Headlines of recession fears, supply chain woes amidst the current worldwide energy crisis and yet more interest rate hikes from the Federal Reserve dominated last month. It’s no surprise then that our top transcripts for September cover a wide range of topics and, based on our data, our readers are most concerned with how companies are bracing for an economic downturn.
Like our last monthly round-up, I’ve split up our top transcripts of September into three categories: one for Amazon (AMZN), and the other two for consumer cyclicals and staples, including companies like Sony (SONY) and Monster Beverage Corp. (MNST). Take a look at our more eye-catching transcript calls this last month and sign up for a free trial to our expert call transcript library.
Top Expert Call Transcripts of September 2022
Top Five Expert Call Transcripts: AMZN
Searches for AMZN experts call transcripts to find out how different branches of the company operating in the long-term, especially logistics and online advertising, comprised our most read articles last month. Here are the top five expert transcript calls with a focus on two in particular below.
- AMZN (Amazon.com Inc) – Former Regional Manager believes Amazon is the best logistics player by far
- AMZN (Amazon.com Inc) – Customer Thinks AMZN’s Complete and Sustainable Ecosystem in Advertising Is an Advantage That Is Sustainable Long-Term
- AMZN (Amazon.com Inc) – Former Customer Is Bullish on ATSG Growth but Believes the Competitive Landscape Has Changed Since COVID-19
- AMZN (Amazon.com Inc) – Former Division Head Sees a Lot of Opportunities for AMZN to Continue Growing Its Advertising Business
- AMZN (Amazon.com Inc) – Former Director Believes AMZN Has a Long Term Growth Path as It Is Expanding Into New Verticals and Geographies
In what has become an increasingly fierce fight to rake in the dollars from online advertising, AMZN has coded its way to the top through its first-party data into a sector once dominated solely by two players, Facebook’s parent company Meta Platforms Inc. (META) and Google (GOOGL).
In a testament to its strength, AMZN’s ad revenue grew by 21% year-over-year in the past 12 months, while META’s declined and GOOGL’s slowed down, according to a NASDAQ note. A current advertising director at a management platform argues that AMZN has only just started to find its place in the online ad sector.
“I would say Amazon is still going to be the leader. They’re innovating at a crazy pace and they have some of the most complex ad products and data that’s out there, by far, compared to what you can get from the other retailers. If we’re talking two to three years, I think Amazon will still maintain that lead.”
– Director, CommerceIQ (Current)
Similarly, a former director at AMZN argues that the online behemoth’s extensive reach and reliance on its own first-party data puts it ahead of the competition.
“Amazon still has a lot of potential in advertising for many different reasons. …It’s hundreds of millions of unique users that actually go to Amazon every day. They have a very large reach. …They are developing additional content that they actually own, like Amazon Prime Video. They are basically supercharging the exclusive content that they own.
Lastly, Amazon has incredible data. When you think about the Amazon data and that was actually the primary reason why I decided to join Amazon advertising years ago is because for me the quality of the data that Amazon owns is just incredible. They know everything about their users. …When brands start using the Amazon solution, it’s very difficult for the other solutions in the market to compete because Amazon is able to leverage incredible data in terms of the quantity but also the granularity, the quality, it’s super up to date.”
– Head of Global Agency Sales, AMZN (Prior)
Top Ten Expert Call Transcripts: Consumer Cyclical
Our top expert calls for consumer cyclical include a range of different sectors from hospitality to athletic wear to entertainment. Among the more interesting cases were Airbnb Inc.’s (ABNB) capacity to withstand a recession and SONY’S battle for a traditional model.
- ABNB (Airbnb Inc) – Former Competitor Thinks ABNB’s Biggest Advantage in the APAC Market Is a Lot of Unique Listings
- POOL (Pool Corp) – Customer Sees Normalization for New Pool Construction but Is Positive on Industry Resilience Particularly in Texas
- NKE (Nike Inc) – Former Converse Manager Believes It Is Hard for Most Brands to Build a Direct to Consumer Business
- NKE (Nike Inc) – Former NKE Account Director Believes Hoka Has a Significant Runway for Growth
- BKNG (Booking Holdings Inc) – Former Competitor Believes Positioning in Asia Pacific Is Key for Growth
- CHWY (Chewy Inc) – Former Sr. Operations Manager Thinks AMZN Will be the Long Term Winner in Online Petcare
- DHI (D.R. Horton Inc) – Former DHI Mortgage Processor Sees the Market Tightening a Bit but Demand and Consumer Default Rates Suggest a Mild Cycle
- SONY (SONY GROUP CORPORATION) – Former SVP Thinks That SONY May Need to Evolve Into a Subscription Model to Compete With MSFT’s Moves and Cloud
- DHER (Delivery Hero SE) – Competitor Believes Marketplaces Are Still Dealing With Retention Issues and Continue to Spend on Marketing to Justify High Commissions
- MAR (Marriott International Inc) – Former Senior Director of Transformation Believes MAR’s Operational Issues From Rapid Growth Are Being Corrected and Is Bullish on the Company Long-Term
Is ABNB’s economic moat large enough to weather a recession?
