Thirsty much

MARKETS

  • U.S. markets: The S&P closed at a record again. Remember, markets call it a day at 1pm today.
  • U.S. economy: Major automakers reported mixed results for June and Q2. Overall, sales are slowing-but SUVs and pickups are still the lots' hottest options.
  • Global economy: Christine Lagarde, current IMF chief, is poised to take over as head of the European Central Bank.

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IPO

Crack Open a Cold Public Market

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Budweiser Brewing Co. APAC, the Asia-Pacific unit of beer behemoth AB InBev (+2.51%), started taking orders from investors yesterday for a Hong Kong IPO slated for July 19. The fundraise could generate a whopping $9.8 billion for the business and value it at a whoppier $63.7 billion.

  • Those numbers would make it the largest IPO so far this year and possibly the largest food and beverage IPO ever. Kraft, you can ask Uber how Budweiser's dust tastes.

The shift to Asia

AB InBev's well-financed focus on momentum in Asia is a result of changing preferences in North America, where even thirsty definitely-21-year-olds are moving away from beer and toward wine, spirits, and nonalcoholic drinks.

  • In Q1, the Asian unit made up 18% of AB InBev's total volume. Revenue for the region rose 8.6% to $8.5 billion last year.

AB InSight: Although Euromonitor sees China becoming the world's largest beer market by sales in 2021, per capita beer consumption there is actually dwindling. Still, AB InBev's been able to preserve growth in the country by pushing upscale options like Stella Artois and Corona to a population with growing amounts of disposable income.

Isn't Hong Kong a risky choice?

Given the current turmoil in the city over Beijing-appointed governance, it may be. But you won't get many answers from AB InBev-if it has any concerns about the protests, it's keeping them under wraps.

And necessity is the mother of IPOs, after all. AB InBev could use a cash infusion to pay down some of its debt (around $102.5 billion at the end of 2018).

  • It's spent the past few years buying up everything in sight, most notably SABMiller in 2016.

Looking ahead: AB InBev CEO Carlos Brito told the FT it will use the extra cash and foothold in Asia for...more acquisitions.

SOCIAL MEDIA

Facebook's Not a Doctor, But...

It's pretty sure baking soda injections don't cure cancer. That's why, after the WSJ reported Facebook and YouTube were inundated with "miracle cure" false medical claims, Facebook (+1.04%) announced plans to overhaul its algorithms to weed out misleading health information.

In a blog post yesterday, Facebook said it made two updates to its ranking algorithms last month to limit the appearance of posts with sensational or exaggerated health claims.

  • A lot of that clickbait is aimed at pushing unsuspecting Facebookers to buy products or services that aren't approved by regulators.
  • Election meddling may not be great, but "misleading health content is particularly bad for our community," FB said.

FYI, YouTube also said it's taken action by cutting off advertising for channels peddling fake cancer treatments.

Zoom out: As Axios points out, Facebook and the rest of Big Tech have actually gotten pretty good at identifying scam posts from bots. But humans driving users to snake oil fixes, on the other seven-fingered hand, are harder to pinpoint.

RETAIL

Nike Decides to Just Not Do It

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This week, Nike (-0.53%) nixed plans for a shoe featuring the 13-star "Betsy Ross" American flag. Thirteen original colonies, endless hot takes.

Nike's view: "Nike has chosen not to release the Air Max 1 Quick Strike Fourth of July as it featured the old version of the American flag," a spokeswoman said. Lucky for you, we speak PR.

  • Nike decided to pull the shoe after former NFL star/current activist and Nike endorser Colin Kaepernick told the company he and others felt the shoe evoked a symbol connected to an era of slavery, per the WSJ.

Arizona Gov. Doug Ducey (R): "Words cannot express my disappointment at this terrible decision." We also speak Arizona governor.

