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- [00:00]
A
Foreign It's March 24, 2026 and this is a commerce rift brought to you by the CPG guys. 10 minutes of the news stories that matter most in commerce this week. I'm your co host, pvsb and I'm joined by Papa Raj, the father of Pop stars, CO founder and CRO of Think Blue Consulting. Sree, how's the SoCal heat wave going?
- [00:21]
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You know what I'm looking forward to? The heat wave actually came to a shocking end this morning. So in usual Sunday fashion, I was out with Bala our dog and I wore shorts and a T shirt, as you can see, and the chill went through my spine. It's a whopping 48 degrees. You know, in the Valley here, even in the hottest days before 10am it's actually pretty chilly, but temperature drops to 73. But you know what I'm looking forward to this week? Las Vegas and Shop Talk. At the time of this recording, we'd already be a day and a half in looking forward to all the dinners we're hosting, all the podcasts we're doing. Should be a great week, great event. Peter, what do you have for us today?
- [00:54]
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Sree, I hope that Giants T shirt you're wearing is not symbolic of the fact that you've given up on the Yankees and the season hasn't even started yet. I know that's not the case, Shree. It's a new baseball season coming our way very shortly. First story the cost of GLP1 drugs is falling and pill versions are hitting the US market. For restaurant chains and snacking giants, higher adoption of weight loss and diabetes treatments poses a threat to their sales or an opportunity. GLP1 drugs slow digestion, suppress user appetites, and increase satiety. For many restaurants and packaged goods manufacturers, those reactions will likely mean weaker sales. Adults who use GLP1s consume 21% fewer calories and spend nearly a third less on grocery bills on average, according to kpmg. JP Morgan estimates the growing use of the medications could wipe out ready for this Sri $30 billion to $55 billion in annual sales for the food and be industry as soon as 2030. About one in every eight US adults is currently taking a GLP1 drug like Ozempic or Zepbound, according to the KFF Health Tracking poll conducted last fall. The number doesn't include consumers who have discontinued rather their use of the drug. 18% of respondents said that they have taken a GLP1 medication at some point. Those numbers are expected to keep climbing, especially after Novo Nordisk launches its Wegovy pill in January, and Eli Lilly prepares to roll out its own oral drug this year. By 2030, more than 30 million Americans could be on a GLP1 treatment, up from 10 million in 2026, based on JP Morgan estimates. But the shift also presents an opportunity for restaurants and food and beverage companies with new protein and fiber options. Many businesses are hoping to win over GLP1 Consumers and mollify investors concerns about how the treatment will affect their bottom lines. Whether it's labeling as GLP1 friendly, increasing the serving size, emphasizing protein content, or even when you shift over to the beverage world because hydration is certainly a concern, there are a number of players that are starting to react to this, said Don K. Johnson, Principle of strategy and execution for EY Parthenon. About half of GLP1 users report consuming fewer calories while taking the medications, according to UBS Evidence Lab. But the effects aren't even across the industry, and certain categories are more impacted than others, Johnson said. Snacking, once one of the fastest growing grocery segments, has taken the biggest hit. About 70% of GLP1 users who report consuming fewer calories said that they are snacking less, according to a survey conducted by E.Y. parthenon last spring. Quote I think it's about have about the specific type of snack, but I do think they're also snacking less. Having said that, we do see that there's a shift to healthier foods and that certainly will include healthier snacking. Unquote, johnson said. Think more yogurt, nuts or fruit and fewer chips or pretzels. SRI over to you.
