Peter V.S. Bond (3:25)

Yeah, we did a couple things. I'll say we're going to have a. In the link to the. They'll have a link to the drive where all of the Cagney presentations we were able to collect single place. We'll put that in the digital liner notes of this episode. But couple of points about the venue and everything. So it was in Orlando for years. It's been at a resort in Boca Raton. They moved the venue this year. I think there was a, a lot of push from the analysts who typically bring their families. It's. It's scheduled to coincide with the spring break week for all the private schools in New York. So they generally, generally bring their families. And I think they liked Orlando as a better venue. So they moved it to a lovely hotel, the Hilton Signia Bonnet Creek, which was adjacent to the Waldorf Astoria, but had lovely conference facility in the hotel. And I will just say this, you know, in years past sri, I've been a couple times I noticed that, you know, I was kind of incognito. I think the last time I went, the only people that knew me were our friends Nick Modi and Jason English, who sent Jason, who since left Goldman Sachs. But this time a lot of people came up to us, came back to where we were in the media section, recognized us. There was. I remember one time you and I were talking in front of the PEPSIC Mexico section where they had all sorts of giveaways, and a young gentleman walked by us three times before he built up the nerve to actually introduce himself to us.

Sree Rajagopalan (5:05)

I actually heard him say to his colleague, hey, they're the CPG guys. Should we talk to him?

Peter V.S. Bond (5:10)

I know. So we're even permeating the world of analysts and equity evaluation. It was a beautiful venue. We, we were kind of incognito. They put the media at the very back of the room, the Farquhar. They couldn't have put us any further away from the stage in that room.

Sree Rajagopalan (5:32)

I'm good with that. I'm good with that, Peter. And I'll tell you why, though, I, I like that. Media was clustered together. First of all, there was hardly any media There were six or eight of us. For both you and I to be there among six or six or seven others. I feel honored and privileged that we could make it out and listen to CEOs and the senior leaders speaking. So let's acknowledge that. But I like that media was clustered together because we made some new friends.

Peter V.S. Bond (5:58)

One in particular, I'll give a shout out to Laura Cooper with the Wall Street Journal. You and I are going to be able to see her in New York in a couple of weeks when we are, when we're at Cornell. So there'll be a lot of opportunities, but a really good group of people. Everyone was very nice. Made friends with some of the analysts and new people, mostly clustered around the big, big spread of giveaways for Mondelez when. When they came to present. Boy, was that crazy. Wasn't it? Sri.

Sree Rajagopalan (6:28)

So, Mr. Barn, are we going to see stuff between Wall Street Journal and the CPG guys or the CPG guys? I'm not going to go that far. Don't answer. Don't answer that question. Surprise. But, yeah, that Mandali spread, and then the Hershey's won the next day. I think Mondelez was a larger scale one than the Hershey's one because they had all the international products. And, man, there was a mad rush for it. This was my first visit to Cagney, attending as a media person. I'd never seen this mad rush before, and, boy, it was impressive. But it was also a little bit of a human stampede to get candy. But it was. It was fun and kind of overwhelming to see at the same time. What would you say?

Peter V.S. Bond (7:10)

I think it was a little crazy. Sri. It was interesting for me, there were some companies that weren't there that were kind of notable. That was my first reaction, right? Like, I didn't see Campbell's and I didn't see Unilever. Now, Unilever, I know that Unilever has scheduled a lunch in New York for all the analysts, many, many companies that don't present. And obviously this year, a very regular presenter was Kellanova and their previous serial division, W.K. kellogg, did present, but obviously Kellanova is in the process of being acquired by Mars. So they didn't appear. What was interesting is did see some Mars people in the room. They were there to listen to all the publicly traded companies talk about themselves. But as they're privately owned, they don't have to show up there. Right.

Sree Rajagopalan (8:09)

Because they're not a stock publicly traded that Wall street is tracking and going through quarterly earnings conversations. That creates excitement for the pension funds or ETFs.

Peter V.S. Bond (8:22)

Yeah, it was very interesting. And one thing we did get to do, we'll drop a little spoiler here. An Easter egg, so to speak. We were able to record a conversation with our friend Nick Modi and he was very candid about what he liked and what he didn't like about the content that was being shared on stage. And the spoiler is it was more not like there was a lot left to be desired from his perspective.

Sree Rajagopalan (8:51)

So wait, Peter, you're saying there's another episode coming from a Wall street person from the Royal bank of Canada?

Peter V.S. Bond (8:59)

Yeah. Yeah.

