H1 ‘25 Earning Insights with RBC Capital Markets’ Nik Modi

Summary

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The CPG Guys: H1 '25 Earning Insights with RBC Capital Markets’ Nik Modi

Date: September 10, 2025
Hosts: Peter V.S. Bond & Sri Rajagopalan
Guest: Nik Modi, Managing Director, RBC Capital Markets

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Overview

In this episode, Peter and Sri welcome back Nik Modi, a respected Wall Street analyst specializing in the consumer goods sector. The conversation dives into Q2 2025 earnings, performance trends for major CPG brands, and Nik’s unfiltered insights on management challenges, consumer behavior, and strategies for sustainable growth. The discussion explores the strengths, weaknesses, and prospects for companies including General Mills, Coca-Cola, Hershey, Brown-Forman, Kenview, P&G, Church & Dwight, and Monster Energy.

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Key Discussion Points & Insights

1. State of the Industry—Q2 2025 Recap

[04:07]

• The previous quarter's earnings expectations were reset downwards across many CPGs, which made Q2 results look less dire but “things remained challenging.”
• Bifurcation in Performance:
  • US-centric companies lag global multinationals, struggling with volume.
  • Global companies sustain some volume growth, helped by international markets and inflation-affected economies.
  • “US centric companies tended to perform worse than the global companies.” — Nik [04:37]

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2. Key Macro Themes: Consumer vs. Customer Centricity

[06:37]

• Nik highlights a strategic drift: many large CPGs have become “customer-centric” (retailer focused) but have lost sight of the actual “consumer” (shopper/usage focus).
• Call to Action:
  • “The number one thing these companies all need to think about is how can we get back to consumer centricity… how is that going to get fed back into the center of the organization so better choices can be made.” — Nik [07:48]
• Value is Crucial: Innovation, price, and marketing all contribute to perceived value, which is top of mind for consumers under pressure.

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3. Company-by-Company Breakdown

Procter & Gamble (P&G)

[08:08]

• Leadership: Salish Jejurikar appointed CEO; strong marketer, expected to drive brand/product superiority.
• Strengths: Disruptive innovation, early adoption of AI, strong organizational capabilities.
• Quote: “They have the capabilities, I think, to really continue to gain share in a pretty tough market because they really invest in disruptive innovation.” — Nik [08:55]
• Organizational Evolution: P&G is moving from 2.0 (which others are still chasing) to 3.0 in organizational structure; often an industry leader in these shifts.

Coca-Cola

[11:01]

• Execution: High-level operation post-refranchising; “beverages for life” strategy diversifies portfolio.
• Price Pack Architecture: Strong globally, with learnings from inflation-prone regions.
• Tariffs & Sugar: Coke Zero’s success balances traditional offerings amid cost pressures.
• Quote: “They have much better alignment within their bottling system than PepsiCo does, and I think that’s a big delineating factor.” — Nik [11:35]
• Innovation Opportunity: Positioning pricing as value vs. alternatives; still room to capture trends like “gut soda.”

General Mills

[16:14]

• Struggles: Weak volumes; iconic brands under pressure.
• Organic Fixes Possible: “All of these problems can be fixed organically...there’s no such thing as lazy markets, only lazy marketers.” — Nik [16:45]
• Challenges Ahead: External pressures (tariffs, inflation, job anxiety) mean “it’s going to get worse before it gets better.” — Nik [18:50]

Kenview (formerly JJ Consumer)

[19:56]

• Activist Pressure: Multiple activist investors recently, organizational structure (inherited from J&J) diagnosed as lacking accountability.
• End-to-End Accountability Needed: Cites P&G’s model; optimism with interim CEO (a P&G alum).
• Brand Strengths: Neutrogena, Aveeno, Band-Aid widely recognized; potential untapped due to structure.

Monster Energy

[23:27]

• Margins & Tariffs: Pricing power to offset input tariffs (aluminum, steel).
• Growth Story: Functional beverages remain “the world,” more upside globally.
• Innovation: Analytics-driven launches (Ultra Vice Guava, Blue Hawaiian); stronger distributor alignment.
• Quote: “They’re really starting to gain their momentum and mojo on their innovation strategy.” — Nik [25:02]

Hershey

[26:55]

• Not Just Sugar: “People have exaggerated the downfall of sugar...at the end of the day, we as consumers still want some sugar; we just want it in a permissible format.” — Nik [27:44]
• Headwinds: Cross-category elasticities (as candies become costlier, alternatives become more rational choices), cocoa cost inflation.

Brown-Forman

[29:01]

• Spirits Under Pressure: Inventory overhang, shifting category dynamics (RTDs taking share).
• Brand Relevance Issue: Jack Daniels “has lost some marketing relevancy”; need to focus on core brand equity.
• Distribution Shakeup: Major distributor realignment will cause short-term disruption.