Talks about a looming recession have long been in our expert calls. A former travel industry director who has worked at online travel giant Booking Holdings Inc. (BKNG) and Klook, a Chinese travel and leisure company, says that ABNB has a sufficiently large amount of listings and only spends about a fifth of its overall revenue on sales and marketing.
And while that might be a moat, that might barely cut it for the company due to the shrinking profit margins of an intensely competitive industry.
“Airbnb’s margins, I think, are [currently] pretty safe. It’s because their suppliers aren’t consolidated like [the suppliers for] the Marriotts and the InterContinentals or in the airline side, the Lufthansa and the British Airways. They’re not as consolidated. They’re not huge. They don’t have a huge bargaining power. Airbnb can get away with 20%, 25%, 30% depending on the market, 20%-30% of take rates.
People start spending less on travel in a world where there’s recession. Now, how that would percolate down to Airbnb, I think overall, Airbnb bookings would certainly go down. There’ll also be a shift from the more premium listings to a little more budget-friendly things.
Now, here’s where I think the variety of listings really comes into play. I think Airbnb is really strong in that I think any city in the world, small or large, and pretty much any country and I’ve seen a few countries. I think their listings, that’s one of their key strengths. They’ve got a large number of listings.
In the time of a recession, that will be a strong moat that they have around their business. In a world where people don’t want to spend as much on premium stays and they live on budget stays, they can find it on Airbnb. That’s probably a good thing. I would say Airbnb would certainly not go out of business during a recession. It is not that kind of a company. Of course, their margins are going to come down. The money that they can return to the shareholders would certainly come down. I don’t think they’ll vanish, but they’ll be in very deep trouble.”
SONY’s last stand for the traditional video game sales model
With entertainment and gaming companies like Nintendo (NTDOY) bursting into the movie scene – cue Chris Pratt’s Mario voice here from that recently released trailer – SONY is facing an existential crisis as supply chain woes have affected the sales of its flagship PlayStation product and with rivals like Microsoft (MSFT) buying up video game studios like Activision (ATVI) and Bethesda. The head of PlayStation Studios recently announced that the company would not give up on its PlayStation 4 players and that it would keep producing games for that console, a clear attempt at hanging on to previous console generations.
A former SONY vice president explains why the entertainment company keeps holding on to the console.
“Gaming as an industry arguably lags behind other entertainment forms in the sense that the subscription model hasn’t really proliferated yet for potentially good reasons. In the same way that music or TV or film, I don’t know the exact numbers, but the high percentage of content is now watched or listened to using subscription services. In the gaming space, that’s still quite a small percentage.
Probably more fundamentally, I think Sony is fearful of a shift to that subscription model, which, as I say, may be precipitated by the Activision acquisition. I think that’s their fault because, potentially could spell the end of PlayStation as a platform, although it may appear in the future as a virtual platform. I think more than that, Sony doesn’t believe the economics of subscription services work particularly well for video game content. By that, I mean if you’re spending $20 million to develop a game, it’s quite hard to recoup that via the subscription model versus the traditional premium model.
I think purely from a first-party point of view, they didn’t want to cannibalize revenues from their first-party titles. I’ll use something like ‘God of War’ as an example, you might be able to sell 10 million, 12 million copies at $60, $70 and recoup on the development costs which would be very hard to do on a subscription service, which at the time have been more than 2 million or 3 million subscribers paying $10, $15 a month. It’s not a conversion issue. It’s the additional work involved in setting up the data centers, it’s the difficult bit and providing a service that provides a great user experience, is the tough bit. As I say, I think it is purely based on economics as much as anything.”
Top Ten Expert Call Transcripts: Consumer Staples
Finally, our top consumer staples list where it seemed that the beverage sector and the supplier-to-retailer pathway are of the highest interest to our readers. I focus on Monster Beverage Corp. (MNST) and Walmart (WMT) below.