Sree Rajagopalan (9:00)

All right. You created some anticipation here for our listeners here that you get the CPG guys version of the conference here, but you're going to get the Wall street version of the conference in like TBD very soon. Yep, we will tell you. All right, let's, let's move this along, Peter. So let's talk about the overall conference itself. And how would you grade it to me? My, you've already started getting into it. But my hats off to Wall street community for actually doing this annually. You know, when you're not on the presentation side and you're watching these presentations, the discipline, the timeliness, the type of stuff that's asked for in templates and just the overall comfort food, everything. A plus plus, plus plus plus. Congratulations, Cagney. You throw one heck of a conference. Thoughts?

Peter V.S. Bond (9:55)

I would agree with you on all but one aspect. And this is just the nature of the business. Cagney gets a lot of the presenters to sponsor meals and breaks and sometimes the meals that are sponsored by food companies, the only food they serve are the food that they manufacture. So we're at a very high end resort and we're eating, you know, packaged food. So that would be my only downside as to the organization, how they scheduled it, you know, the synchronized swimming of the whole process. SRI it was awesome. It was a great event. I mean I, I can't. I my hands off to Hats off rather to Cagney and Weston, the company that organized everything. They put on a great event. I have no, no real complaints. You know, my, my, my picayune approach to the food is more because, you know, I'm down at a beautiful resort and I, I'd like to have, you know, a, a lobster Benedict and that's, that just isn't what I got. So I'm okay with that. It's just, it's the nature of the business. But really good event. Shree.

Sree Rajagopalan (11:09)

Yep, absolutely, Peter. And so A plus for that, but let's give an overall grade for the quality of the presentations we saw. And I'm not asking you, Peter, did people come prepared? Were the present, was the actual presentation and the beauty of the presentation. Great. Were there videos? Were there, you know, ad shown? I'm asking you the output sitting in those pageantry made public. The pageantry was fabulous. I can't say no. But the output in each one of those decks for where the industry is. How many times in this episode, in this podcast, or on the CPG guys via LinkedIn have we said the industry shock surprise, right? Industry is going through a volume growth challenge. Do you feel the industry addressed it?

Peter V.S. Bond (11:58)

Few and far between. Sri. I can count. There were 30 presentations, right. I can count on one hand and still have a couple fingers left over. How many addressed the elephants in the room? Volume, private label and you know, growth.

Sree Rajagopalan (12:18)

It's just media optimization would be other one. Retail media is a piece of that.

Peter V.S. Bond (12:22)

One presentation referenced retail media. I.

Sree Rajagopalan (12:26)

It's. And for that, Peter, the grade I would give for that. The grade I would give overall for this would be at best underwhelming. Your thoughts, please?

Peter V.S. Bond (12:41)

Yeah, I was, I was displeased with the lack of transparency. They all seem to be focused on convincing the analysts that they were going to hit their quarterly numbers. And I don't know if that is necessarily the right thing to be doing right now. And we'll get more into that with our conversation with Nick, but I think that they were, they didn't address how they were going to do it. They seemed incredibly focused on the power of their brands more than anything.

Sree Rajagopalan (13:20)

Yeah, I want to talk about that for a second. So I want to talk about that for a second. Right. So volume challenges. And again, maybe this is the. I'm not counting, but who's counting? But maybe this is the 50th time on this show that I'm referring to. It was around late March 2023 that volume challenges started. No genius Einstein discussion here. You know, snap dried up, EBT dried up and so did a lot of the government assistance check that hung around from COVID days. You put all that into the mix and you have inflation, pricing, related inflation. Obviously there was a volume growth. To be fair, Peter, brands have had two years. We're nearly two years into that cycle. So my humble anticipation being a practitioner was we'll get to see strategies of what brands are going to do to at least take it head on. And what I saw was a lot of I have very strong brands and I'M going to lean back on them.

Peter V.S. Bond (14:15)

Yeah.

Sree Rajagopalan (14:16)

Trust me.

Peter V.S. Bond (14:16)

Yeah, that was, that was kind of the impression that I got from a lot of the presentations that all they talked about were their brands and their innovation and that will carry them into the future. And I don't think.

Sree Rajagopalan (14:31)

But even innovation, I'm going to say it's a passing grade. I'm not going to say it was underwhelming. It was a passing grade. I saw a lot of line extensions. Oh sure, some had a, some had a little bit of adjacency type. Hey, I'm going to evolve into this aisle something new, a new form, new packaging. But in an industry again which is struggling on volume growth of innovation is one of the biggest aspects you're going to lean in. We'd want to see something epic.