Church & Dwight

[34:59]

• Portfolio Resilience: Bifurcated (premium + discount) portfolio well-suited for tough economic times.
• M&A Strategy: Recent wins, e.g., Touchland (hand sanitizer-fragrance hybrid) and HERO Cosmetics.
• Quote: “I have a very high degree of confidence in this management team and their strategy.” — Nik [34:59]

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Notable Quotes & Memorable Moments

• Consumer vs. Customer: “A lot of these large companies are very customer centric. I don’t know if they’re consumer centric anymore. And there’s a difference.” — Nik [06:58]
• Organic Growth Possible: “Every single one of these companies can fix their problems organically.” — Nik [17:36]
• Private Label Threat: “They can’t take their eye off the private label ball. That is a real concern...” — Peter [37:57]
• Innovation Wish List: “When I cut myself shaving my head, I’d love to be able to put something [from Band-Aid] that doesn’t make me look so ridiculous....if you’re listening, Kenview, there’s an idea.” — Nik [22:20]
• Occasion-Based Segmentation: “We have to get to occasion-based marketing and segmentation. Because the category silos are limiting the opportunity.” — Nik [32:14]

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Timestamps for Important Segments

• Industry Macro Overview: [04:07] – [07:53]
• Consumer vs. Customer Centricity: [06:37] – [07:53]
• P&G Deep Dive: [08:08] – [10:41]
• Coca-Cola Overview: [10:41] – [15:40]
• General Mills Analysis: [15:40] – [18:50]
• Kenview (J&J Consumer) Breakdown: [19:02] – [22:45]
• Monster Energy Outlook: [22:54] – [25:18]
• Hershey Company: [25:18] – [28:25]
• Brown-Forman & Spirits Trends: [28:25] – [32:14]
• Church & Dwight Strategy: [34:59] – [36:12]

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Major Takeaways

• Course Correction by CPGs: Many have listened to analyst calls to lower earnings targets, reinvest, and focus on volume growth.
• Organic Growth Preference: Nik strongly believes that CPGs’ issues can be solved “organically” with greater consumer centricity, rather than M&A alone.
• Upcoming Challenges: Macro pressures (tariffs, inflation, AI-driven job anxiety) expected to worsen before improving, requiring agile, insights-led leadership.
• Strategic Focus: Occasion-based marketing, value delivery, and defending against private label are foundational moving forward.

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This episode is densely packed with tactical analyses and strategic imperatives, making it essential listening for anyone invested in or operating across CPG and FMCG sectors.

Transcript

[A]

Nick.

[B]

I'm Nick Mody, Managing director at RBC Capital Markets and you're listening to the CPG Guys.

[C]

Welcome to the CPG Guys podcast.

[D]

Your host, Sree Rajagopalan and Peter Vs.

[C]

Bond explore how brands and retailers engage consumers in an increasingly digitally driven world. And now, here are the CPG guys.

[E]

Hello and welcome to this episode of the CPG Guys. I'm of course Sri, your co host and also CRO and co founder of ThinkBlue Consulting, your trusted partner and your omnichannel development journey. Get in touch with me at [e-mail] Please do listen to my older daughter's music at www.rearaj.com where I was actually at the music video shoot last night. And follow Laraj. My younger daughter is a member of the world's fastest growing global girls group, cats. I've just come off a record breaking Gap global advertising campaign. I'm joined today of course by my co host, BFF and also co founder of the CPG Guys, Mr. Pbsp, who moonlights as head of industry and client engagement at Flywheel, the commerce acceleration division of Omnicom. Peter, it's Friday afternoon. How you doing man?

[D]

I'm doing great. I'm very excited about our conversation today. I understand that we are the second most favorite podcast in the household of our esteemed guest today because apparently, apparently there is another podcaster, a burgeoning career and I guess he was inspired by having appeared on our podcast after the Cagney show. And now I hear he's. He's gone. He's got his eyes set on taking going past the CPG Guys in terms of fame and popularity. So I'm looking forward to the call. Sri, how you doing?

[E]

Everything Episodes later, he will.

[D]

Can you believe that? Can you believe 517?

[E]

You know what, Peter, how have you.

[D]

Put up with me for that long?

[E]

I'm five and a half years.

[D]

Kind of, I'm kind of grouchy.

[E]

You know, I have advertised under the radar for different co hosts.

[D]

Are you getting an AI co host, Sri? Is that what I hear? You're cutting me out in favor of.

[E]

Some automaton 7.0 will be our next co host.

[A]

Wow.

[D]

Wow.