- [04:00]
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From snacking we go to a big divestiture of the year conversation. Let's see if it happens. Do food and toiletries belong in the same place? For 100 years, the answer for consumer goods behemoth Unilever was absolutely yes, but not anymore. Unilever said last Friday was in talks with spice maker McCormick about a sale of its food business, which includes Hellman's Mayonnaise and Nor Stock Cubes. News of a potential deal, which could be valued at tens of billions of dollars, confirmed in earlier Wall Street Report Journal. A sale would mark the biggest portfolio shakeup for Unilever since it was created nearly a century ago through the merger of Dutch group Margarine Uni and British soap maker Lever Brothers. It would also be the company's most significant move yet to shed slower growing food brands and push deeper into health and hygiene products. To boost growth and lift its stock price, Unilever has worked to reshape its portfolio in recent years. The company spun off its ice cream brands such as Magnum and Ben and Jerry's in December. It sold its tea business, including Lipton in 2021 and Country Crock and other spreads in 2017. Unilever previously held talks with Kraft Heinz about a possible food deal before receiving an approach from McCormick, according to people familiar with the matter. Unilever turned to McCormick in part because it preferred its brands and saw an easier path to regulatory approval, the people added. The divestment of its remaining food brands would be a milestone for a group that long champion holding pantry and bathroom staples in one corporate cupboard. The approach is unusual, peers such as P and G, Kraft Heinz and Nestle mostly focusing on either personal care or food, but not both. Unilever used to argue that scale across both categories is a big asset in emerging markets, which accounted for almost three fifths of revenue last year. Mom and pop stores in countries like India tend to stock all kinds of products, and India is a big market for you to leave a single distribution network that serves them with small packets of shampoo as well as jars of mayo made sense. Slower global growth an intense competition from upstart brands forced longer, long time stable consumer goods companies to rethink their strategies. Unilever such call came in 2017 with an unsolicited takeover approach from Kraft Heinz, then lauded for its skill in cutting costs and expenses. While Unilever successfully rebuffed that deal, it suddenly needed new answers to questions from investors about flagging growth. Selling fruit brand was one response to Unilever's Kraft Heinz crisis in many traditional packaged food categories has been lackluster or negative as consumers embrace fish produce startup brands that emphasize health benefits. I'll note here we're going to cover it later on this episode. Another such company which is in two completely different segments like what we've just discussed is General Mills Food and Pet Food. So over to you Peter. What have we got amongst delivery?
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Yeah, this one baffles me Sree, because you and I have talked about this a lot. There is a saturation of last mile delivery services, particularly in the hour to 10 minute range right this immediate delivery and yet faster delivery options are all the rage among retail giants looking to satiate convenience focused consumers with Amazon's new one and three hour options. Adding to that trend, other examples include Walmart growing its three hour delivery reach to 95% of households, Target expanding its next day delivery capabilities and Dollar General even building out its own same day rural delivery rates. While many retailers leverage their extensive store footprint for quick delivery. Amazon's new fast shipping options are possible through its same day delivery facilities, which, quote, enable the full lifecycle of an order under one roof from fulfillment to final delivery per the release. The hubs, in combination with predictive AI inventory placement algorithms, have enabled Amazon to streamline the picking, sorting and fulfillment process. Amazon said the new option will help the company deliver at even faster speeds this year, building upon recent quick shipping gains to combat rivals like Walmart, CEO Andy Jassy said in February. That same day is Amazon fastest growing delivery option, with items delivered the same day jumping nearly 70% year over year in 2025. The company is also testing its 30 minute or less Amazon now service, which focuses on essential goods and groceries in select US Locations. We saw an opportunity to use our unique operational expertise and deliver network to help make customers lives a little easier while unlocking even more value for prime members, udit Madan, Amazon's senior vice president of worldwide operations, said in the announcement about the three one and three hour delivery options. Faster deliveries come at a price. For Amazon prime members, one hour delivery means a 999 fee. Wow. And three hour delivery has a 499 charge. Customers without a Prime membership pay 19.99 for one hour delivery and 14.99 for three hour. New delivery methods can cover a litany of goods including pantry items, cleaning supplies, health and beauty products, OTC medications, electronics, toys, clothing, accessories and home and garden items, according to Amazon. One Hour Delivery is currently available in hundreds of cities and towns including parts of la, your Neck of the Wood Street, Chicago, the District of Columbia, along with smaller locations such as Des Moines, Iowa. Our friend Kayla Winstead lives in Boise, Idaho. Three hour delivery is live in over 2,000 communities including smaller locations like Cornwall, Pennsylvania and Hara, Oklahoma. Amazon said it aims to expand both capabilities to more areas in the coming months. Cherie, close us out would you?
