Prof G Markets — Stocks Fall to Start September, Kraft Heinz Breaks Up & Why Constellation Brands Has a Beer Problem

Date: September 3, 2025
Hosts: Ed Elson, Scott Galloway
Guest: Robert Moscow (TD Cowen Managing Director)

Episode Overview

This episode of Prof G Markets navigates the shaky start to September for US markets, a major corporate breakup at Kraft Heinz, and the deep secular issues facing Constellation Brands—distributors of major beer labels. As always, Scott Galloway and Ed Elson blend sharp analysis with candid, sometimes acerbic, commentary. The episode digs into underlying global economic shifts, legacy brand challenges, consumer behavior in the age of loneliness, and what it all means for investors.

Key Discussion Points & Insights

1. Markets Slide & Geopolitical Anxiety

Segment: 01:23–04:36

• Market Recap: Major US indices fell after Labor Day, with the Nasdaq declining for the first back-to-back 1% since Deliberation Day. Bond yields jumped; gold hit new records.
• Key Movers: Google stock soared 8% in after-hours trading after an antitrust update—US Judge Mehta ruled Google can keep Chrome but must share its search data and is barred from exclusive contracts.
• Macro Uncertainty:
  • A US federal appeal found many Trump-era tariffs illegal, raising concerns about the US needing to refund billions and further harming business confidence.
  • Uncertainty over Trump’s bid to oust Fed Governor Lisa Cook.
  • Economic anxiety about worsening US-India relations following new tariffs, with Indian PM Modi recently strengthening ties with China and Russia.

Notable Quotes:

• Scott Galloway (on US-India relations):

  “What you brought up last is, in my opinion, the most important thing that happened or that happened in August. ... When India, China, and Russia hook up ... you’re talking about $20 trillion in GDP … this is scary. That is a true ... axis of counterbalance to what has been a 50-year hegemony for the US.” (06:23)

• Scott Galloway (on the US' handling of alliances):

  “It was totally unnecessary. Yet again, another own goal.” (08:25)

2. Kraft Heinz Breakup: Bundling to Unbundling

Segment: 13:28–25:09

• Corporate Move: Kraft Heinz will split into two companies by 2026—one for higher-growth products (Heinz, Philadelphia Cream Cheese, Kraft Mac and Cheese), one for mature/slower-growth staples (Oscar Mayer, Velveeta, Lunchables).
  • The stock dropped 7% on the news.
• Strategic Rationale: “Conglomerate tax”—the more diversified a company, the lower the stock’s premium/multiple because investors prefer to choose their own diversification.
• Backstory: The 2015 Kraft-Heinz mega-merger ($46 billion, led by Warren Buffett) emphasized cost-cutting and scale, but failed to react to changing consumer tastes. The stock peaked in 2017, then tumbled as processed foods fell out of favor and brands stagnated—culminating in a $15 billion write-down in 2019.
• Buffett’s Criticism: Buffett has publicly called the split “disappointing” and may exit his 27.5% stake, creating significant market overhang.
• Long-Term Fix?: The split may not solve deeper structural and consumer preference issues; it may pave the way for future acquisitions rather than operational turnaround.

Notable Quotes:

• Ed Elson:

  “It’s not your job to diversify. It’s my job to diversify. It’s the job of the investor, not the board.” (14:29)

• Robert Moscow:

  “What they’re seeing ... is that companies that try to gain scale through breadth are not succeeding as well as those that have focused on depth.” (16:34) “It is very difficult to see a clear path to operational improvement from just splitting up the business. ... Many of these problems are structural in nature.” (20:24)

• Ed Elson (quoting Buffett):

  “It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart is going to fix it.” (25:00)

• Ed Elson (on corporate strategy):

  “You merge, you unmerge, you bundle, you unbundle. But does any of this actually solve the problem? ... Somewhere you have to think the customer kind of gets forgotten.” (25:09)

3. Constellation Brands: The Beer Problem Nobody Wants to Discuss

Segment: 25:10–end

• Current State: Constellation Brands (Modelo, Corona, Pacifico) cut its sales outlook, now predicting a decline of 4–6% in net sales for fiscal 2026. Stock is down 32% YTD.
• Management’s Explanation:
  • General macroeconomic pressure and consumer belt-tightening.
  • Weaker demand among the Hispanic community, attributed in part to fears around immigration and job security.
• The Bigger Trend:
  • Beer and broader alcohol sales are down across all major brands—even as macro explanations fall short.
  • The core issue may be secular: "Americans ages 15 to 24 spend 70% less time at parties than they did 20 years ago. Only 25% of Gen Z is still interested in going out to a club."
  • Reduced socializing and rising loneliness mean young people are simply not drinking (or socializing) like previous generations.

Notable Quotes:

• Ed Elson:

  “Put simply, we are the antisocial generation. We are the lonely generation. … We don’t go out. We don’t party. We don’t really drink. And this isn’t an anecdotal observation. This is proven in the data." (28:21) "Lonely people, young people, they’re not buying handles and 12 packs. And if four in five young people are lonely … that’s four in five fewer customers.” (29:35) “Until we put the phones down and get back to partying, I don’t think there’s any real reason to think this is gonna change.” (30:52)

Memorable & Candid Exchanges

• Scott’s one-liners on summer and global affairs:
  “My top line thoughts, Ed, are that we should release the Epstein files. … From the markets’ standpoint, we have the wrong metrics. … It’s a metric for the health and well-being of seven companies ..." (04:36)
• On UK/US parallels (Ed & Scott):

  “It's what the Brits did in 2016. That's exactly what the UK did in 2016. They searched that exact entry into Google, not ChatGPT.” (09:44)

• On Kraft Heinz merger cycle:

  “There’s only two ways I know of to make money, bundling and unbundling.” (25:09)

Timestamps for Key Segments

• Market overview, geopolitics, Google antitrust: 01:23–04:36
• Scott Galloway’s macro commentary: 04:01–09:44
• Summer banter (brief): 10:05–10:46
• Kraft Heinz breakup deep dive w/ Robert Moscow: 13:28–25:09
• Constellation Brands’ beer problem and broader trends: 25:10–end

Tone & Style

• Candid, snappy, and at times caustically witty.
• Data-rich but also big-picture, weaving in global politics, culture, and evolving consumer behavior.
• No-nonsense: direct discussion of company earnings, management strategy, and macro risks—and skepticism toward PR-friendly explanations.

In Summary

This episode unpacks why September started shaky for markets, the strategic (and existential) crisis facing Kraft Heinz, and how macro, demographic, and cultural shifts—particularly loneliness—are reshaping entire categories like alcohol. Scott and Ed connect the dots between big global trends and the granular struggles of legacy brands, always reminding listeners to question surface narratives and look for the real drivers beneath the news cycle.