[E]

This is. All right. Make sure you're subscribing to our podcast on your preferred listening platform where you can get our latest episodes and even go back to consume some of the 500 plus episodes Peter referred to. We've already published out there. Today's episode is one we have looked forward to. We haven't really doubled down on earnings season and we're grateful somebody has agreed to do that with us and really talk earnings and individual stock tickers and somebody who's looking at some of the world's largest brands. We interact with how they're performing in the marketplace. Who better than a Wall street leader and analyst managing director on this space quarter over quarter to tell us from his lens how it looks like so today we look at the following General Mills, my alma mater, Coca Cola, Hershey Brown, Foreman Ken View, PNG Church and White and Monster Energy. Some of our favorite brands in the world. Join us in welcoming to the podcast Nick Modi, Managing director in equity research at RBC Capital Markets with over 20 years of experience in the workforce and tracking some of the largest brands in the world. He knows the CEO, CFOs and sweet seat all these brands and so much more. We saw him in action at Cagney on the circular conferences engaged in tracking results performance expecting the next quarter now he's an advocate for long term growth. Recently published the article Message to CPG CEOs Lower your EPS targets significantly. Please welcome repeat guest on the show Mr. Nick Modi. Welcome to the CPG Guys.

[B]

Sir, gentlemen, thank you for having me.

[E]

Of course we're excited to have you on the podcast. We include in the digital show notes of this episode, links to your LinkedIn profile and that of our BC capital and I'm going to jump into ticker number one. But before we do that, let's ask you earning season just passed by to wrap up first half fiscal of the year 2025 without individual tickers or brands. What's your net assessment of how Q2 went overall in the first half of the year? Has gone for these amazing brands that you track?

[B]

Yeah, I mean I think in order to give you a real answer for that, we have to kind of go back to the last quarter because you know, as we had indicated, we thought that numbers needed to come down pretty broadly and a lot of companies did that in the first quarter. So the March quarter numbers and expectations came down. So this quarter things weren't as bad. They remained challenging though and I would say there was a really interesting bifurcation. US centric companies tended to perform worse than the global companies.

[A]

Right.

[B]

I think there's still a lot of global kind of growth, even some inflation that's happening. And so when you think about some of the global multinationals, they performed better. They actually put up some volume growth whereas US centric companies really struggled on the volume front. And that's an ongoing trend generally.

[E]

Nick, does that mean they listen to you when you sell lower EPS forecasts? Are we saying everyone's shining just by pure contrast because they have weaker quarters year ago that they're competing against now for year over year?

[B]

A lot of companies listened. I mean, it was actually nice to hear from a lot of C suites saying they read the piece and they listened and they realized that they need to really get volume growth. Because if you just keep on letting volumes bleed, then you start running into structural issues with shelf space. Especially at a time where retailers are really rethinking how they think about retailer brands. And so I'm glad that numbers have come down. I'm glad that they're reinvesting appropriately. Not every company is built equal, so some still have to bring their numbers down further. But I think more or less we are getting into a better spot.

[D]

Nick, welcome back to the podcast. It's always great to have your insight amongst SRI and me, the industry luddites. But sri, like how I slip that.

[C]

In your new favorite word, Luddite.

[D]

But I know he's. I know he wants to say something.

[C]

But we're not going to let him.

[D]

So here's the thing, Nick. I love, by the way, the emails I get from you with all the incredible equity research I've been looking for, the one on Cat's Eye as a brand and where it's going. As soon as that's published, you have to send it over to me because I want to see what RBC Capital Markets thinks about it.

[B]

It's all about multiculturalism, right? Multiculturalism.

[D]

I know it is. It is. Thank you. So here's my question. What do you think is holding consumers back today? What's the number one focus you feel as a Wall street leader, they should have to get back on track in order to be relevant to today's consumers.

[B]

Yeah, consumers need value. And there's a lot of different ways where value can be provided.

[A]

Right.

[B]

Innovation, marketing, obviously, price. But there are a lot of different ways to think about it. I think the thing that I'm seeing, the companies, a really clear theme is that a lot of these large companies are very customer centric. I don't know if they're consumer centric anymore. And there's a difference.

[A]

Right.

[B]

You know, if you're focused on execution and merchandising, obviously that's very important. But I think what gets lost in the shuffle is really understanding what the consumer wants and how the consumer feels. Because I hear a lot of discussion about, oh, you know, this category is doing bad. And so, you know, we're struggling because we're not exposed to the right category. And I say, well, wait a second, there are like three other brands in your industry that are growing gangbusters. Why is that?

[A]

Right.

[B]

And I think it's really a delineation of how these brands are being communicated to the consumer. So that's the number one thing I think these companies all need to think about is how can we get back to consumer centricity, not lose our execution and our customer centricity, don't get me wrong, but how do we kind of get that consumer element? How do we get information from the periphery of the organization where all the insights are contained? And how is that going to get fed back into the center of the organization so better choices can be made.

[E]

Then when you say customer versus consumer, you're referring to retail execution, retail focus versus the true consumer.

[A]

Correct.

[E]

Or the shop.

[B]

Correct. Exactly.

[E]

Awesome. So now we're going to get into the fun piece. You ready for Nick? Individual tickets.

[B]

Let's do it.

[E]

So we'll start with the first one and I'm going to start with P and G. And so P and G has announced a new CEO. Salish Jejurikar Zacks rates it a trending stock says restructuring in the works beat non GAAP profit estimates. Are we doing on png?

