#getwokegobroke

What are banned but addicted vapers going to smoke now?

Image result for smoking many cigarettes

Tobacco companies fall foul of most ESG (environment/social/governance)/CSR (corporate social responsibility) measures. Good. Give that so much money is already loaded into corporations that focus on financial virtue signalling, tobacco companies remain forgotten. They look a great mean reversion trade.

British American Tobacco (BTI) is trading at $36 almost half the level of two years ago. Now at 1.02x book value and a 7.3% yield.

Philip Morris Int’l (PM) is at $72.60, down from $122.90 in 2017. A 6.4% dividend yield.

Imperial Brands (IMBBY) at $26.73 down from $55.55 in 2016. A 9.2% yield.

JT is less than half its 2016 number trading at $21.44. A 6.45% yield.

Philip Morris doesn’t have a vaping business but it appears with all these bans in NY etc that nicotine-addicted vapers will switch back to the old school.

Old habits die hard and cigarette smoking is pretty inelastic. Even in bonkers $40 a packet Australia, the ABS records men continued to be more likely than women to smoke daily (16.5% compared to 11.1%). Rates for both men and women have declined since 1995 when 27.3% of men and 20.3% of women smoked daily. However, these rates have remained similar since 2014-15 (16.9% for men and 12.1% for women). Therefore taxes haven’t killed off the habit.

So start underweighting the rubbish in your portfolio that has a penchant for banning plastic straws in the staff canteen to those corporates that allow yourself the opportunity to kill you!

Let’s not forget that governments aren’t going to terminate the monster taxes from this either, especially that so many national and state budgets around the world are looking seriously sick.

Why Gerry Harvey’s comments on diversity obsessed companies speak more about our superannuation fund managers

Harvey Norman is currently valued at over $5.1bn, which is c.4x the combined value of Myer and David Jones. Good on Gerry Harvey for getting stuck into the stupidity of diversity quota obsessed boards. He is right. Why are certain funds requesting Harvey Norman hit these soft and irrelevant targets adopted by David Jones & Myer so they can invest under their self imposed ESG guidelines? Surely any company’s performance (assuming they aren’t illegally exploiting child labour) should be all that matters to shareholders? If it works without this gender balance nonsense why fight to change a winning formula?

If anyone is ever fortunate enough to meet Gerry Harvey’s wife, Katie Page (the CEO), it isn’t hard to work out that her gender wasn’t a selection criteria. Fistfuls of competence were. She gets it and not for one fleeting second could anyone ever get the idea that she plays up to the gender card. An utterly pleasant, generous and intelligent individual.

If Gerry Harvey & Katie Page thought Harvey Norman shareholders’ best interests were served by an all female board it would done so based on skill and ability to add value. The gender wouldn’t even be a factor.

Have you noticed why Harvey Norman hasn’t followed the group think pervading all the other companies who pulled their adverts off the Alan Jones Breakfast Show? Because Harvey Norman doesn’t pretend to judge the personal political beliefs of its customers. They only wish to provide the best possible goods that meet market demand, not chase imaginary pixies in the quest to morally preen. However it perfectly describes the decision making processes inside less competent boards when they blindly follow the herd rather than independently validate scenarios based on data, relevance and common sense. We now know over 40 companies didn’t.

The only diversity required is that of thought – not gender, race, sexual preference or religion. However don’t be surprised to see locals run Harvey Norman’s overseas businesses – driven by the fact they understand local conditions better than a helicoptered expat.

Maybe it is high time these superannuation funds actually decide to do some homework on the companies they invest in. To drop this focus on nanny-state driven diversity targets and actually look at the companies themselves as “businesses”.

CM guarantees that the companies that focus on this socially constructed diversity balance nonsense will severely underperform when tough times approach. Because decisive leadership in a crisis can be found with leaders like Katie Page, not with those companies that put everything else but ability as the key selection criteria.

The bigger concern down the line will be that these CSR/ESG and equality obsessed fund managers will have parked so much money in the wrong names that the retirements of millions of Aussies will be severely crimped by this muck. Let there be no mistake – super holders will not thank these woke investors for chasing irrelevant internal constructs over viable businesses when reality dawns that they have much less than they anticipated for retirement. Maybe that is what CM should have said to the ATO when he set up his SMSF.

Lessons from Deutschland on why renewables are a bad idea – period

 New wind park projects face a significant amount of red tape. And then there...

The normally left of centre leaning Der Spiegel has put together two decent hit job articles on the failure of the energy transition in Germany. This is what happens when misguided altruism turns on itself and ends up costing a bomb for little result. Australia, are you listening? Germany has already done beta testing on renewables and as a culture is not renowned for doing half-baked jobs. Yet Merkel can add this to the list of failures.