Peter V.S. Bond (14:58)

You know, SRI the other thing that was lacking in almost every presentation was a recognition of the impact that GLP1s was going to have on, on food manufacturing.

Sree Rajagopalan (15:10)

And so, so, so Peter, we had such a. You and I walked in expecting to see on the food and I would say beverages as well because the sugar aspect, how brands are dealing with or working with GLP1 and why you and I walked in with that is brand after brand after brand in the quarterly earnings releases when Wall street analysts were asking questions prior to. We're saying, hey, GLP1 is actually getting in the way of progress here from a volume growth perspective. But here at the conference nobody addressed it. But to my surprise, when we talked to analysts, what they said to us is the Repeat rate on GLP1 is so low that it's a 1 and done for most people because of the.

Peter V.S. Bond (15:57)

Cost of GLP1 lower pre trade.

Sree Rajagopalan (15:59)

Right? 30%. So yeah, of course 30% is still making some change in categories, maybe 50 basis points in food and beverage categories. I just don't know the number. But whatever it is, it's a minor dent and that's why brands didn't address it. But yet leading up to this, brands have been saying that's the reason why their volume is slow.

Peter V.S. Bond (16:21)

So you can't say it's the reason.

Sree Rajagopalan (16:22)

It's clear.

Peter V.S. Bond (16:23)

You can't say it's the reason and then not address it and say no, it isn't. Yes, what is it? Is it or is it?

Sree Rajagopalan (16:29)

Maybe. Or maybe brands have tricks up their sleeve how they're going to address it and didn't want to share it with others. But my hats off to ConAgra.

Peter V.S. Bond (16:37)

They were the best.

Sree Rajagopalan (16:38)

In particular, Bob Nolan's presentation was absolutely fabulous.

Peter V.S. Bond (16:43)

Kudos to Bob Nolan. If I remember correctly, he was one of. There were only a handful of companies that had people other than the CEO or CFO on stage. Conagra was one of them. Bob Nolan took them through an incredible story filled with insights and outcomes and I thought it was very, very impressive. I know you did too.

Sree Rajagopalan (17:07)

Peter. I won't even blink. It was absolutely fabulous. But on the GLP one aspect in new innovation, certain select categories, maybe it was frozen, I can't recall, Peter, but it's in our notes. Conagra is actually going to put a badge that says GLP1 Friendly or Not, which I think is very progressive.

Peter V.S. Bond (17:26)

It's important because in order for GLP1s to be effective, you have to be consuming a high protein diet. And that's what they're doing. They're basically saying it's not just about the drug, it's the drug in combination with the diet that will have the maximum effect. And so they're leaning into it. I heard a couple of references, but then I heard one manufacturer come out and not even talk about it and then say one of their major innovations was they were just going to glaze things that they brands, they already had. They were going to add a glaze. Glaze like that seemed to be, I don't know, tone deaf maybe.

Sree Rajagopalan (18:05)

I don't even know what to say, Peter. But here's what I do, you know, because I didn't walk out of there. You and I, we didn't walk out of there. Our discussion with Wall street analysts yielded the same answers, kind of that we will be putting out this episode with the RBC analyst Nick Modi soon. The general consensus opinion walking out of there was brands didn't give a clear picture on how to return to volume growth. But this is an open invitation to brands. If you want to come here, we speak to retail as well. You know, you're not speaking to Wall street here. If you want to come and talk to retail, which is a half our audience here, you're welcome to come here and share what your plan to growth is. You're more than welcome. You can keep it as generic as you want to. We welcome it. We'd love to have that discussion with you because the industry needs you.

Peter V.S. Bond (18:50)

I want to add a couple more thoughts and I'm just going to be very honest about this. They used a lot of the CEOs use buzzwords on stage that you and I looked at each other and we knew that if we asked them a question on if they use the term price pack architecture. Most of them could not articulate what it was.

Sree Rajagopalan (19:11)

Before you get into, before you get into scientific terms in our industry, I want to talk about artificial intelligence.

Peter V.S. Bond (19:17)

We're going to do that. I mean, everybody used AI. It was the buzzword.

Sree Rajagopalan (19:22)

But Peter, AI was in almost every presentation. But it looked.

Peter V.S. Bond (19:27)

It did. And I don't, I don't think in.