- MNST (Monster Beverage Corp) – Former Regional Director Sees Increased Growth and Market Share for MNST in EMEA Markets
- KO (Coca-Cola Co) – Former Sr. Global Director Thinks the Current Environment is Especially Challenging
- PEP (PepsiCo Inc) – Former Director Believes That Gatorade Will Remain Dominant in the Sports Beverage Market Despite Ever Increasing Competition
- WMT (Walmart Inc) – Former Director Believes WMT Is in a Good Position to Capture the Potential Upgrade Wave of Home Spending
- WMT (Walmart Inc) – Industry Expert Believes Inexpensive and Easily Accessible Diagnostic Tests Are the Key to Improving Health and Healthcare Equity
- MKC (McCormick & Co Inc) – Former Competitor Believes MKC Has a Multi-Generational Brand Focused on Quality and Reliability in a Commoditized Landscape
- BUD (Anheuser-Busch InBev SA/NV) – Former Associate Director Is Neutral on BUD and Thinks the Indian Market Has Many Hurdles to Clear Before Growth Can Resume
- WMT (Walmart Inc) – Former Supplier Sees Significant Evolution to the Retailer and CPG Relationship
- PEP (PepsiCo Inc) – Former Supply Chain Manager Thinks Redundancy and Reliability Are More Important in Current Supply Chain Management Than Pure Cost Reduction
- BG (Bunge Ltd) – Industry Expert Sees a Huge Problem if Grain Stops Exporting From Ukraine
MNST has a chance to close the gap with leading rival Red Bull…
In the beverage industry, the energy drinks share of the market has been booming, achieving a whopping $86 billion market size in 2021 according to Grand View Research and expected to grow this decade at an 8.3% compound annual growth rate.
MNST – which recently won a $293 million false-advertising lawsuit against Bang Energy, one of its toughest competitors in the U.S. – has about a 22% share of the energy drinks market, trailing behind Red Bull which has an estimated 36% of the same market.
With recession fears and rising interest rates, however, a former MNST executive thinks that this could be yet another step for the company to make up some ground, especially after having its most profitable year during the first year of the COVID-19 pandemic and bringing out new flavors among its drinks.
“Obviously, now we have a worldwide recession coming, I believe in the MNST proposition, which is more value for money. For example, you can buy 500 mL MNST at the same price as 250 mL Red Bull, so per 1 L, half price than Red Bull. It’s definitely helped Monster to even further increase their volume and share revenues.
I believe this turbulent time, it seems to be working very well for MNST and impacting more Red Bull like the big traditional players. I believe that their market share continues to grow for sure. In the U.S. right now, MNST is head-to-head with Red Bull, almost the same share, so they’re competing very closely. Europe, other continents, still what I mentioned before, Red Bull is far bigger, but I believe that this gap will be reduced quite dramatically.
Maybe in the next five to 10 years, MNST could take over the number one position. If they can continue to do the same kind of innovations, if they will keep, maintain their investment on the marketing if needed, I believe that they have a good chance to take over the market leadership from Red Bull.”
Retailers prepare for the cash-strapped recession consumer
With mounting recession fears, some of the bigger retailers in the U.S. are preparing by doubling down on improving their supply chain infrastructure and in-store operations, especially after the pandemic and during the current energy crisis. According to CNBC, WMT has invested $7.5 billion in capital spending in its fiscal year, a 50% increase from the previous one, a number analysts are expecting to balloon to a budget of $16.5 billion.
A former Conagra Brands (CAG) executive thinks these investments will not only pay off but are evidence of the morphing relationship between consumer packaged goods (CPG) holdings companies and retailers like WMT.
Firstly there’s the in-store experience:
“Walmart, as obviously the largest retailer, they have a lot of clout. Everything’s about price. Even if you have an innovation that warrants a higher price bracket, they’ll try to get it as low as possible because they want to be able to say, ‘Walmart has the lowest price than anybody else.’
In the interim, I know retailers are trying to do the same thing by creating, like I said, these stores within stores. I think it’s Walmart that’s created a whole meals-to-go section. Part of that has been in partnership with some manufacturers that have items that they’re in the center aisle so that it creates that awareness of, ‘Here’s a meal that encompasses all these components.’”
Then there’s how the CPG-to-retailer partnership is affected by the looming recession.
“I think now what we’re facing is figuring out how the government is making adjustments to what may become a recession and how that’s going to trickle down to the plans that every CPG company has across each of their brands and products and profitability.
I think there’s going to be a lot of creativity and compromising taking place just because, like I said earlier on, retailers are heavily investing in building their media networks to compete to AMZN and they want that investment from CPG.
I think right now while things seem gloomy from a pricing standpoint, inflation standpoint, I think these are the times that actually drive a lot of evolution and creativity in business models, as well as relationships with a lot of the retailers. I can only imagine that it could be more positive than negative, near-term, probably, yes. I think long-term, we’re going to move towards perhaps new ways of working with retailers that would be more beneficial for both sides or just different. I always think different may not always be bad.”