← The CPG Guys
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- [00:01]
Peter V S Bond
Hey, it's pvsb with the CPG guys. Sri and I are going to be in Las Vegas, Nevada January 6th through the 9th for the 2025 CES conference. Monday evening we'll be hosting an invite only party at the Aria. On Wednesday morning we'll be emceeing a breakfast briefing on 2025 Retail media investments that's sponsored by CVS Media Exchange. That's over at the Park MGM Tuesday appearing over at the OMG Commerce Experience at the Cosmopolitan and we'll be seen mostly around the area space. Expect to see us going into a lot of the area sky suites for individual meetings. We'll even be recording some content there. If you see us, stop by, say hello, take a selfie, whatever you want. We love speaking with people. We look forward to seeing you in January. Happy Holidays everyone.
- [01:04]
Britton Ladd
Hi, I'm Britton Ladd and you are listening to the CPG Guys Podcast.
- [01:11]
Sri Rajagopalan
Welcome to the CPG Guys Podcast.
- [01:15]
Peter V S Bond
Your host Sri Rajagopalan and Peter V S Bond explore how brands and retailers engage consumers in an increasingly digitally driven and now, here are the CPG Guys.
- [01:31]
Sri Rajagopalan
Hello and welcome to this episode of the CPG Guys. I'm of course SRI co founder, co host and also co founder and partner of Think Blue Consulting, your key to unlocking your profitability potential. As builders, connectors and amplifiers, we shape the future of commerce to drive your growth. Please do listen to my older daughter Rhea Raj's music www.rhearaj.com that's R H E R A J. My younger daughter Laura Raj is a member of the Geffen Records Universal Music group Katsai. They've just started performing their tour on the Jingle Ball cities in Dallas and now Boston. I'll be lucky enough to see him this weekend Live Touch. The hit single is now at 180/million plays on Spotify and we're headed to Tokyo, Japan for the holidays as they go perform for the Apple Music Awards there. Not able to join me today is my co host and BFF Mr. Peter Vs Barn. When he's not co hosting this podcast he serves as partnership acceleration lead at Flywheel, the division of Omnicom that helps enterprise brands improve the SEO and SEM growing the e commerce businesses. He of course is in Chile. Santiago, Chile working with Walmart's leadership there, Latin America leadership there, talking retail media and a bunch of other things trends. So before we get to our guests we'll ask you to consider following us in your preferred podcast listening app. If you already don't do so. This will ensure you automatically receive new episodes as they released this year. We partnered with drugstore news on December 4th at the iconic Linkage center on the annual Issue Summit in its 26th edition. We co presented six awards at the event in the Health and Beauty care space in harbor to both brands and retailers. It was a first and we look forward to what's up next year as we continue to partner with dsn. We also partner with the Path to Purchase Institute in the annual OmniShopper Awards back in November November 14th in Chicago and a select group of those winners will actually feature on the CPG guys in 2025. We also have been discussing the first Retail Media Executive ED program in the industry from May 5 to 8, 2025 at Cornell Tech. The CPG Guys are strategic partners with Cornell University for this immersive four day program that will bring together industry thought leaders, renowned faculty to share best practices for building compelling retail media platforms. You'll discover how to collaborate on creating best in class tech stacks, measure performance to ensure brands across the necessary KPIs based on campaign objectives and establish strong partnerships between brands and retailers. In addition, the program will cover optimizing brand strategies using AI driven campaign design at scale to achieve marketing goals. Links to our podcast assistacast, social media profiles of my daughters, how to register for Cornell Tech can all be found in the digital liner notes of this episode. Now here we get to the main event. Today's CPG landscape, needless to say, has accelerated significantly in the past few years, especially with omnichannel retail. A whole bunch of M&As in the mix, a whole bunch of earnings releases not going exactly the way the industry would have expected them to. And there's a whole new maturity on top of all that with the Digital Shopper which is creating a new path to purchase that's emerging in the CPG industry. Along with this, there are technology advances in supply chain home delivery and how a retailer perceives a shopper and delivers convenience. All of these things matter. So who do we have today to get into this transformation? Who survives? Who doesn't? What's going on in this M and A space, why some retailers cannot get out of their own way, and why there are categories that are doomed is none other than third time guest of the show Mr. Britton letter. And by the way, when he reaches five he gets the famous CPG Guys letterman jacket with his own very own initial and the CPG Guys logo. So Britain that'll be on its way. And of course he's got the following brands on his resume. Kroger, Amazon, Deloitte, Capgemini, Dell Michaels. For those who don't know, he posts often on LinkedIn and I thoroughly enjoy his writings. Many of his predictions have come absolutely accurate and true and I'm going to encourage all of you to follow Britain Lad and you can do that by going to light LinkedIn and typing his name right up in the search bar. B R I T A I N L A D D Watch out y'all. Britton, thank you so much for joining us today and I'm incredibly excited to speak with you today about the space of cpg retail supply chain advances, all the MA that's taking place, earnings releases. You know, anytime I really want to get a true rank punditry on the industry, that's when we ping you. So thanks for joining us. And before we get to the detailed questions that I've prepared for you today, can you take 60 seconds and give us a brief overview as your work as an independent consultant?