[B]

Png obviously, given how big their business is in the us They've obviously been under some pressure more recently. You know what, look, this is a company that has built real capabilities over the last decade and a half. And as an analyst, you know, yes, maybe this quarter, next quarter, you know, maybe feels a bit under pressure. But when I think about the longer term, you know, they have the capabilities, I think, to really continue to gain share in a pretty tough market.

[A]

Right.

[B]

Because they really invest in disruptive innovation. They're definitely ahead of the curve on AI.

[A]

Right.

[B]

And so when you really think about what they've been able to do over the last seven to 10 years, I'm seeing a lot of other companies across the industry actually mimic what P and G has been doing.

[A]

Right.

[B]

And now P and G is onto a whole other kind of evolution of its organizational structure, which I think companies across my industry will probably start to emulate three years from now.

[A]

Right.

[B]

Because they're still trying to catch up to PNG 2.0 versus trying to get to where P and G is going, which is 3.0. And I'm happy to discuss the details.

[E]

If, if, if you'd like you reminded me multiple times when we met up at Cagney and other places that one of the most important barometers of success is now the C suite talent. How do you feel about that new CEO coming in?

[B]

Yeah, Shailesh is excellent, right? I mean, look, don't get me wrong, John Moeller, former cfo, did a great job as CEO. He is a legend, right? He's very well known. I think he really did a great job executing a very cohesive plan. And Chalesh coming in, I think is going to also be very additive to P and G. I mean he's a marketer by background and so I think that's going to fit perfectly in terms of the next five to seven years where P and G is looking to go, right? They're really trying to exert their product superiority. And you know that I'm passionate about this topic because I do believe product efficacy is really going to be the next way of building brands.

[A]

Right?

[B]

Because the more efficacious your product is, the more people will recommend. And social selling is really how brands are being built today. And so I think Shayla, she's really going to be able to come in and reassert P and G superiority across all price tiers, not just a premium price tier. And so I'm excited, I'm excited for him to get to get into that role.

[D]

So Nick, Coca Cola is one of our favorite global brands and one regarded as clearly iconic. Always a dividend stock. Now we're talking real sugar. Motley says better stock than PepsiCo. A three year return of 16.34% approximately. What are your thoughts on Coca Cola?

[B]

Yeah, look, I think when James Quincy came in as CEO many years ago and posted refranchising, this is a company that's operating at a very high level. This whole beverages for life strategy and saying, hey, you don't to have Coca Cola as your favorite beverage, right? It can be a water or a tea or a milk, right? And so I think this, this holistic approach has really helped Coke, you know, keep up revenue momentum, Right. I mean they've done a phenomenal job growing their business in that mid single digit range. And that's because they're attacking all these other pockets of the beverage industry. I still think there's more upside, I still think there's more opportunity for them in terms of catching some of these other categories that are emerging, whether it be gut soda or things like that. But I think Coke is operating at a very high level. They're executing very well, they have much better alignment within their bottling system than PepsiCo does. And I think that's a big delineating factor and a big competitive advantage, quite frankly.

[E]

What about tariffs and its impact to sugar? If indeed there's going to be a transformation in the portfolio over time. To sugar?

[B]

Yeah, look, I think the, obviously Coke Zero has done a phenomenal thing for the Coca Cola branded portfolio, right? And so, you know, you can have the Coke with real sugar, you can have Diet Coke, which is starting to turn around now given some of the social media attention that's been paid to it with Dua, Lipa and things like that. And then you have Coke regular, right. And you know, that product or that brand kind of took it on the chin a little bit because of some of the immigration rhetoric that was out there, some, some false stories and narratives that really affected Coke's products. But they are starting to come back out of that, right? You starting to see the share declines start to moderate in the, in the whole grand scheme of tariffs. Listen, everyone is dealing with it. I mean, you know, I have companies that sell coffee that just got a 50% tariff on coffee beans coming into the U.S. right. So these companies have pricing opportunities still. Like I know that price has been a big issue for a lot of consumer goods companies, but if you really think about the beverage industry, because we had like 20 years of deflation because of the Coke and Pepsi wars, right? A lot of the pricing that we've seen has literally been catch up pricing, right? If you think about buying a 12 pack of Coke today, you can get a can for a dollar, right. If you think about it in unit terms. And that is a very good value relative to some of the alternatives. And I think that's something that Coke should be thinking about is how do we kind of change the reference point on pricing so we have even more opportunity.

[D]

Let me dig in a little bit here, Nick. First of all, I think we would probably both agree that this is not a new Coke, Coke classic kind of thing where they have to trot out.

[C]

Bill Cosby to try and sell it. I think we're past those days, right?

[D]

But the whole price pack architecture is a big deal because outside of the United States it has historically not been as pronounced. I remember the days when I would get three or four six packs for $8. That's back in the day when SRI and I were working at PepsiCo.

[E]

Eight or ten is the one that comes to my mind.

