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Nestle, Hershey, etc

Analysing companies' finances and value from their financial statements using ratios and formulae
SteadyAim
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Nestle, Hershey, etc

#624830

Postby SteadyAim » November 2nd, 2023, 9:10 am

Some of the big food companies are down with these new weight loss drugs that are coming out. Perhaps this makes some of the huge food companies a buy?

e.g. Hershey p/e 20 dyld 2.5%
Nestle <ok, not down so much>

There's a meme in social media about how ~10 companies sell a huge proportion of developed world's food and drink, I'm sure I've saved a picture, but can't find it just now - that list might make a good initial few companies to check.

Which exchanges do people buy these stocks on (e.g. in an ISA) nowadays? For example, Nestle? Some brokers allow purchases on foreign exchanges, but may extract their "pound of flesh" in excessive fx rates. So do we still stick to the international order book on the lse?

77ss
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Re: Nestle, Hershey, etc

#624845

Postby 77ss » November 2nd, 2023, 9:34 am

SteadyAim wrote:Some of the big food companies are down with these new weight loss drugs that are coming out. Perhaps this makes some of the huge food companies a buy?.........



I don't follow your logic.

Cannot the wilfully obese continue to gorge if they have access to weight loss drugs?

A rather obscene win-win situation for big business? With, one fears, health service costs.

Bubblesofearth
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Re: Nestle, Hershey, etc

#624864

Postby Bubblesofearth » November 2nd, 2023, 10:42 am

77ss wrote:
I don't follow your logic.

Cannot the wilfully obese continue to gorge if they have access to weight loss drugs?

A rather obscene win-win situation for big business? With, one fears, health service costs.


AFAIA weight loss drugs work by suppressing appetite so people on them shouldn't fell the urge to continue gorging.

Personally I'm not sure how successful they will be as, like many addictions, it's more psychological than physical. Like smoking, the physiological changes reverse over just a few days but the psychological addiction can last much longer.

BoE

bungeejumper
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Re: Nestle, Hershey, etc

#624914

Postby bungeejumper » November 2nd, 2023, 1:20 pm

The great thing about Hershey bars is that they don't taste like chocolate anyway. It's the butyric acid, you see? :D Those with a strong constitution may wish to know what it does taste of. For others, ignorance may be bliss. (This from Huff Post, BTW: https://www.huffingtonpost.co.uk/entry/ ... 8f98bec0cd)

From what I've read, the appetite suppressants in weight loss drugs stop working as soon as you stop taking the medication. That might not be such a problem if you've genuinely, absolutely beaten your demons by that stage, and if you're completely confident that you'll never need to raid the biscuit tin again. But somehow it doesn't work out that way for most people. :|

As a student, I once spent a summer working for Cadburys in Bournville. It was in the glorious 1970s, and Kraft wasn't around yet to pollute the flavour of the stuff. Cadburys, of course, was still a basically Quaker outfit in those days, and there was a factory rule that you could help yourself to any kind of choccie, as long as you didn't take it from a finished pack that was ready to go out on the vans.

Everybody working there had had pretty much the same experience. You gorged yourself stupid for the first two weeks, and after that you wouldn't want to eat another chocolate for five years, or maybe ten. Or, in my case, thirty.

Now, that, folks, is what's called knowing your product. And your workforce, and its weaknesses. And heading off a potential future pilfering problem with kindness! Mind you, I doubt that the same approach would have worked at Mr Kipling. :?

BJ

monabri
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Re: Nestle, Hershey, etc

#624937

Postby monabri » November 2nd, 2023, 2:38 pm

I spent several weeks as a student at Robinson's Jam in the late 70s ( outside Manchester near Ashton-under-Lyne..factory now closed) working on the " tank farm" where they stored vast quantities of 'goo' in metal tanks. One day I was told to go to work in the main factory where my job would be to add pectin to the sticky stuff. Pectin added, the concoction would then be left in the yard where it was temporarily stored with ill fitting lids pending movement to the production line.

So, it seems we were making raspberry jam with a soupcon of 'Wasp and fly' flavouring..That's what some of the bits were in the jam....yum yum!

Put me off jam for quite a while.

( I was actually fired from Robinson's because I needed to leave a week earlier than they wanted...they claimed I had signed a contract to work for so many weeks ( I hadn't). I asked them to show me this contract ...they couldn't! They were not pleased that this young upstart should question their authority and they decided to sack me instead (!) ?...I bet I could have sued them nowadays for unfair dismissal! )

Lootman
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Re: Nestle, Hershey, etc

#624941

Postby Lootman » November 2nd, 2023, 2:45 pm

77ss wrote:Cannot the wilfully obese continue to gorge if they have access to weight loss drugs?

Rather like how people who start taking drugs for high cholesterol or high blood pressure feel they can consume more unhealthy stuff? No more need to feel guilty about getting fried chicken, kebabs or pizza!