Sree Rajagopalan (19:29)

A slide where it was hard for me to comprehend is that the best use of AI to me, in our industry, AI is already in supply chain. Fabulous. Most people have caught up. AI has been around forever and people are using it. It's just, it hasn't been showcased with senior management. But chief supply chain officers have been working with it for a while. It's starting to gradually move into marketing. But to me, our industry loosely still uses the word AI just to be cool in front of them. I'm so sorry. I'm so sorry. Just to look cool in front of Gen Z and millennials. And this morning I read your post.

Peter V.S. Bond (20:09)

I loved your post.

Sree Rajagopalan (20:11)

I had to make a post.

Peter V.S. Bond (20:11)

You called it out.

Sree Rajagopalan (20:12)

Here are the basics. Let Gen Z millennials and chief supply chain officers and CIOs and CTOs figure out the best application. Solve the volume crisis. That's where senior leadership needs to put out. And perhaps I don't even help you with suggestions.

Peter V.S. Bond (20:30)

There was one other thing. There was one. Sorry, Peter, you can rant. There was one other thing I wanted to talk about, which was the projections and the forecast. Right. The guidance. The guidance was pretty slim.

Sree Rajagopalan (20:44)

Wait, wait, you saw there was some.

Peter V.S. Bond (20:46)

Guidance and it was pretty slim.

Sree Rajagopalan (20:49)

Out of 30, how much, how many did you see? Guidance?

Peter V.S. Bond (20:52)

I actually saw guidance. About half.

Sree Rajagopalan (20:56)

Half. Slightly more than that.

Peter V.S. Bond (20:57)

There was one company that came and completely avoided it, said, oh, you'll get that at our next quarter. The analysts really groused about that. They were not happy that this came. This company showed up without any guidance changes, knowing full well that it's not going to be good news when they hit. I, I, you know, I listen.

Sree Rajagopalan (21:21)

Each company has the right. They decide what it wants to share and doesn't want to share. Let's, let's start at the base.

Peter V.S. Bond (21:26)

If you're not going to do this. This particular company had just really didn't do anything. They didn't talk about any of the capabilities. They didn't address the, the volume issue. It was like, why come? Why come? Yeah, you've been here every year forever.

Sree Rajagopalan (21:44)

I don't know. Because you made a commitment. But here, hold on, hold on, though. I want to get back to that. Right. Every company has a right to showcase or not showcase whatever it wants, right. It's a conference, it's up to the company. But Wall street walks in. Listen, man, we're also reflecting what analysts told us as media, right? We don't make this stuff up. You're going to come to Cagney. The number one thing they want from you is an outlook, guidance, guidance, guidance. And then the how you get there, which is, which is less important than what is your guidance. Right. That's all. We're only reflecting what we were told by analysts and we were fortunate to talk to analysts in the first place. So I want to go back to those that actually declared dividend increases. I do want to say congratulations because in an aura of slower volume, negative volume, if you figured out how to take more cost out, I'm going to give you a muted applause. But it's still an applause.

Peter V.S. Bond (22:40)

Yeah. There is also another elephant in the room there, sri, is that we see these companies that say their volume is not going to increase much at all, but they're going to hit their EBITDA goals. And so the math doesn't work. The math doesn't work.

Sree Rajagopalan (23:03)

It does if you take out of the system, to be clear.

Peter V.S. Bond (23:06)

So that's the elephant in the room. How do you take cost out of the system? And we talked to a couple analysts and what we heard was, you know, the layoffs have already been coming and they're just going to keep going. That's how they're going to take costs out of the system. Because if you can't raise, you can't raise your price because the Delta with private label is already pretty significant. Right. And you're not growing your business. The only way to take cost out of the system, that is the biggest variable. Right.

Sree Rajagopalan (23:37)

So what I'd very softly contend with Peter here is normally we could have seen, hey, supply chain is always an area to look for savings. Except over Covid. Everyone has sharpened their pencil right over the last and most said my supply chain is super efficient. So there's probably not a lot left there. It is not always an area you can dig, but many are completing their massive 15 year long ERP projects which makes it fairly complicated to pull money out of id. Maybe there's a little bit to claw there. Your largest line items then are people your trade spend, which not a lot spoke about because in an aura of slow volume you get to go back to frequency of trade spends. Nothing to cut there. Or maybe there's Some non working dollars. But wait a minute Peter. Does the visibility exist for leadership to get to the non working dollars on an account label basis? And the answer to that question is unless you're dst, do you have the discipline to go there and focus? Having come from a selling role myself for large parts of my life, I know all too well that that's not a conversation that's had within a cpg. But you got to go there. And the other one, Peter, is media. But wait a minute, Peter. Everyone said I'm adding more dollars to media, so I fear you may be right. Peter. It's like silent layoffs, but I just don't know any better.

