operator in October and that was in partnership with the former Gap CEO Glenn Murphy, as well as the Kansas City Chiefs tight end and also Taylor Swift's fiance Chavez Kelce. And just to pause on that for a moment, I distinctly remember I should check this though sort of conversation or verbiage coming from the management team that this was going to be a collaborative effort. So the fact that Jarnaponts came out out with this sort of very damning language today just goes to show how quickly these situations can change. Well, despite today's bump, the stock is still down 65% year over year. Shares in Oklo, totally different topic, charged up nearly 2 1/2% today. The advanced nuclear reactor startup company that's backed by Sam Altman announced today that it has secured its first license from the Nuclear Regulatory Commission and that's for its wholly owned subsidiary, Atomic Alcohol. Well, Oklo is scheduled to release earnings pretty much now right as the Bell was going and this license could introduce a new revenue stream for the company which remains in that pre revenue stage. It's an important moment for this one
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John Carteau
and I'm definitely keeping an eye on the company's small fast fission Aurora power plants, especially in light of the recent energy event at the White House with major tech players pledging to bear the cost of new energy for data centers will be interesting. And finally, shares in Uber rose 5% after the company announced an expanded partnership with Nvidia. Nvidia centered around fully Nvidia software driven robo taxi fleet using the new Nvidia Alpa Myo AI stack.
- [23:33]
Anne Barry
There's Robotaxi is set to launch in LA and San Francisco in the first half of next year with plans to then scale to 28 cities internationally by 2028. These are ongoing partnerships with Amazon's Robotaxi subsidiary Zoox, and then with Lucid Motors as well. Plus you've got today's Nvidia announcement. So this all highlights how Uber is actually hedging its bets. It's making a lot of partnerships of lots different players, basically positioning its platform as a primary marketplace for autonomous mobility and that's instead of owning a fleet itself. So it's going the capital light route and also spreading its bets to see who's innovating the most, I imagine. Well, tomorrow is a big day. We've got the Fed announcement. We're going to see what happens with rates. We're also on countdown to Fed Chair Jay Powell's final sets of press conferences. Don't forget he is scheduled to leave his seat in May, so tomorrow is going to be one of the last ones we hear again from Fed Chair Jay Powell. We're going to be keeping all eyes and ears on that one. That's it for today's Brew Markets Daily.
- [24:33]
John Carteau
Brew Market Daily is hosted by Anne Barry and produced by John Carteau, Tarkab Delatif, Avani Laroya and Emily Milian. Technical direction by Eugenio Waugu. Brittany Nataco is our audio engineer and the President of Morning Brew Inc. Is Devin Emery.
- [24:45]
Anne Barry
Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow. Same time, same place.
- [25:00]
John Carteau
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Anne Barry
What do I do? My refund though.
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John Carteau
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Anne Barry
I'll be with you every step of the way.
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