- [06:07]
Britton Ladd
Sure. Well, first of all, I'm so happy to be back on the show. Thank you for having me on. I focus primarily on retail strategy, supply chain logistics, last mile delivery, and I also focus a lot on robotics, micro fulfillment and so forth. So I work with retailers, but I also work with oil and gas companies, chemical companies and also logistics company.
- [06:29]
Sri Rajagopalan
Awesome Britain. Always a pleasure to have you here. So now let's get right into it. Of course, for those of you seeking Britain's profiles, you'll be able to find it in the digital liner notes of this podcast. So I'm going to jump right into the first, what I call a little bit of a hot topic over here. The soup category hasn't exactly been crushing it in the last three, four years. You know, it's really a duopoly progresso Campbell's and then there's a handful of private label and a handful of much smaller ones like Swanson etc who are growing. But it's really dominated highly merchandised category. Without the investments, can't move a ton of units and it's really limited to the colder season. Typically I would say mid November runs through March some parts of the country, maybe April given the weather. Campbell's has announced huge leadership changes. Your thoughts on that, Britain?
- [07:24]
Britton Ladd
First of all, I support the leadership changes. I think the individual they chose to be the CEO, I think he'll do well. But here's the problem. The challenge with Campbell's is that they continue to believe that they're a soup company. That's Campbell's we are a soup company and I've written about Campbell's, I've spoken to executives at Campbell's and I say, I think you're making a big mistake. I've said to Campbell's, I think you need to think of yourselves as the place where people come for meals. And I said that is a huge difference from thinking that you're a soup company. And I've stated, absolutely, you've got some great soups, no doubt. And I said, however, what about any type of meals? And I said, why don't you acquire a company like Icon Meals or at the time, why don't you acquire a company like Factor 75? Why not do something unique and look for a merger with hello Fresh, something be able to change the dynamic within the company that we don't sell soup, we're your choice for when you want to eat. And that could be soups, it could be ready made meals, prepared meals. There's even an opportunity for them to do certain things in frozen. So I think that if they don't change how they really view themselves as a company and if they aren't willing to consider some M and A, I don't anticipate a lot is going to change there and frankly, I think we're going to continue seeing the same very dull results out of Campbell.
- [08:55]
Sri Rajagopalan
My worry for the soup category Britain is over the last four or five years being in the field every week at retail, the soup category shrunk from a very large footprint of 24ft on the shelf down to 16 may not be a popular term Britain, but it's a shrinking category. And being elite in a shrinking category is just winning by basis, on the basis of competition that doesn't exist or you know, you're, you're a, you're a big fish in a spawn that's getting smaller where the water is getting drained out. Would you agree?
- [09:29]
Britton Ladd
Oh, 100%. I agree with you completely.
- [09:31]
Sri Rajagopalan
This is my big worry for the soup category. So thank you for that one. So let's jump into a completely different area now, space planning. No secret that both you and I are working in the space planning area. So let's declare that upfront. That said, space planning is one of those things where nothing has really changed dramatically in the last, I don't know, two odd decades. The players in that space, various softwares, have been around two, three odd decades. Most of the infrastructure as well as the capability of software that was built is over two decades old with minor updates. Nothing revolutionary going on in that space. So I'm going to say no issue for the last two decades. Use it as it is. Deeply embed yourself within brands. Except we are now living in a world where inflation has hit stores pretty hard, resets are more frequent than they've ever been, and shelf space is changing dynamically, routinely and oftenly. So if you want to chase it, you're going to have to have software that can help you chase it routinely, dynamically, can help you do micro space planning at the actual category and eye level. Your thoughts on space planning in general?