Peter V.S. Bond (24:56)

We'll see how the year I'm. That's what I, that's what's going through my head. The media issue is interesting. So literally only one of the 30 presentations mentioned retail media and talking about it. You know, hats off to Colgate Palmolive, our friends there for actually tackling showing how their media is growing. Specifically talking about retail media as a mechanism to drive performance marketing and make it very measurable. They, they leaned in. I didn't see anybody else do that. And that's a big issue because you know, with retail media, you and I know this, that for every dollar that's spent, 77 cents goes to the guys in Seattle, another seven to northwest Arkansas, and then the other hundred or so retail media networks are fighting over 16% and most of that is coming from the trade line cherie. So back to your point on trade optimization. They're not seeing great ROI on most of those RMNs. We just saw a study by a survey by the Path to Purchase Institute and most of the brands said overwhelmingly that that tail of RMNs isn't delivering the value that they promised.

Sree Rajagopalan (26:15)

I do want to discuss that for a minute, Peter. So I was anticipating that I would see some details around media spend. Retail media. Then I start looking at what percent of your overall media spend is retail media. Most will say about 20 to 40%. So it's a fairly large size. But in this big scheme of Optimization, our CEOs and CFOs responsible for speaking about retail media. Not really, other than Peter. Hold on Peter. Most brands will sell you publicly or in private settings with agencies with RMNs. Hey, I need to pull back. I'm not sure I get value out of it. I want to make sure it's optimized. I don't know what metrics are the best ones. Everyone's got a different metric on the retail side so technically, senior most leadership needs to weigh in and make judgments as well as decide, am I going to increase, decrease and give guidance to one level.

Peter V.S. Bond (27:16)

I would shree. I want to say this and I want your opinion on it. What stood out to me in terms of beyond the brands and the innovation that they showcased was how they presented their marketing and universally. Universally, the focus that they showcased at this event were linear television ads. They were linear. That was their primary mechanism. There are a couple ones that would show a static image, but they weren't showcasing anything that wasn't about super bowl ad. Mass merch and pardon me, mass audience linear television. I mean, for the CMOS to do that, it gets back to the issue that you talk about, sri, which is, you know, if you're a CMO and you don't understand how to use retail media, you're not leaning in to understand TikTok, you don't understand how to do streaming, all of that, then you're doing a disservice to building your brand equity. And all I saw there was great 20th century advertising techniques. Unfortunately, we're in the 21st century, so that gives a little bit of a problem.

Sree Rajagopalan (28:47)

In the words of a great Wall street analyst, marketing today, selling today is moving on to becoming slowly and steadily peer to peer.

Peter V.S. Bond (28:58)

They want their 1%.

Sree Rajagopalan (28:59)

The challenge for most and DST is better at this. But for warehouse brands, it's largely been about B2B and about volume shipped to a retailer with difficulty to get to the ultimate consumer data. Retail media has unlocked that in many ways. But it's only consumer data on retail media spends and I think the true and trite tactics of yesteryears and what has been taught in schools, in education, that's what brands, CMOs, it's easy to gravitate to. This is, I'm gonna say agencies. You own this as much as brands or you own it even more than brands. Agencies. You need to carry brands as hands through this journey of optimized media. And you heard it here first, 95% digital.

Peter V.S. Bond (29:55)

Yeah. The only one that really showcased that in a major way was Elf Elf Beauty. Hats off to our friends Acta Chopra and her CMO colleague Corey. They had a, they had, first of all, they didn't have a presentation, a slide deck, they had a video playing behind them and they were showcasing a lot of their disruptive strategies. They said they put out 12 campaigns a year, whereas major brands can only do to. They are very focused on leveraging social, leveraging influencers, sports enthusiasts, celebrities, all sorts of Stuff and they're just being incredibly disruptive and they are growing their business. They showed how they were the only major cosmetics brand to actually grow volume last year. The others all saw volume declines like the rest of the industry. Very interesting.

Sree Rajagopalan (30:57)

Absolutely, Peter. Yeah, absolutely, Peter. Now I generally say in the HABA health and beauty category, J and J or Ken View rather did an excellent job, I would say absolutely excellent job in showcasing, in showcasing their capabilities. I thought it was.

Peter V.S. Bond (31:14)

And the way they did history, it wasn't with big detailed slides. They talked. They had very evocative slides, mostly of people and families. But it wasn't a whole lot of. But they clearly knew their stuff because how they talked about it was not superficial. It was very detailed on targeting, on building relationships, on creating solutions for families. It was really, really a good presentation. It was so understated based upon the content they put on the screen, but so over delivered in what they talked about at the microphone.