Part 1 – Germany Failure on the Road to a Renewable Future

“But the sweeping idea has become bogged down in the details of German reality. The so-called Energiewende, the shift away from nuclear in favour of renewables, the greatest political project undertaken here since Germany’s reunification, is facing failure. In the eight years since Fukushima, none of Germany’s leaders in Berlin have fully thrown themselves into the project, not least the chancellor. Lawmakers have introduced laws, decrees and guidelines, but there is nobody to coordinate the Energiewende, much less speed it up. And all of them are terrified of resistance from the voters, whenever a wind turbine needs to be erected or a new high-voltage transmission line needs to be laid out.”

Germany’s Federal Court of Auditors is even more forthright about the failures. The shift to renewables, the federal auditors say, has cost at least 160 billion euros in the last five years. Meanwhile, the expenditures “are in extreme disproportion to the results,” Federal Court of Auditors President Kay Scheller said last fall, although his assessment went largely unheard in the political arena. Scheller is even concerned that voters could soon lose all faith in the government because of this massive failure.

There is also such an irony when these mad green schemes encounter scourge from animal rights groups. Former Green’s leader Bob Brown knows the feeling,

“The bird of prey [red kite], with its elegantly forked tail, enjoys strict protection in Germany…Red kites are migratory, returning from the south in the spring, but they don’t return reliably every year. The mayor would have been happy if the bird had shown up quickly so its flight patterns could be analyzed and plans for the wind park adjusted accordingly. It would have been expensive, but at least construction of the project could finally get underway.

But if the bird doesn’t return, the project must be suspended. Spies has to wait a minimum of five years to see if the creature has plans for the nest after all. Which means the wind park could finally be built in 2024, fully 12 years after the project got underway.”

Part 2 – German Failure on the Road to a Renewable Future

An additional factor exacerbating the renewables crisis is the fact that two decades after the enactment of the Renewable Energy Sources Act (EEG), 20-year guaranteed feed-in tariffs will begin expiring next year for the first wind, solar and biomass facilities. Some of those who installed solar panels back then — often farmers and homeowners — are still receiving 50 cents for every kilowatt-hour they feed into the grid. Today, larger facilities receive just 5 cents per kilowatt-hour.

The state has redistributed gigantic sums of money, with the EEG directing more than 25 billion euros each year to the operators of renewable energy facilities. But without the subsidies, operating wind turbines and solar parks will hardly be worth it anymore. As is so often the case with such subsidies: They trigger an artificial boom that burns fast and leaves nothing but scorched earth in their wake.

As Australia continues to expand the renewables portion of our power grid, the lessons from the Germans couldn’t be clearer – market distortions and misguided investments only lead to marginal results on the back of massive investment to stop something that can’t be controlled. German taxpayers have been swindled and Aussies are sleepwalking down the same path.

Gillette Direct – the best things in life are more than 50% off

Gillette.png

Everyone knows CM is no longer a user of Gillette products. The brand is rife with double standards. To be lectured on toxic masculinity while it happily plastered its brand on the backsides of Dutch supermodels wearing skimpy jumpsuits to promote a racing car series.

Interesting to see the company has turned to sponsored advertising on social media. Is Gillette Direct tempting? We don’t have a good idea of the costs of selling at supermarkets and chemists. So how much will Gillette margins change at the margin? Best sell for 50% off direct than 50% off at Woolies. Await coming 10Q data to see how the trends evolve.

Our total outlay would be $76.00. Savings are:

Free handle: $7.00 saving

Blades: $7.79 savings x 4 = $31.16

4th Set of Blades: Free ($28.00 saving)

Shipping: $10 savings

Total Savings: $7.00 + $31.16 + $10.00 + $28.00 = $76.16 

On top of this for Father’s Day, Gillette appears to be offering an extra 10% savings. 52.3% off.

Will be interested to see if the Dollar Shave Club model will somehow lift Gillette out of the hole they dug for themselves.

Dollar Shave Club offers 8 replacement blades per cycle and shaving cream for $31.35. Better value. A starter kit is only $15.00.

CM is unmoved. Thanks but no thanks.

Good on Schick BTW for this counter advert questioning gender stereotypes without pandering to radical leftist feminist cabals inside corporate marketing departments driving narratives about oppression obsession. #getwokegobroke

Gillette champions what it censured. Too late

So is this admission that Gillette has finally realised it made a catastrophic marketing mistake to throw the majority of its customers under the bus? How interesting that the company now champions the very macho men it sought to criticise. You know, those who put their lives on the line to protect us. Unfortunately, Gillette, it is a bit late. More than happy with my Schick Hydro. Your $8bn is a fantastic Harvard case study of failed marketing campaigns.