- [10:42]
Britton Ladd
Well, it's interesting you asked me this question because I actually just wrote a post on LinkedIn called the PepsiCo Challenge. And in that post, that article I wrote, I actually speak about this topic and I make many of the arguments that you just brought up. I believe that the biggest problem in space planning is that you have a company like Blue Yonder who has been selling software related to space planning. But that software was developed over 30 years ago. And so what's happened is what you just stated. Many companies have embedded software from Blue Yonder and a few other companies into their tech stack into their platform, and they believe that's the best that they can do. The other thing that I think that a lot of companies are making a mistake on is foolishly, they view micro planning, space planning, and even planning grams as something that should be viewed as a transactional activity. And I tell them that is 100% false. That should be treated as something that's strategic. The problem is the software they have doesn't allow them to honestly think strategically or be able to do things that would be considered strategic. And that's why in the article I state very clearly that in my opinion, and I've written about this now for about two years, I think without a doubt the number one space planning tool out there, the digital digital twin tool, is from the company 345 Global. Mark Edwards is the CEO of 345 Global and I think he's brilliant. I think the team that he has working with him to build the platform are truly the best in the industry. But what I like about what 345 Global is doing is that they've expanded the capabilities of the software, but they've done so in a way that makes it easy for companies to say, I'm going to replace my Blue Yonder Stone Age platform with something built on a gaming platform using modern architecture from 345 Global. And I can't stress enough how many companies, especially very large retailers, are doing things using Stone Age software. They have an army of people working with them to complete space planning and make planograms and so forth. And they're not doing anything strategic. But what they have themselves convinced is that, well, there's really nothing else I can do and that's false. Contact Mark Edwards at 345 Global, get a demo of the software and I guarantee you you will dump whatever software you're using.
- [13:18]
Sri Rajagopalan
Yeah, to me, to me, Britain, it's a different store environment. Private label is on tear right now and anyone can argue with me on that. The data doesn't lie. I go by data and the trends. If you're going to rebuild shelves, you're going to be a trusted category advisor and a category captain. You're going to truly be that category management boss that the retailer wants you to be. You need software that can back you up. And it's good to hear the summary. The post you referred to in PepsiCo, the best way for people to find it, just go to LinkedIn, type in PepsiCo Space Britain lad and they should be able to find it.
- [13:53]
Britton Ladd
Correct. Or they can just go and Type in the PepsiCo challenge and Google if that's what they want as well, it should come up. But if you have any, anyone has any problems finding it, they can just reach out to me and connect with me on LinkedIn and I'll make sure.
- [14:04]
Sri Rajagopalan
To send it my recommendation to all. You can find Britain's profile on the digital liner notes of this episode. You can click there, make a connection with Bitten and he'd be happy to send it to you. We will re feature that on the CPG guys at some point as well for your watching pleasure. So topic number three kind of shook up the industry late last year when it was first announced that Kroger was looking to merge with Albertson. Some say merger, some say acquire. At the end of the day, two of the greatest brands in the industry, legacy brands in the industry, coming together right across. And you know that for coverage from the Eastern seaboard as well as the Western seaboard. And so Stuart Aiken just announced he's moving on. He's now part of Circana starting January 1st. I've had the pleasure of working with Stuart quite a bit when I was at General Mills in the CCO role. Stuart is a powerhouse. I see Stuart's departure from Kroger as a big loss. Big win for Sorkana. Needless to say, love to hear your opinion on Stewart moving away. Is it a big deal for Kroger and then what's going on with this Albertsons and Kroger merger. We got a new administration coming in. Do you think it was the right thing in the first place? Should, while you and I obviously are not part of the ftc, should we be anticipating some change, et cetera? Just get your opinion on all of that.
- [15:27]
Britton Ladd
Let me address Stuart. I'm a big fan of Stuart. I admire him. I respect him tremendously. I had the pleasure of working with him when I worked at Kroger as a consultant. So I've seen firsthand how skilled and capable Stuart is. I believe that Stuart leaving really is a warning for Kroger because I think what's happened is that Stuart looked out there and said, is this merger going to be approved? Yes or no? And Stuart leaving tells me that he, among many other executives at Kroger I've spoken with, they don't believe the merger is going to be approved. And I think Stuart looked out there and said, well, this is really a great opportunity for me. I've actually written several times that if the merger was approved or is approved between Kroger and Albertsons, I think one could look at Stewart as being a potential candidate to be the CEO of the combined companies. And the reason why is Stuart knows retail inside now, grocery retailing inside now. But Stuart's been running 8451, the really prime, highly respected analytic company that is owned by Kroger. And I think having someone like Stuart as CEO would have really helped Kroger and Albertsons be able to start running that company based more on science and data and analytics versus what's really been going on, which is a lot of gut feel because both of those companies have been built by merging multiple regional players. So I think Stuart leaving is actually going to be harmful to Kroger. It's going to be hard to find someone who can replace his capability, no doubt. As far as the ftc, with the Trump administration come in, there will be a new head of the ftc. Lina Khan, I don't believe will be kept over. Will they make any major changes? The question is, is there really anything that they could do right now to change the outcome of the Kroger and Albertsons merger. The trials have already taken place, so I don't believe a new FTC person would be able to change much unless they came out and said, hey, we've changed our opinion. We absolutely are supporting the merger. We're withdrawing our lawsuit to prevent it. Is that a possibility? Yes. But I don't know who the Trump administration is going to choose.
- [17:57]
Sri Rajagopalan
The odds are kind of low, right?