Sree Rajagopalan (31:55)

Hats off to Thibaut and the CMO of Kenvue for being there. You did so much with so little slides that listening to the conversation was just. It was like a. How do you word this, Peter? Like a sound for so years.

Peter V.S. Bond (32:13)

It was, it was music. It was, it was music to my ears. It was soulful. It was almost soulful from a CPG perspective. It was as soulful as CPG gets. How about that?

Sree Rajagopalan (32:25)

Yeah, they talked about everything from analytics capabilities, use of AI in a meaningful way within those analytics.

Peter V.S. Bond (32:32)

Not just a buzzword, not just a buzzword of blah, blah, blah AI. They actually discuss some very concrete applications.

Sree Rajagopalan (32:42)

The use of AI in media, straightforward. The use of AI in science, absolutely fabulous with.

Peter V.S. Bond (32:49)

They talked about their agency consolidation and that was behind that and what kind of value that delivered back to the shareholder. I mean they were very, they were very thoughtful in the words that they chose. There were a lot of people that went up to brag about their brands or frankly there were one or two where they were just bragging about themselves. Kenview. Very thoughtful. Every word they chose. I was very impressed.

Sree Rajagopalan (33:14)

Yep, well done. Well done, Ken. We really enjoyed that presentation Also. I just want you to take a minute, Peter, since we are on the retail media topic, remind our audience what we're doing.

Peter V.S. Bond (33:25)

Yeah. So Sheree and I have partnered with the Exec Ed program at the Johnson School of Business at Cornell University and we are hosting a four day in person seminar in New York City. It's actually a certificate program. So you get a executive ed certificate from Cornell University. But what we're trying to do is bring together leading luminaries from the retail media ecosystems. Brands, retailers, some service providers, intermediaries. And our goal is to level set what retail media is, how a brand budgets for it, how a retailer offers solutions that are meaningful, how it is measured. And underpinning this SRI is the fact that to some degree the balance of power between brands and retailers has shifted over the last couple of years. It had been decidedly in the hands of the retailers for 75 years because they held all the cards, the points of distribution. But in the world of E commerce and Omnichannel, marketplaces crave assortment brands. I just want to finish this. Brands control assortment. They control the how they're going to approach price pack architecture from marketplace to marketplace. But the other thing they have is they are not the one that is selling now. They are also an economic buyer and what they're buying is retail media. And why is retail media so desired by retailers? Because the margins are so much better than selling stuff through their stores. So they now have a decision to make about whether they want to invest their brand dollars in retail media. And so things are changing. It is a very dynamic ecosystem between brands and retailers right now.

Sree Rajagopalan (35:37)

Completely agree. Could not agree more on that aspect Peter whatsoever that it is a dynamic system. You called out Marketplace and I don't want to miss the moment because Another interesting development in the last 72 hours Walmart made its quarterly earnings release and I got to. I was not expecting the CEO of Walmart Global, Doug McMillan to talk to. They're going to introduce. I have can carry up to a million skus. Was it a million skus Peter in the Walmart third party marketplace. In my wildest dreams when I started working in the E commerce sector about a decade ago, I would have never forecasted Walmart will embrace digital technology. Omnichannel retail media follow the consumer 365, 24 7. Wow. Yeah, wow.

Peter V.S. Bond (36:31)

Okay, so big figures. They recorded that their U.S. e commerce sales were up 20% year over year. Wow. Big number. Marketplace delivered 34% sales growth six consecutive quarters. Right. Global e commerce rose 16%. Global advertising grew 29%. Wow. Shree. That is a big number U.S. and.

Sree Rajagopalan (36:59)

I think roughly, roughly Peter. I can't remember the exact rates on an annualized basis that's a $4 billion line item. So if it's growing 30, 40%, those are all large numbers.

Peter V.S. Bond (37:09)

Walmart plus their subscription membership, they're comparable to Amazon prime doubled over the last year, right? Or pardon me, not true, not true, sorry. They saw double digit growth. I'm sorry, I miss, I misquoted there. They did not double it, but it is huge. Sam's club even saw a 24% uptick. You know, our friends Diana Marshall, who's got an upcoming episode on the CPG guys, and our dear friend Harvey Ma really driving some things there. You know, there are some, some things that, you know, if you're a brand or you're an agency, you need to understand that retail, retail media is a major growth lever for Walmart's E commerce momentum. Right? And that's where you, if you're a brand and you're thinking about where you want to invest your media dollars, Walmart's a pretty good place to do it because they're seeing really big growth. Sree.