PG slices another $8bn off Gillette in 4Q

P&G reported stronger earnings overnight but wrote off another $8bn in 4Q on top of the $6bn in 3Q on the Gillette brand in terms of goodwill and intangibles. Of course management brushed this off as significant devaluations over a decade, lower shaving frequency and new entrants at prices lower than the average. Nothing to do with the toxic masculinity campaign 6 months ago? Get real.

Under grooming, most of the results performance came through the sale of real estate in Boston. Other than that the company reported unfavorable channel mix, volume declines, brand communication investments and currency headwinds. The CFO Jon Moeller said with respect to Gillette,

You’ve got here a business with a very broad global footprint, and particularly with the year that we have just been through, that impacts that value assessment,”

Sorry, what does that even mean? No surprises that grooming was the worst performing division in P&G’s quiver.

Get woke, go broke.

Nivea CEO – “we don’t do gay”

LGBTQ Nation has reported that Nivea CEO rejected a campaign from its ad agency – FCB Global – which involved two men holding hands with the words, “we don’t do gay at Nivea.” This has led to a social media backlash showing offended users binning their products in protest. The laugh is that the advertising agency wants to dictate to the client how it runs its business. Nivea just doesn’t wish to promote “woke.” A choice that it should be entitled to make, just as Nike or Gillette are.

Nobody asked in what context “we don’t do gay” were said? Was it in reaction to the disastrous Gillette (note P&G reports Q4 results on July 30th) campaign on toxic masculinity? Did Nivea merely not want to reference specific minorities where it didn’t feel sufficient market gaps or opportunities would be found or was it a venom filled homophobic tirade? CM is willing to bet it was the former. Some corporations don’t wish to mix politics with product.

Nivea got in hot water in 2017 when it promoted a skin lightening cream in Africa. After much success with such products in Asia (where lighter skin is deemed more beautiful and brands make a fortune selling cosmetics based on this) it tested the African market. Unfortunately it got into hot water despite demand. The skin whitening industry was $10bn in 2009 and expected to grow to over $23bn by 2020.

Should Nivea be bashed for supplying products to a market demand that clearly exists? If Africans wish to lighten their skin, shouldn’t that just be a question for that individual? No one is forcing Africans to use their products. Nicole Amartefio is rightly proud of her skin hue so she can choose, like many others, not to buy into the ‘insecurity.’ If Nivea sales tank, they can blame the marketing department for inadequate due diligence.

Maybe CM should protest the sunscreen market for heightening insecurities over skin cancer because whites have less melanin? Do people realise that sunglasses lower the risk of tanning because the eyes regulate melanin production based off the glare the eyes receive? Why doesn’t Nivea promote the use of sunglasses instead of selling expensive sunscreen?

However this is where the Nivea story gets stupid.

FCB Global has been Nivea’s as agency for over 100 years yet its CEO Carter Murray said it intends to end the relationship with Nivea at the end of the contract.

FCB is within its rights to bin a century of business development but if the client wants to follow a mainstream campaign rather than get woke, surely isn’t it Nivea’s prerogative to do so? Does it require Nivea to meticulously follow the social diktat of its service providers? Who does FCB Global think it is? Why does it seek to throw its client under the bus? So much for respecting a century old client relationship.

LGBTQ Nation argues that one of the agency staff who proposed the campaign was indeed gay himself. Presumably he was offended.

Sadly Nivea felt the need to make an irrelevant statement to defend something completely unnecessary,

We are an international company with more than 20,000 employees with very different genders, ethnicities, orientations, backgrounds and personalities worldwide…Through our products, we touch millions of consumers around the globe every day. We know and cherish  that individuality and diversity in all regards brings inspiration and creativity to our society and to us as a company.”

Do consumers honestly ask themselves how “woke” every brand they buy? It is not dissimilar to ANZ preaching about Maria Folau. Is that in the forefront of the 5 million customers it serves? That is not even taking into account the hypocrisy of a bank which was admonished by the Hayne Royal Commission for unethical behaviour.

If Nivea believe that advertising to the LGBT community is a winner, let it decide because it has far better information than FCB Global about markets, products and segmentation. It shouldn’t feel guilty. Subaru America ran a campaign that targeted the lesbian community. Clearly the brand felt its market position had to differentiate away from the monsters of Toyota and Honda.

Talk about FCB Global cutting off its nose to spite its face. Expect its business to be affected more than Nivea. #GetWokeGoBroke . Interested to see how Gillette’s Q4 trend has been since the disastrous Q3 when P&G reports.

The moral of the story is to let the free market weigh Nivea’s decisions. It hasn’t called for anything other than defending how it serves its client base. Nivea parent company, Beiersdorf AG, has not experienced a share price backlash.