- [17:58]
Britton Ladd
The odds are low. Absolutely. The odds are low of that. I think the problem, though, is this. This merger took on a life of its own and it became more of a political campaign than a business strategy. And I've been very critical of Kroger and the people that Kroger has hired to work on this because they kept giving these stump speeches about this is the greatest thing for the grocery industry. It's going to be the greatest thing to protect union jobs. And how dare you not support the merger of two union companies to protect unions and to protect the families of America. I literally felt like I was listening to a political speech. And I think that's actually harmless. Kroger, because of their focus on the way they have been messaging this, it's raised a lot of skepticism. And I also am skeptical of the merger because of the way that Kroger introduced several other aspects of this discussion. So do I believe it's going to be approved? I've said from the beginning I think it's only 50, 50. The longer it goes, the more skeptical I become that it's going to be approved. But even if it is approved, make no mistake, merging two union companies who move about as fast as the Titanic and then expecting that somehow there's going to be some major changes, some major transformation, I think is simply false. I think a Kroger and Albertson's merger is going to be one of the most challenging mergers ever. And the amount of work to turn those companies around is going to be a Herculean effort. And I'm just not really expecting a lot of good things to come from that. I've always stated, and I continue to believe the company who should have merged with Albertsons is Ahold Delhaze. Ahold Delhayes and Albertsons did agree to merge in 2022, and then in the last minute it was called off by Ajo Delhes. And so if Kroger and Albertsons don't merge, I certainly am anticipating that Albertsons will go back to all Del Hayes and say, let's pick this back up. And the reason why Albertsons will receive a $600 million payment from Kroger if the merger doesn't go through. And Albertsons can say, we have $600 million to fund this merger. So let's redo on a quick basis the due diligence we had already completed. But let's bring this up now and make a recommendation that we can merge. And I actually think that would be a better fit for Albertsons than a merger with Kroger, if you want the truth.
- [20:50]
Sri Rajagopalan
The big thing though, I scratch my head on that one. Britain is I think like you said, 2022. There was plenty of rumors, there was public news about it. But why would the FTC let that one go through?
- [21:02]
Britton Ladd
Well, I believe the reason why that this would go through is number one, I'm convinced that the Trump administration is going to choose someone to be head of the FTC who will be more willing to embrace mergers and acquisitions. I don't think that they'll be as restrictive in their thinking. The other thing that I think would help is, or I hope that it helps is I have to believe that the executives from Albertsons and Alhaze have learned from the mistakes that have been made. And I think that they will keep the focus on the true value of a merger, the benefits of a merger and they'll do everything they can to keep the politics out of it, to stop using such bombastic and inflammatory language. And I think that they can present a better argument that look, Albertsons controls mostly west coast. We have all Delhi is primarily on the east coast and this is where the benefits can be. Is it a guaranteed slam dunk that they would be allowed to merge? No. But do I believe that an Albertsons and all Delhi's merger would have a better chance of being approved than Kroger and Albertsons? Yes, I do. I've always believed that.
- [22:16]
Sri Rajagopalan
I heard you clearly say the issue with the Kroger one now and Albertsons is the lawsuit that's already been discussed, debated and results are already out there versus with ahold. It'll be brand new. There's no existing lawsuit to shut anything down. It can be a fresh start. You know I certainly agree with you big time Britain on this one. That which is which is going to be a precursor to my next question that with one giant now really dominating in the industry way ahead of even Amazon and that's Walmart who has been firing on so many cylinders I want to say all cylinders and really executing flawlessly since the middle of COVID gaining trips traction, store brands private label on fire, it appears Walmart has nicely carved itself a position as the absolute behemoth in supergiant of retail in the industry. Thoughts please. I recently noticed a post from you on that and I'm just trying to get into some details. Do you believe so they're built for the future industrial and is this a long haul marathon where Walmart is really going to stay ahead of the curve of everybody else for a long time to come.