[D]

Three? Yeah. Three. Three for ten. Four. There were some really ridiculous prices And I remember as I started to go outside of the United States and travel, you never saw gluttonous as we are. But they had to claw some of that back, didn't they, to get their price pack architecture in line with. With what the rest of the world is in order to make them a little bit more profitable. Because to your point, you know, I remember when I would. When I would go on a. On a drive, A drive, a bottler trip to a store. We go into the store. This is when I was working at Dunhumby and Coke was my client. We'd walk in the store. We. The first thing we do is we would go to the front end and we would make sure that the coolers by the checkout were completely stocked. Why?

[B]

Because.

[D]

Because that was the single most profitable item in the entire store. Then they would go to the displays, then they would go to the shelf, and before they left the store, they'd go back to the front end because God forbid, four people had bought four. They got to put. They got to make sure that's filled because that's where all the money was. I mean, it seems like Coke's got their price pack architecture down. What do you think?

[B]

Absolutely. I mean, look, they're the case study and the benchmark that I think a lot of other CPG companies look at is in terms of strategies on how to manage price in this environment. And the good thing that Coke has to its advantage is that they're global.

[A]

Right?

[B]

So they have other markets in which they've been dealing with lots of inflation like markets in Latin America as an example. And so they're able to really take some of those best practices and overlay that into the U.S. market. And clearly it's worked.

[E]

Nick. Now for my alma mater, ding ding ding, GIs or General Mills. And so I'm not sitting in automatical leadership team meetings anymore. But the brands have survived the long marathon of life, still continuing, pretty persistent, solid dividends, significant shrink in market cap to be acknowledged yet with iconic brands that have, again, like I said, survived the long marathon of life and struggling volume environment. For the categories, gentlemen, what do you see for the long term? Can it evolve organically or we emanate territories the only way out.

[B]

Listen, I'm of the view that all of these problems can be fixed organically. I really am. Let's think about it. If Gushers is struggling, someone would say, oh my goodness. Well, who wants candy? Who wants sugar? That's why they're just not exposed to the right categories. And then I said, well, wait a second, there's plenty of people buying nerds clusters. And so the reality for me is that this is not about the categories.

[A]

Right.

[B]

One of the executives that I used to cover once said, there's no such thing as lazy markets, only lazy marketers. And I have seen it 25 years covering this industry. I've seen it. I've seen companies and brands go in and out of favor. And all can be traced down to how those brands were being communicated to the consumer. And so I believe General Mills can fix their problems organically if they take the right consumer centric approach in terms of how they communicate those brands to the consumer. Now, will M and A help solve some of these gaps that they might have much faster? Like, could there be a protein opportunity for General Mills at some point? Sure. You know, I'm not sure. They have a really wide, broad portfolio of things that appeal to just ghost consumers looking for protein at this point. And obviously what they have right now is not really resonating as much with the consumer. But the point being is these problems can be fixed organically. Every single one of these companies can fix their problems organically. I think they'll look to deals to do it faster, but I do believe that they can be fixed organically.

[E]

What's your number one ask of the GIS stock ticker of the management other than the dividend? Pretty consistent. Yes.

[B]

Look, you know, last quarter they brought their numbers down quite dramatically. That was a good move.

[A]

Right?

[B]

That was obviously in line. Right? That was very in line with kind of what we were asking for. Now it's really about delivery right now. I want to just acknowledge the realities of our, of our world right now. If you were looking for a range within your guidance, high end, low end, the market has certainly deteriorated more over the last few months. And it is my view, and I've been very clear in my writings, that I do think it's going to get worse before it gets better. It's unavoidable because tariffs are coming, inflation is coming, the consumer's going to feel pressure, and we have job anxiety.

[A]

Right.

[B]

It's not just about the uncertainty of the geopolitical and the macro environment, but it's this whole notion of AI take coming for your job. I think it really is having an impact on people, the way people are consuming. And so we have to just acknowledge that things are going to get worse before they get better.

[E]

Things are going to get worse before they get better. Oh boy, oh boy. So we got another five more tickets to Go. So we don't mind the audience that we're speaking with. Nick Modi, Managing Director at RBC Capital. Over to you, Peter.

[D]

All right, another from sri's blast from the past. The artist formerly known as JJ Consumer, now known as kenview, headquartered in Majestic Summit, New Jersey I think is their new venue. So some noise on an activist investor. Satcham Head. You know, shares fell a couple of weeks ago with missed estimates, some lower guidance, but they still have iconic long term brands in the house. Neutrogena, Aveeno, Bandaid. Like SRI and I were really impressed with the now outbound CEO and his presentation at Cagney. It was, while it was short on visuals, the words he used were clearly demonstrative of his command of what some of the business issues are. Are you bullish on kenview? What are your thoughts right now?