  • Nike plans to open a $185 million, 500-plus-employee manufacturing plant outside Phoenix. On Monday, local lawmakers approved an incentive package for Nike's facility plans.
  • But now, Ducey says he ordered officials to withdraw all financial incentives. Nike stands to lose a discretionary grant of as much as $1 million.

+ Want more info on how Nike's decision fits into the retail landscape? Retail Brew writer Halie LeSavage will have more this afternoon. Add Retail Brew to your inbox with one click.

INTERNATIONAL

Ghana and Ivory Coast Are Done With the Sweet Talk

Yesterday, Ghana and Ivory Coast announced they're teaming up to raise cocoa prices.

The context: Together, the two countries supply about 60% of the world's cocoa. Their gripe is that, though the industry generates $10–20 billion in annual profit, West African farmers don't see much of it. The average farm family there makes as little as $2,400 per year.

The brass tacks: Will be hammered out at a meeting today in Abidjan. Both countries have committed to a minimum price of $2,600 per ton of cocoa (about 10% above the global price) starting in the 2020–2021 season.

The cocoa coalition's been dubbed "cocoa-PEC" (like OPEC, but for cocoa). Leaders say the cocoa cartel could:

  1. Boost West African farmer incomes
  2. Limit child labor
  3. Give farmers a fairer cut of your "if it's 80% cocoa it's basically healthy" habit

Bottom line: The plan's critics are skeptical of how exactly a price floor would alleviate widespread poverty. And chocolate companies are proceeding with caution. Still, some consider the price floor a solid first step.

TRAVEL

Here To Save the Day and Get You to Rehoboth

The Rock's next starring role: holiday weekend gas prices. They're the hero America needs right now, holding strong despite challenging circumstances.

A gallon of fuel is set to cost about 10 cents less this long holiday weekend than it did last year. That's an Oscar-worthy performance, given that prices have already increased due to...

  • The Philadelphia Energy Solutions refinery. It accounts for roughly 27% of East Coast refining capacity and just announced it's shutting down following two devastating fires. Since the refinery's June 21 blaze, prices have risen seven cents/gallon.
  • 13 states, including California, Illinois, and Ohio. They raised gas taxes, some of which went into effect Monday.

Zoom out: At the beginning of 2019, experts predicted prices at the pump would stay consistently lower year-over-year for the first time in three years. Thank a combination of OPEC extending production cuts and booming U.S. crude production.

+ While we're here: Leave early and pack an extra PB&J. A record 41.4 million people are expected to travel on U.S. roadways over the long weekend, per AAA.

WHAT ELSE IS BREWING

  • The U.S. women's soccer team beat England in a tough Women's World Cup battle. Next up: finals. Meanwhile, Nike said it's sold more USA Women's World Cup jerseys online than it has any other soccer jersey in a single season ever.
  • Saudi Arabia is restarting preparations for a monster IPO of its state-owned oil giant Aramco, per Bloomberg.
  • Tesla (+6.96% after hours) delivered a record 95,200 vehicles in the second quarter, smashing expectations.
  • Upton's Naturals, a vegan "meat" company, sued the state of Mississippi, arguing labeling rules prohibit First Amendment rights.
  • Amazon, Goldman Sachs, and 204 other companies asked the Supreme Court to rule that civil rights law bans job discrimination based on sexuality and gender identity.

BREAKROOM

Saturday Headlines
It's a Wednesday that feels like a Friday, and we want it to be Saturday, so we're giving you Saturday headlines. One of these stories is made up and three are real. Can you figure out which is which?

  1. Police: Woman refuses to pay for cake she ate while shopping
  2. Complaining didn't work, so a man threw a birthday party for a pothole. Within days, the city fixed it
  3. Hot dog eating legend Joey Chestnut announces a line of gluten-free buns
  4. Mississippi town commemorates alleged alien abduction with historical marker

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Breakroom Answers


Saturday Headlines
Do you really think Joey Chestnut does anything halfway, including gluten consumption? That one's a fake-out.

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