- [23:30]
Britton Ladd
Walmart's certainly ahead of everybody else right now. And I anticipate that Walmart will remain ahead of everyone else for the next few years. But here's the brutal truth of everything. Walmart and Amazon know that the key to their success is groceries. And the thing that Walmart is doing. The reason why Walmart is investing so much capital into their stores is to do everything they can to attract as many customers to come to them for groceries as possible. Why? Because consumers shop for groceries more than they shop for anything else. Consumers have to shop for groceries on a weekly basis. They don't have to buy a new jacket on a weekly basis or shirt or jeans. The beauty of it is Walmart also did something that I think is brilliant. Walmart really is great at analyzing data. And what they started to see is that high end customers, high end consumers were actually coming into the stores. Customers that were making a substantial annual salary above the average customer. And so Walmart said, wait a minute, what else can we provide to these customers? So they added high end jewelry, handbags, fashion. They started to really identify and incentivize these high end consumers to come into the store. So Walmart has people coming in, making 200, 300,000 or more a year to shop for groceries. But they're buying things, they're buying jewelry, they're buying apparel, they're buying other things as well. And so that certainly helped, helped Walmart. Now when I look to the future though, I have to take into account what do I know what's going on at Amazon, what's going on at Amazon. Amazon sits back and says, so how do we become better at groceries? Well, they acquired Whole Foods, but that only gave them about 1% market share. They have Amazon Fresh stores. That's only going to do so much. I think what we're going to see from Amazon is that they change their strategy with groceries and that they start looking at more of. So how do we get closer to the customer with groceries, Smaller format stores, automated micro fulfillment centers where they can put 40 to 50,000 SKUs in an automated micro fulfillment center. They can provide groceries to customers in 30 minutes to an hour and do so 24 hours a day. And because the automated micro fulfillment centers could be put in anywhere from 20,000 to 50,000 square feet, they can open up thousands of these locations across the US and that can really start to bleed into what Walmart is doing. The other thing, and I broke this story, is the fact that Amazon has automated the back of Rivian vans to be able to do fulfillment, fulfillment of products from that van. Now, I actually wrote a story called Is Automating the Back of Rivian Vans the Next Frontier for Amazon? I actually challenged Amazon to do this, and they did it. And the team that actually created all this contacted me and they said, hey, we want you to see what we built. And I've seen the vans, I've seen all the videos, I've seen the technology in the back, and it's truly extraordinary. And so people listening to me, what I want you to think of is that these vans from Amazon, the Rivian vans, you'll be able to hail these vans as easy as you could hail an Uber. And I coined this phrase, hail a store. And so Amazon may have 15,000 or more vans at any one time roaming around neighborhoods. By 2030, Walmart has around 4,500 stores in the U.S. so Walmart's always looked at it as well. Amazon will never be able to build as many stores as we can. But I've made the argument Amazon doesn't have to build the same number of stores if Amazon can change the definition of what a store is. And that's why I wrote that article and challenged Amazon. Think big. Think about mobile retail as a better strategy than opening up physical retail stores. Now, Amazon will probably do a mixture of physical online and these, these mobile vans from Rivian. And I think that's going to give them tremendous capability. So now imagine you're Walmart and you look at Amazon and you say, well, Amazon owns MGM Studios. They have aws, they have all these other capabilities. And what do we do as Walmart? We are a retailer. And so I wrote an article called Walmart 2030. And in that article, what I make the argument is that Walmart really needs to start thinking about diversifying. And I say think big. Crush all assumptions. One of the things I say to Walmart, acquire Embraer, the airplane manufacturer. Acquire the Los Angeles Chargers. Bring them to Northwest Arkansas. Open up, build a field. Walmart field, home of the Arkansas chargers, by the 20% of ESPN that's owned by Hearst Media. Think about possibly acquiring Southwest Airlines or Delta or American. And the list goes on and on. I think I gave them nine things to think about that people can read the article and see it. But what I'm really making the argument to Walmart is, today you're doing great. By 2030, you may find that Amazon has taken 10 or more percent of your grocery volume. They may have taken even more of Your sales. Amazon may have formed strategic partnerships with high end fashion houses and come up with an even better strategy. So yes, Walmart today is doing great. I want to know what they're going to do when it becomes 2030, because by 2030, Amazon is going to be a much bigger company.
- [29:30]
Sri Rajagopalan
Love that clear and awesome summary and the challenge for 2030 as well. So let me remind the public that I'm speaking with Britain lad, independent consultant, one that we love to have here on the show to discuss things taking place in the industry that are huge, meteoric and also make the news on a daily basis. So I wanted to ask you about this wonderful newsletter that you've created which has a name, no Retreat, no Surrender. Truly going back to your past being coming from a background of actually being trained in the armed services, is that fair?
- [30:03]
Britton Ladd
Correct. So I served. I graduated high school. After I graduated high school, I served in the Marines for six years. I began my career as a tank commander. Then I realistically went to the infantry and I could always shoot well. So they made me a scout sniper with 2nd Battalion, 8th Marines. Then I became a hand to hand combat instructor. And so I was going to make the Marines a career, but I ended up getting injured. They took an inch off a bone on my left ankle and they had to remove 20% of disk L4. So I became disabled to an extent. But the one thing I kept with me was what I learned in the Marines about strategy, about having no fear, about being willing to take on big challenges, but more importantly about having the courage to be confrontational. And what I mean by that is confronting problems. And especially what I learned was leadership. And leadership to me is having courage. The courage to say we are doing great right now, like Walmart, but I think we better be thinking more long term and we better be thinking what else can we be getting into? So I created this letter, this newsletter, and I'm like, so what really sums up the way I believe? And I'm like, no Retreat, no Surrender. And I'm like, okay, I'm going to do it. So it's a catchy phrase. A lot of people have complimented me on it and I have, you know, 10,000 subscribers or something like that every day it just increases. So I'm grateful to anyone who reads it. I don't promise to send it out on a weekly basis or anything like that. Sometimes I go several months between issues because I say to everyone, if you receive a letter from me, it's because it's worth reading. I don't want to just push stuff out.