[B]

Yeah, so look with, with Ken, you, by the way, that this last activist investor is, is the fourth activist investor that has entered this stock in the last six months or year, I should say so There's a lot of activist activity going on at Kentu. Now here's my thing. Very, very iconic brands, we know that, right. But even when they went public, we had wrote that we think their organizational design, right, the matrix, which is basically kind of a J and J template that they just took over when they spun out, is not the right organizational structure. It lacks real end to end accountability. And I go back to P and G, they made a change a decade ago where they went end to end, meaning that one person was responsible for that one category globally. And if they hit their numbers, they would get rewarded. And then they missed their numbers, they would not get rewarded.

[A]

Right.

[B]

And I think that's what Ken View has lacked. And I do believe that if Ken, you can somehow fix that. And now look, they have a former PNG executive, Kirk Perry in as the interim CEO, right? So he obviously has an understanding of what P and G did. If they can execute what P and G executed, it's not going to be easy, it's not going to be quick. But if they could do that, I think it can make a meaningful difference in how this company operates and then they'll actually be able to realize the potential of their portfolio.

[D]

Hey, there is no way that Ken View can be in any financial trouble in the future given the fact that every time my daughter even brushes her skin against something, doesn't even have to break the skin, she is grabbing her box of Frozen Disney band Aids and she's slapping like five or six on so they're making money. Households is contributing to the stuff, the stock value, the brand equity of the canview portfolio.

[E]

What a iconic brand. And you know, there's hardly a family in America which hasn't going through what you're going through. But I think there's a realization there that it's a very need state based, very non endemic need state. You only think of Band Aid when you need it.

[D]

It's an acute condition. You don't stock up on Band Aids unless you're like going to your summer house. You deal with it when, when it happens.

[B]

You know what I would love for Band Aid to innovate. When I cut myself shaving my head, I'd love to be able to put something that doesn't make me look so ridiculous. Yeah, that would be helpful. You know, so if you're listening, can you, there's an idea for, for an.

[D]

Innovation and can you maybe, maybe take a nod from, from Mars? You know how they have the customized M&Ms. Sree. What do you think? CPG guys? Band aids?

[B]

Hey, I would buy them healing, Peter.

[D]

That's all. We're all about the healing here.

[E]

Earnings estimates.

[D]

We're about the healing. All right.

[E]

Anyway, our next1 is MNST industry recognized favorite energy drink or Monster Energy where we have a lot of friends. Is the Q2 gross margin sustainable due to tariffs? And then of course it's in beverage categories. Lots of commodities in the mix to make them. Are they still seeing growth for energy long term? Are you seeing it in your evaluation? Can the consumer price point sustain as it is given? Economy is going through a lot of turmoil when it comes to affordability. And are you seeing enough innovation that gets you excited, Nick?

[B]

Yeah. So look on the margin side and the tariffs, look, they obviously are going to have to deal with some aluminum and steel tariffs, but they also have I think some pricing latitude. So I think they will be able to price some of that tariff risk away. Now remember, because carbonated softening pricing went up so much and energy drinks didn't follow to the degree the gaps have really gotten out of whack. So there's still a lot of upside and opportunity for Monster and the energy drink category to take more price. So I'm not too concerned about the gross margin side. Plus I do think that this is a company that has a lot of productivity opportunities that haven't been realized yet. So that will obviously also create some, some offsets as relates to the energy drink category. Look, we are moving into a world of functionality, right? And I think Everything that's growing in beverages is really functional in orientation. And this is only going to increase as we age as a population. And we're not just aging here, we're aging globally.

[A]

Right.

[B]

And so I do think that there is going to be considerable opportunity for the energy drink category going forward, especially overseas, because it's not as developed outside of Austria and some markets in Europe.

[A]

Right.

[B]

So I still see a lot of, a lot of upside for Monster here in the US and globally. And then in terms of innovation, look, I think they're really making a much more concerted effort to not just use gut feel for innovation, but to actually use analytics. And I think that's why you saw Ultra Vice Guava and Blue Hawaiian and some of these other innovations really capture traction. They've also realigned butler incentives. So that obviously helps when you have your key distributors that are aligned with you in terms of incentives and dollars and cents. So I think that they're really starting to kind of gain their momentum and mojo on their innovation strategy.

[D]

All right, here's my call out to Monster, our friend Ben Galvin. Sheree knows this. I order, I get two cases of energy drinks coming to my house every week. Yes, we don't drink coffee in this household, but here's the kicker. And Monster, this is where your innovation opportunity stands. I don't drink anything carbonated. That eliminates like 99%. Now, I also don't want to drink iced tea in the morning. Okay. The only non carbonated drinks that Monster offers have tea in the mix. If you just give me a non carb without tea. Ben Galvin. There's two more cases of volume coming your way. Coming your way. Just be warned, Monster. All right, let's move on down to central Pennsylvania. The Hershey company have a new CEO. Motley rated them as a dividend stock. There's still strong volume within the candy category. How do you think the, the impact on the demand for sugar as Coca Cola and potentially Pepsi move in that direction? Right. Is that going to have an impact on the domestic candy business and notably Hershey and, you know, the second quarter EPS estimate was, you know, beaten a solid 20%. More importantly, volume estimates beat by 3.1%. Is this, is this sustainable? Are there headwinds that they need to be concerned about, particularly around sugar?