Sree Rajagopalan (38:06)

On the other hand, can I hit up an elephant in the room? Gorilla in the room. 500 found gorilla. All my favorite words from previous corporate roles. If Walmart is leaning in on the third party marketplace and you're a large market cap brand, which is traditionally 30%, 40% whatever of your volume has come from Walmart, should you be worried or let me flip the question another way. Should you be looking to enter the third party marketplace or understand the Walmart third party marketplace inside out?

Peter V.S. Bond (38:39)

I would say yes, and here's why. Because you've heard me predict this on the podcast recently and it was something that Duncan Painter, the CEO of Flywheel, said in a very senior level meeting that I was at and I agree with him. I believe in the next five years Amazon will exit One P and will be a 3Pmarketplace exclusively. Because that's not. They don't make their money. They brought inventory in 1P because they wanted to control the pricing and be very competitive with Walmart. The fact of the matter is they're big enough now in scale that they don't need to be buying and warehousing product. They will move to marketplace. So if you're going to be, if you're facing that fact, you better be into Walmart's marketplace. Yeah, they'll still take stuff into the store, but. But the marketplace is going to be a bigger component of Walmart's business in the long run. Just as Amazon is now already bigger in 3P than it is in 1P and it will consume all the 1P and move it into 3P.

Sree Rajagopalan (39:51)

I gotta say Peter, is some of your thinking on some of what you said about hey, Walmart likely or Amazon likely leaning on the third party marketplace coming from the grocery business at Amazon is largely still being figured out and there's been volatility in management, new change. So I do want to share with audience. Coming soon, an episode. Jordan Burke ex Walmart International Kind of the one of those who was in the startup family for Walmart International up in China launched their business there and I had a chance to go to the Amazon Fresh grocery store which was like day one grocery store for Amazon Fresh, the number one store up in Woodland Hills, California. We actually did a full shopping trip and we gave our overall assessment of how it is from category management to strength of assortment to display opportunities, retail media and store opportunities. That episode is coming soon as well, very shortly. So look forward to that on where Amazon's progress with Fresh and Frozen and a true physical grocery store format is. But Peter, if I will tell you, Peter, if I was working in a commercial sales role in corporate America for a large market cap brand for the first time, I will challenge my Walmart team and say, hey, what do you know about the third party marketplace? @ least seek to learn more. Whether I choose to put 20 things there or not, still debatable after I learn. But I'll tell you Peter, it's a viable alternative for long tail with scale. And remember Peter, in our industry, year one innovation doesn't even cross 5 million, 7 million, 10 million in sales for the most part. If Long Teen and Walmart can buy, a third party marketplace can sustain $10 million in sale for a given SKU over a year.

Peter V.S. Bond (41:42)

Sure it is. Sure it is.

Sree Rajagopalan (41:43)

It's born a new life. You might not have to discontinue. I agree with you.

Peter V.S. Bond (41:48)

And that means you not only have to consider the marketplace as the mechanism, you also have to heavily invest in the tools that will ensure the product gets the attention and trial right out of the gate. That means, you know, your old term search, content assortment, navigation, ratings and reviews, all of those mechanisms are going to help your 3P items. But you know, remember the big number they threw out there, right? The 1 million items. Remember that there are a lot of those items that third party sellers are selling, items that are already sold via Walmart 1p from the brands, right? They are not. They are. They have not done as comprehensive a job the way the Amazon experience is where the buy box, right, is typically one by one P. But there are other sellers. They have different, different PDPs for third party sellers. So Walmart is still a little bit messy in terms of its duplication. They do need to clean that up. They do need to clean that up.

Sree Rajagopalan (42:59)

All right, Peter, so we've Said quite a bit on the show here. You know, we were lucky again to be with the Wall street analysts. Go to Cagney, listen to outlooks, et cetera. We opened up saying, hey, little underwhelming, the overall grade from the quality of the presentations we saw. There were some that were absolutely outstanding here on the CPG guys. We try not to take names and call out specific brands, but overall grade and quality of the presentations, I got to tell you, I was underwhelmed. I walked in hoping to see this big. Maybe it was wrong on my part in the first place. And I'll acknowledge that may be the case. I was hoping to walk in and see this aha moment from every single presenter and brand. That said, here's how I'm taking volume challenges head on. Here are the three things I'm going to do. You don't have to give away your secrets. High level, three actions. And I just didn't see it across the board.