- [31:46]
Sri Rajagopalan
I noticed the latest one that you put out of Walgreens is in a world of hurt and it's their fault, actually has a tank as the picture. So I just couldn't pass up asking you about the newsletter. But more importantly, Britain, who should subscribe to the newsletter? Is it analysts? Is it just anyone in the industry? Is it brands? It's retailers?
- [32:05]
Britton Ladd
You know, in all honesty, anyone can subscribe to it. I have people in Silicon Valley who have nothing to do with retail, but they read it. I have so many executives who read it. All of the companies I write about read it. You know, Walmart, I have tons of people from Walmart to read it, tons of people from Amazon, Target and so forth. And I say to people that if you're wanting to learn things and if you're really wanting to see a different way of thinking and how it can generate results, then by all means subscribe to the newsletter. You may not like everything that I write, but what I do is I always point out things that are viewed differently by most people. People say to me all the time, you think in a really unique way. And I agree with that. It's just something I've always done. But it's something I've leveraged to my advantage because I have been able to come up with things years in advance. When we talked about Amazon, I wrote a research report in 2013. I was completing my third master's degree and I stated in the research report that Amazon should acquire Whole Foods. And I sent a copy of that report to executives at Amazon and they said, this is stupid, we would never do this. They said, you really should delete this from your report. I said, no, I think I'll keep it. In June 16, 2017, Amazon acquires whole Foods. So I was years ahead of the curve in that. And that's why I don't change things. I don't make predictions. I say that I make recommendations. I basically say if I was running a company, this is what I would do. So I don't make predictions. I'm really recommending things based on if I was in charge, this is what I would do.
- [33:46]
Sri Rajagopalan
Listen, man, we really enjoy listening to you. You may say no predictions, but I have no problem saying many of what you said have come true. That is a prediction in reality. But let's continue this dialogue. And Walgreens is the next one on on the docket over here. So 8,000 plus stores. We know the stock has lost approximately 70 plus percent in the last, I would say annualized 12 month calendar cycle. Lots of news today on a private equity acquisition. Thoughts, please?
- [34:16]
Britton Ladd
If you read my article, Walgreens is in a world of hurt and it's their own fault. I go into great detail about all of the issues at Walgreens. I interviewed everybody. I had so many executives reaching out to me and how I came up with the idea. Executives from Walgreens actually reached out to me and said, we read everything you write and we think you're the perfect person to tell the true story of what's going on inside Walgreens. And I said, well, if you could get me enough people who can, who will be willing to let me interview them and provide me with factual information, I said, I'll be more than happy to do it. And I did. And that article went all the way to Stefano Pesina, who owns Walgreens Boots Alliance. Multiple law firms went through it. I had multiple lawyers saying they were going to sue me from Walgreens, but to Walgreens credit, sue you, for one. Well, that was just it. They were suing me because they didn't like the negative stuff that I had written in the article. But I said, it's not negative. It's factual. It's the truth. And I stated repeatedly in the article, I'm recommending to Walgreens to hire an outside firm and investigate all this. I'm not saying take my word for it or the word of the people I interviewed. Get the facts yourself. Interview people. And so they couldn't sue me. I actually was able to have a pretty decent relationship with the law firms and the senior advisors and executives at Walgreens. But I've always maintained that Walgreens is truly in a world of hurt and that they are going to go out of business if they don't make drastic changes. And one of the things I wrote in the article is I stated that I believe a private equity firm will come in and acquire them. There's a man named John Lederer. He is actually an advisor to Sycamore Partners, and he is on the board of directors for Walgreens Boots Alliance. So Walgreens, Boots alliance and Sycamore Partners really know how bad things are. And I believe what's going to happen is Sycamore would acquire Walgreens. I think they will shut down a majority of the stores. I think they'll divest the rest. And I think really it will become one of these breakup scenarios that Sycamore is going to go after. Walgreens has made so many bad mistakes. Over the years, they've dug such a deep hole that it's almost going to be impossible to dig them out. So I wish Walgreens the best, but in many ways this is to be expected. I honestly think it's the only thing they have left. I had stated at one point, maybe Amazon would be interested in acquiring Walgreens because Amazon could have access to those stores. There's around 8,500 stores. The problem is many of those stores are so small and in really depressed areas that about 2,000 more of the stores would really add no value to Amazon. But really, the challenge for Amazon would be the amount of capital it would take just to try and keep Walgreens running, because the entire pharmacy business is changing, and Amazon made the right choice. They went with Pill Pack and they're doing more of an online pharmacy component. And I think that's really the best way to go. So do I expect a lot of positive things happening to Walgreens in the coming years? No, I. But I wish them the best, but they dug their own grave. They are the ones who caused this, nobody else.