[B]

I wouldn't say the headwinds are around sugar, Peter. I would say a few things. First of all, the reason why the quarter was so strong, and don't get me wrong, the underlying numbers were actually quite good. But they had some timing of ERP transition that helped them out and obviously some shifting around on seasonals with Easter timing. So that kind of helped them. Here's what I worry about with Hershey. Not necessarily the whole concern about sugar because I, I think that has been overblown, right? If you really think about some of you know, the fastest growing categories right now or some of the best performing categories, it's energy drinks and candy. Like think about that. Remember a year ago how like no one would ever wanted this stuff because of GLP1. So I think that people have kind of over exaggerated the downfall of sugar because at the end of the day we as consumers still want some sugar. We just want it in a permissible format.

[A]

Right.

[B]

What I worry about is that obviously cocoa pricing, cocoa costs have gone up. Hershey just announced a pretty large scale price increase. And I worry about cross category elasticities, right? I don't worry about what M and Ms. Are versus a Hershey bar. What I worry about is what a Hershey bar looks like relative to a Coca Cola 20 ounce or a snack bar or any other kind of alternative that you would select as a permissible indulgent at 2pm as a break in your day, right? Or as a dessert. So that's what I worry about. I worry about the cross elasticity across the wheel, the snacking wheel. And I think that's might, that might become an issue for Hershey in 2026.

[E]

2026. We'll certainly be looking forward as you invite you back in the CPG guys, you know, to discuss earnings one more time. Next on my list is Brown Foreman Whiskey, tequila, rum, ready drink beverages. A solid indeed portfolio with the overall nature of beer, wine, breaking down cocktails up, especially craft cocktails is what we hear on the CPG guys all the time. Is this a growth segment anymore? I mean Kramer recently said sell, sell, sell. With the bounce in share price. Why did he say that? New board, brutal inflation tariffs. What are we looking at here?

[B]

Yeah, look, the spirits category, like the rest of beverage alcohol has been under pressure. There's been a lot of inventory in the system ready to drink. Spirits are taking a lot of share, right? As it's more convenient, maybe more affordable. You know, you don't have to buy a whole big bottle. You could buy a couple of drinks in a six pack or. And you can have variety packs. That's, I think that's another big thing that's impacting the liquor industry right now is that consumers can buy a variety pack, get a variety of a Bunch of different drinks rather than just buying a single handle of vodka or rum or whatever. Okay. But Brown Forman has deeper issues.

[A]

Right.

[B]

It's not just about the category dynamics. I think Jack Daniels has lost some marketing relevancy. I think Brown Foreman has taken their eye off the core Jack Black equity as they were looking to market some of their flavor expressions.

[A]

Right.

[B]

So they, they did the kind of, not the marketing 101, what you should be doing, which is make sure you're haloing the core brand. And I think they kind of fell short of that. And the last thing I would say, and by the way, because demand is so tough, there's a lot of whiskey and inventory right now. And so I think you're going to see a lot of price promotion as people try to move liquid over the next six to 12 months. Okay, so those are some of my issues. The more near term concern I have is they've just announced a huge realignment of their distributor network. And these things never go seamlessly, as we all know. And so I think we're in for a few quarters of rough, very noisy trends because of inventory dislocation and executional gaps.

[D]

You know, Nick, you mentioned the change in the whiskey market, and my question is this. There were a huge, over the last 10 years, a huge growth in the boutique whiskey, particularly bourbon business. Right. And my question is, are when you say there's going to be so much more in inventory, is that because those guys need to move it through, they're going to start discounting those prices? And there are people that would have bought Jim Beam and Jack Daniels that are going to trade up and take advantage of the lower prices for some of these, you know, top shelf kinds of whiskeys. Is that what you're saying could be happening in the whiskey business?

[B]

Absolutely. Yeah, that's exactly what I'm saying.

[D]

Okay.

[E]

The other thing I want to come back to, Nick, is the trends we hear. People have come on the show and in our public podcast here have said there's a huge trend moving away from beer and wine in the industry. Are you guys tracking to the same or not? Not the case.

[B]

It moves around.

[A]

Right.

[B]

So there was a time where spirits were gaining a ton of share. I mean, it might have been 15 years of straight share gains from wine and spirit, from wine and beer, but actually beer is looking a lot better than wine and spirits. And it might be an affordability issue. Right. That might be driving that dynamic. So it's going to be interesting. Now here's the thing. What is beer Wine or spirits. Like, you know, we're starting to see convergence of all these categories, right. And so I, I again, I will reassert this theme or this thesis for the entire industry. We have to get to occasion based marketing and segmentation. We have to get out of category based segmentation because it's actually narrowing your scope of opportunity.

[A]

Right.