Peter V.S. Bond (43:48)

I only saw improvement is the most.

Unknown (43:50)

Generous description I can give.

Peter V.S. Bond (43:52)

Sri.

Sree Rajagopalan (43:55)

Yeah, Peter. So I'll wrap it up by saying, two years into volume challenges, what are we doing as brands? By now we should have answers, or at least a bat to answers. And let's wrap it up with that.

Peter V.S. Bond (44:07)

What I love most is you and me just getting together, going down to Orlando. The best part. And we saved the best for last. I'm going to talk about it.

Sree Rajagopalan (44:18)

Go for it.

Peter V.S. Bond (44:19)

Your friend Joey got together with us and we called an audible. On Tuesday night, we heard that the SpaceX rocket was lifting off from Cape Canaveral that evening. And we decided to hop in the rental car, drive our way out to Cape Canaveral. It was about an hour drive from Orlando. Pulled off on the very last exit before the bridge, looped under, found a place right on the water with a perfect view and we got to see a rocket launch. Isn't that cool? Bucket list moment. SRI bucket list moment.

Sree Rajagopalan (45:00)

I had never done that before and all the videos we put out cannot do justice to what the eyes saw, especially as it went into the sky, got lost in the clouds and then maybe 60 seconds later to see it again in the sky, just jet passed out as a speed I cannot even describe. I've never true bucket list moment.

Peter V.S. Bond (45:19)

We went to this total dive pizzeria in Cocoa. Not Cocoa beach, mainland Cocoa. But it was a. You know what it was? It was a great experience because you, me and Joey scarfed that down and it was a fun time. I'll also say I loved raiding the Mondelez Table with you. Sri. I was carrying back one of the heaviest bags full of all sorts of. She did. She loved it.

Sree Rajagopalan (45:44)

I hope Nadia loved what she got.

Peter V.S. Bond (45:46)

The egg. I have not opened the egg.

Sree Rajagopalan (45:47)

I opened the egg. Was the egg open?

Peter V.S. Bond (45:49)

That has not been authorized quite yet. Exactly. There's already an egg post birthday authorization somebody.

Sree Rajagopalan (45:56)

Awesome.

Peter V.S. Bond (45:57)

To me, it was about the connections we made. Not only just what we heard, but the connections we made. It's definitely an event that most people in our industry don't really think about going to, but what a great opportunity it was for us to be there.

Sree Rajagopalan (46:14)

Peter, I want to speak about that for one second, if it's okay. Peter, I know I've said wrap up and here I am just stretching this episode out, but as an employee that has come up the ranks in the CPG industry, Cagney was always this mystical moment in aura where only senior most leadership would go and there'd be so much stress for 30 days around that. I'm not talking about one company I worked for. It's been that way historically. I just felt like another person attending Cagney. The tables were kind of turned and I'm like, my gosh, all the stress. Yeah, what are we doing? We're all humans. At the end of the day.

Peter V.S. Bond (46:53)

It was interesting because you said only the most senior leaders. It was great because there were a lot. You know, the CEO and CFO came in, presented and left, but probably one level down from most of them, there were a handful of people that, that stayed and sat in the back of the room and listened to their competitors speak. It is, and I will say this, you can download the presentations, you can listen to the presentation streaming online, but there really is nothing like being in the room. It's a room where it happens. Sree room where it happens.

Sree Rajagopalan (47:29)

Couldn't agree more.

Peter V.S. Bond (47:34)

Written by a Wesleyan alumni, Hamilton. So, Sheree, thanks again for doing this episode with me. Thanks for making the trip down to Florida. I know we've got a couple more. Thank you, Peter. Thank you to Cagney.

Sree Rajagopalan (47:46)

Thank you.

Peter V.S. Bond (47:47)

What a great experience. Look for the episode with our friend Nick Modi. It's coming up very soon. Sree. And thank you as always for joining me to our audience, 35,000 followers on LinkedIn. If you're not one of them, follow us on LinkedIn and also go to your favorite podcast platform, Apple, Spotify, whatever it is, and make sure you're both following us. And please scroll down and just click the star rating. It helps feed. The algorithm makes us more findable We've got a lot of great stuff coming up in short order. Lots of great guests. Women's Month is coming up. Sree wow. That's going to be a great, great month. We've got some Cracker Jack guests coming on board. I'm looking forward to it. Thank you as always and to our audience. We look forward to speaking with you on the next episode of the CPG Guys Podcast. Goodbye Foreign.

Unknown (48:53)

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