- [37:46]
Sri Rajagopalan
Another one that's kind of making the news last 48 hours is this great conversation about Mondelez acquiring Hershey. Given Mars has just recently acquired Kelanova. I got to imagine this one has got some serious attention to it and is brewing to be something real. Your thoughts, please.
- [38:04]
Britton Ladd
So this is an interesting one, and there's a lot to talk about here, so I'll compress it as much as I can. So I really believe what Mondelez is trying to do is acquire Hershey as a defensive move against the fact that their biggest competitors, one of their biggest competitors, Mars, did just recently acquire Kelanova. So Mondelez is looking, sitting back and saying, we have to do something. And they look at Hershey and they say, let's acquire Hershey. Now, the challenge that I have, and I've spoken about this already, I've written some things about this, When I look at the executive team at Mondelez, they really don't have a strong executive bench. So I wrote a post on this and what I have recommended to Hershey and the Hershey Trust. The Hershey Trust is who makes the decision of whether or not Hershey can be acquired. And I stated to the Hershey Trust that, look, if I was you, what I would do is I would say make one of the executives who was the president of international at Hershey and named him to be the executive of Mondelez number one. Number two, replace Michelle Buck, who is the Current CEO of Hershey with a man named Michael deposo and name him the CEO of Hershey.
- [39:24]
Sri Rajagopalan
Michael and I have actually worked together on the Walmart business when I worked for PepsiCo. I'm talking a decade old story though.
- [39:31]
Britton Ladd
So you know who he is. You know that he's a really qualified individual. He's, he's very well thought of, very highly thought of. And so what I'm saying to Hershey is, look, stack the deck in your favor. Have a CEO, have the president of international from Hershey become the CEO of Mondelez, and then name Michael deposo to become the new CEO of Hershey, the Hershey company. And so now you have two executives who know Hershey inside and out, know all their operations, all of their markets and so forth. And that will greatly simplify the process of merging Mondelez with Hershey. I've also stated that the name Mondelez should go away. They should just rename the entire company to Hershey. And then the other thing I've stated is I believe that the combined company, whoever is the CEO, should hire a chief supply chain officer and have them really do a detailed and in depth analysis of the combined supply chains because I believe there's tremendous opportunities there to reduce costs. But the other thing I have stated, I think Nestle should take a look at maybe stepping in and also making an offer for Hershey. Nestle knows the chocolate market very well. Nestle's fastest growing region is India. And I believe that introducing Hershey into India would be a fabulous move to make. And I have stated that Lawrence Free is the CEO of Nestle, but I believe he should have a co CEO, and specifically I've named that they should name an executive from India, from Nestle India to be the co CEO, because I don't think that Nestle really understands how truly strategic and vital that India is to their future growth. Just as if Mondelez acquires Hershey. The reason why, like the Hershey executive becoming the CEO of the Mondelez brand is because they know how vital India is as well. So that's what I think about that. I think it's an interesting acquisition. Do I think it will go through? It's going to be very challenging. We're looking at probably a 45 to $50 billion acquisition of Hershey. And Hershey has always, always pushed away people who've come to try and acquire them. So this is going to be an interesting one to watch.
- [41:51]
Sri Rajagopalan
How awesome. And you refer to India as a great opportunity purely because of the size and scale of the population. Correct?
- [41:57]
Britton Ladd
No, it's not just the size and scale of the population. It's the changing demographics within India. I've traveled all over India. There are 29 states in India and there are different pockets within India, different regions that are becoming much more economically powerful. The average income is rising. And what's happening is that now consumers have more disposable income and they're willing to try foreign brands. And so it's the fact that there's many changes taking place in India, not just because of how large they are, but I really look at of what country is going to receive the most for supply chain and logistics. Investment, port investment, airport improvement, manufacturing, everything leads to India. And it's foolish for any brand not to look at India and say, we better figure out a way to become dominant in that market or we'll be blocked out completely. Now, Nestle is there, Mondelez is there, hershey is not. 90% of Hershey cells are in North America. So I think this is a tremendous opportunity for Nestle to move into India. But I think they're going to certainly have to have experts from Mondelez or Nestle to be the ones who are actually in charge of.
- [43:16]
Sri Rajagopalan
So should we have a CPG Guys India?