[B]

And I'll give a great example. If I told you that milk and wine were competitors, you would probably look at me and laugh. But they are. When my kids were young, we would have, you know, cookies and milk in the evening before they went to bed. That was our bonding time. And the same exact next night at the same exact time my kids were in rot, I would have wine and chocolate with my wife. Wine and milk just became competitors for that bonding occasion. And so, you know, if you don't think about the world that way, you're missing lots of nickels and quarters.

[A]

Right.

[B]

And so I really like, if there's one kind of passionate plea I can make to the industry, is really think about your consumer analytics engine and think about the occasions in which consumers are making their choices because the category silos I think are limiting the opportunity.

[D]

You've sparked a memory, Nick, that I'll share with you and Sri because I.

[C]

Always love telling good stories.

[D]

In 2010, I moved to Cincinnati to work for Kroger. Across the river in Kentucky is a very large liquor store called the Party Source. And the Bourbon Trend was not even there yet. Sure they made bourbon there, but there was. I walked into the Party Source and said, do you have any Pappy Van Winkle, which was the very high end bourbon available? And the guy looked behind his desk and he goes, yeah, I got a bottle of 10 year old here. Do you want to buy it? I'm like, sure. So I went and bought it. The next year they put an email out. I had to get in line at 4am to be the first one to buy. I got in line at 4am and someone showed up 10 minutes after I did and I got the bottle of 20 year old that I wanted the next year. I went at 8pm the night before and there were already 100 people in line with tents and sleeping bags. That's how crazy it went. Now I see it's coming back down as people are being a little bit more rational and the trend is going. Let's close it out with Church and Dwight. Shout out to our friends Sarabi, Pokriel and Chan and Soni who just joined Church and Dwight. Here's what I'm thinking it's household staples of so many products. They're under some serious margin pressures. They've got flat sales. They're doing some major portfolio realignment. 10% EPS estimates were actually beat that. That also cries to me that they're chasing the eps. And I'll ask you one did they follow your advice in terms of taking down their the expectations? But, you know, what's the outlook for Church and Dwight? Are they in a position where they're going to be able to weather the storm and come out strong?

[B]

Yeah, I think so. I mean, I have a very high degree of confidence in this management team and their strategy. And the good thing about Church and Dwight's portfolio is that it's very bifurcated.

[A]

Right.

[B]

They are premium, but they also have a lot of discount. And I think that's what you need in an environment like this. So it is a portfolio that is designed for this kind of environment. Right now they just did an acquisition, Touchland, which is basically kind of a hybrid between a hand sanitizer and a kind of canned fragrance or a fragrance. And I think there's going to be a lot of upside in that product. I mean, you know, it's a metric that I've never seen before. 97% of Touchlands consumers are new to the disinfectant category. I've never seen a metric like that. 97%. And the product was launched after Covid when you already had a ton of hand sanitizers in the market. So I think they got something good there. They're getting back on track with their M and A strategy. They kind of got off track with some device driven M and A which I don't think is their thing.

[D]

What about that, what about the hero? What about the HERO cosmetics acquisition? Good decision.

[B]

Very good decision. I mean they are doing really well with the HERO patches and, and you think about the long term applicability of that technology on for other ailments.

[A]

Right.

[B]

So I think they have a lot of potential upside by taking that product and using it for other issues that we might face as consumers. So yeah, I'm, I'm, you know, I like where they are right now.

[E]

All right. Didn't expect anything list from Nick. Anything less packed.

[B]

Packed, packed.

[D]

He took it straight on sri. He did. He didn't sidestep anything.

[E]

So let me thank audience for listening to this wonderful episode. Do leave us a rating and review on Apple Podcasts Spotify, your favorite listening platform. It informs us how we're doing as well as if we're having the right conversations. To all of you, thank you from Peter and me. You make the show happen to all our sponsors, whether this podcast or parties at events, hosted dinners, having us at panels. Thank you, thank you, thank you Peter. It's been fun doing this podcast with you. What's your one big if there was summarize this episode in one big takeaway.

[D]

The bourbon wave is over. Time to clean out the inventory and think about giving more shelf space to ready to drink cocktails. That's what I hear.

[E]

I heard right up at the top of the show. And one of the earliest questions I asked Nick, how are we doing overall the earnings outcomes? And he said they've listened and they've adjusted. That's why the numbers are better. He gave them a one time opportunity and sounds like many of them. I won't name them, have listened and adjusted the earnings. And second thing that I think is equally important, I violated the one big takeaway rule over here. He used the word organic growth. I believe he says that they can recover organically, get back to their ways of volume growth. And I think that's a major, major game changer. If CPG brands focus on that, they.

[D]

Can'T take their eye off the private label ball. That is a real concern in a lot of those brands that are susceptible. P and G is very insulated, right? They've done a really good job.

[E]

Instead of fighting private label, you now have to figure out how to get volume growth working with private brand. I don't even say private label anymore. So thank you for joining us on the CPG Guys and all this engagement ticker by ticker, patiently.

[B]

Yeah, you bet guys. Thanks for having me.

[E]

That's a wrap of this episode of the CPG Guys.

[A]

Foreign.

[C]

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