- [09:24]
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Thank you Mr. Bond. And I am going to talk about General Mills recent earnings report for the Q3 for fiscal 2026 which is showing declining volume. And this is straight from Seeking Alpha, which is of course one of the investors and does a lot of reviews here of stocks. The past 12 month period has been quite challenging for consumer staples and packaged goods companies in particular. No surprise, ongoing cost pressures are forcing businesses to undergo yet another price increases and this is taking its toll on volumes, margins and investor confidence as well. General Mills I believe has gone in the other direction. From what we learned at Cagney, they have actually taken pricing down based on investments they put back into the P and L. General mills has not been immune to these trends and the stock performance of the past year reflects that. After the Q3 2026 report, it seems that there won't be any changes to the narrative in the near future as the management reaffirmed its full fiscal year outlook for a low single digit sales drop and a material drop in both operating profit and eps. While this could be interpreted as neither good nor bad news, the GI stock has fallen by more than a whopping 36% over the past year. That's shed over a third of its value and is now seen as one of the worst performers within the already challenged peer group. As a result, GIS is now trading single digits earnings multiple on a GAAP basis and a forward pe multiple of 11 once non recurring items are accounted for. On one hand we have a stock that some may say is trading at ridiculously low levels. On the other hand, the latest reports are send a signal to investors that a recovery in the coming quarters is mostly unlikely. Having said that, long term oriented investors should pay attention as the recent quarter has also shown some early positive signs which coupled with the record low valuation could make a decent entry point for some before we proceed to some of the specifics from the quarter, it should be mentioned that Seeking Alpha warned investors about the company specific risks as early as back in October of last year 2025. These were primarily related to capital allocation decisions and certain operational metrics. While trends in the latter might change in the short term, mistakes within the capital allocation process are very hard to remedy on the surface. The third quarter F26 did not present investors with anything of substance. The full fiscal year guidance was reaffirmed and the quarterly results were roughly in line with the expectation of a notable drop in profitability. Stock fell on the day of the report as organic sales growth has fallen to a negative 3% after the previous report shown the decline could be soon coming to an end. So it did not happen. Note to jump in Q2 of that year what I want to point out here particularly Peter and a well known public fact General Mills depends on the third quarter every single fiscal because it overlaps the holidays and is the biggest quarter for General Mills so the recovery doesn't happen. Difficult to sustain the year organic volumes fell by 1% in Q1 at 26 and then it seemed as if they'll be gradually recovering after a 0% impact on volumes in Q2 during the last report our GIS returned to negative volume growth and this is now causing unease amongst investors as the company's organic price mix is also in negative territory. Last year, Seeking out for criticized the company's approach with the pet food segment that involved a number of M and A deals and a fragmented brand strategy. While I remain skeptical of that approach and here on the CPG guys, we're not really sure what the heck is going on, the recent quarter has shown some progress in that area with retail sales and pet accelerating to 2.4%. Too early to probably judge whether or not this is sustainable, but at least let's put it on the leaderboard as a note, the drop in quarterly gross margin, however, is quite concerning as it follows on the trend of organic sales growth that came below the levels from the prior quarter. During the quarter, GIS management expressed optimism that they're seeing early signs of the strengths, but the numbers very different. Hardly anything to act upon. After taking into account the exceptionally low pricing of the GIS stock seeking alpha rights, we could make the case for GIS being a cautious long term buy. Nonetheless, due to the risk for the dividend and certain capital allocation mistakes, they are reluctant to upgrade the stock at this point in time. Disappointment is all I can say. I'll bring it back to should the question be asked to pet food and human being food be run by the same operational management just like Unilever is now experiencing with the McCormick opportunity?
- [13:35]
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As we wrap up reminder to catch up with our recently released episode featuring Jeff, Rona and Dave Gottlieb from form newly merged company, formerly Trax Retail and form Shree and I in our own Q1 wrap up episode. It's a do not miss please check it out. That's a wrap on this week's Commerce riff. If any of this sparked a thought, drop it in the comments. We do read them. If you're not already following us on LinkedIn, Instagram, TikTok, Facebook and YouTube, now is the time. It's a little too late for doing it on MySpace, but anyhow, we'll see you next week. The content in this podcast episode is provided for general informational purposes only. By listening to our episode, you understand that no information contained in this episode should be construed as advice from CPGuys LLC or the individual author, hosts or guests, nor is it intended to be a substitute for research on any subject matter. Reference to any specific product or entity does not constitute an endorsement or recommendation by CPGuys LLC. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent the views expressed by CPTGuys LLC do not represent the views of their employers or the entity they represent. CPTGuys LLC expressly disclaims any and all liability or responsibility for any direct, indirect, incidental, special, consequential or other damages arising out of any individual's use of, reference to, or inability to use this podcast or the information we present in this podcast.