- [43:18]
Britton Ladd
I believe we should have a CPG Guys India. Well, in all honesty, when you think about it, that makes perfect sense. And there also could be, you know, a podcast where you're talking about the transformation that India is going to be going through. I've written about this topic a lot. The biggest long term threat to China is India because China's population is decreasing so significantly because the birth rate is falling so fast. And so when I look at. So who is going to be the new China? It's going to be India. India will be picking up manufacturing and all kinds of things that has been done traditionally in, in China. So I think India has so much growth ahead of it, it's just almost unfathomable to speak about. It's amazing what's going to happen there. If I could live in India, I'd move there tomorrow. I used to live there. Loved it. It's still one of my favorite countries in the world.
- [44:11]
Sri Rajagopalan
I can chat about all the things transformational with Britain forever here on the cp. This is why we love having him. There's so much going on. But I can't end this episode without a question on trends and where I'd like you to focus. Britain is the supply chain space because clearly over time, Walmart clearly established their superiority with investments in Supply chain. But we have a hot new world in the CPG industry and retail. It's not that new, but we've made it kind of new and hot. It's been around forever and it's artificial intelligence. And most are still confusing artificial intelligence as a technology play versus understanding that truly applied AI is where the action is. I'd love your take on the connection between artificial intelligence and supply chain as we wrap this up.
- [44:56]
Britton Ladd
So that's a fascinating one. And I am constantly having to talk about what artificial truly is and how it can be leveraged across supply chain logistics, transportation and so forth. The challenge, and we touched on this earlier about these embedded technologies, these embedded software. Most companies are still relying on software made, developed 25, 30, even 50 years ago. That's how they're running their supply chains. And so when they look at AI, they don't say, AI really can actually replace these platforms I'm using give us an entirely new way to view supply chains. How we can interpret what's going on in supply chains, how we can connect suppliers in supply chain. They're not really doing that. They're saying, how do I add AI to what we're doing? And I think that is truly the wrong way to look at it. I think one of the most fascinating opportunities just came about because of Dave Clark, formerly of Amazon, and he has created this company called Augur. And what they're wanting to do is leverage an AI based platform to rethink and reimagine supply chain software. And I believe this is a tremendous opportunity because the software that most companies are relying on to manage their supply chains, to do transportation management, system, warehouse management, even warehouse execution, is based on software decades old, as you have pointed out. So I believe that today is AI really being able to do anything transformative in supply chain? Not really, it's just not there. But if you start with a supply chain software platform that is based exclusively on AI, and they leverage AI from the very beginning, and then they bring in capabilities for supplier relationship management, sales and operations planning, demand planning and forecasting, transportation management systems and everything else. Now it gives you a completely different ecosystem of how to address the supply chain, how to manage, monitor the supply chain, but really to be able to understand this is what's going on in my supply chain. I always say to companies, the purpose of a supply chain is to do one thing, enable growth. The problem is every software company out there says, well, we view supply chain as a way to execute or reduce cost. So they're always putting the focus on software that either does a transaction or optimizes a movement. That's not how you enable anything to grow. And so the entire view of what a supply chain is has to change. And I've gone to the length of saying I don't even like the term supply chain. There is nothing linear in supply chain. I say, I believe to use the phrase supply web, just like a spider web, is really the best way to view what takes place globally regarding all of the movements and interactions that take place to get a product manufactured, delivered to the US and then delivered to the customer. So AI will have an impact, but it's going to be because someone has come up with a platform that's built with AI in mind versus saying I'm going to add AI to what we're doing. Wow.
- [48:17]
Sri Rajagopalan
This is why we wanted to chat with Britain Lad. And we got exactly what we expected, which is hot topics, M and A results, earnings divestitures and everything taking place on our industry, including trends. Always the facts. Fun conversation. Let me remind the audience you can find all of our content by simply going to a web browser and typing cpguys.com in the URL. If you think you or your company has some thought leadership to contribute to our community discussion, drop us an email@contactpguys.com and maybe you can join us on the podcast. Don't forget to drop us a rating and CPG guys on the navigation bar on top. The reason we ask you for a rating and review is the rating tells us how we're doing, the review tells us we have the right guest rights. Conversation to our incredible LinkedIn followership. We can't thank you enough. Without you there is no CPG guys. You shape the show for the clicks, likes, comments, DMS meeting us at conferences, recording episodes at conferences, and for the ongoing support of CPG guys. We are eternally thankful. Britain, thank you for making time on short notice. I'm always excited to speak to you. This is not a one and done. We would love to have you back because you have to earn that letterman jacket. We are only two episodes away. Thank you for joining me.
- [49:32]
Britton Ladd
Thank you very much for having me on the show. Always love being here. You can have me back as many times as you wish. And I would love to have that jacket.
- [49:39]
Sri Rajagopalan
Looking forward to it Britain. Thank you. And that's the wrap of this episode.
- [49:54]
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