SalvorHardin
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Re: Nestle, Hershey, etc

#624953

Postby SalvorHardin » November 2nd, 2023, 3:21 pm

SteadyAim wrote:Some of the big food companies are down with these new weight loss drugs that are coming out. Perhaps this makes some of the huge food companies a buy?

e.g. Hershey p/e 20 dyld 2.5%
Nestle <ok, not down so much>

There's a meme in social media about how ~10 companies sell a huge proportion of developed world's food and drink, I'm sure I've saved a picture, but can't find it just now - that list might make a good initial few companies to check.

Which exchanges do people buy these stocks on (e.g. in an ISA) nowadays? For example, Nestle? Some brokers allow purchases on foreign exchanges, but may extract their "pound of flesh" in excessive fx rates. So do we still stick to the international order book on the lse?

The 10 food companies according to The Independent are "Nestlé, PepsiCo, Coca-Cola, Unilever, Danone, General Mills, Kellogg's, Mars, Associated British Foods, and Mondelez." There's a nice picture in the article linked below. The list isn't particularly accurate; Tyson Foods and Kraft Heinz (amongst others) aren't on the list though their annual sales are bigger than some of these ten companies.

https://www.independent.co.uk/extras/these-10-companies-control-everything-you-buy-a7765461.html

Nowadays I buy all my American and Canadian shares on the NYSE. When I sell I keep the proceeds in US dollars (it makes sense since my reinvestment contenders are invariably American and Canadian). The exceptions are my Brookfield Asset Management and a small holding in Canadian Pacific, which are in an ISA with a full service broker. These were bought many years ago and the foreign exchange commission back then was a very small percentage (much lower than today's online brokers and it still is when the dividends are forcibly converted into sterling).

As to the food companies, the weight loss drugs argument seems to be a feature of brokers' recommendations to sell. Krispy Kreme was recently the subject of a broker's note which focused on these drugs, though many private investors are arguing that it will cause a temporary reduction in consumption followed by consumption recovering to normal levels after the weight has been lost. I'd argue that these drugs could very well increase demand for Krispy Kreme's doughnuts because people will be more confident that they can control their weight using these drugs (and doughnuts are seen as being a bit naughty when it comes to people's weight).

https://seekingalpha.com/news/4026239-krispy-kreme-downgraded-truist-weight-loss-drugs-overhang

servodude
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Re: Nestle, Hershey, etc

#625057

Postby servodude » November 3rd, 2023, 3:31 am

Bubblesofearth wrote:
77ss wrote:
I don't follow your logic.

Cannot the wilfully obese continue to gorge if they have access to weight loss drugs?

A rather obscene win-win situation for big business? With, one fears, health service costs.


AFAIA weight loss drugs work by suppressing appetite so people on them shouldn't fell the urge to continue gorging.

Personally I'm not sure how successful they will be as, like many addictions, it's more psychological than physical. Like smoking, the physiological changes reverse over just a few days but the psychological addiction can last much longer.

BoE


The weight loss aspect of Ozempic appears to work by slowing down the emptying of the stomach and also making one feel nauseous.

I'm pretty sure that a lot of chubby folk just ignore the signals in their body that tell them "I'm full" - but it's harder to argue with the "i feel sick" message.

In terms of "sticking with it" there is an advantage in the fact it is a weekly injection, so the actual commitment can be transient and still get the same benefit (it's a lot easier to jump on the wagon than fall off)

That said I think the reaction of the markets to this is a bit nuts - and that's not just for "sometimes foods", anything that might be affected by people being overweight looks to have been hit (e.g ResMed, Baxter) and I can't see this drug changing things at a fundamental level (or at least not by 30% )

-sd

SteadyAim
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Re: Nestle, Hershey, etc

#625093

Postby SteadyAim » November 3rd, 2023, 10:15 am

SalvorHardin wrote:The 10 food companies according to The Independent are "Nestlé, PepsiCo, Coca-Cola, Unilever, Danone, General Mills, Kellogg's, Mars, Associated British Foods, and Mondelez." There's a nice picture in the article linked below. The list isn't particularly accurate; Tyson Foods and Kraft Heinz (amongst others) aren't on the list though their annual sales are bigger than some of these ten companies.


Ah, thanks! Yes, that picture is one of the ones I've seen.

I bought some extra Berkshire in an ISA once, and was annoyed when I found out how bad the fx was, but this was some time ago so I don't remember the details. And ISAs are not allowed to hold foreign currency, so you get hit by the fx twice every time you trade in and out. Using a SIPP might be ok though, I will have to check.

Regarding the companies, I don't believe the weight loss drugs will have any noticeable impact on their profits, so this might be an opportunity to buy a slate of very solid companies. I don't approve of most of the "foods" they sell, but I won't let that stop me from buying, I think of it as a "Robin Hood" type exercise - move some money from the "bad" people to the "good" people :-)

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Re: Nestle, Hershey, etc

#625177

Postby stevensfo » November 3rd, 2023, 3:40 pm

monabri wrote:I spent several weeks as a student at Robinson's Jam in the late 70s ( outside Manchester near Ashton-under-Lyne..factory now closed) working on the " tank farm" where they stored vast quantities of 'goo' in metal tanks. One day I was told to go to work in the main factory where my job would be to add pectin to the sticky stuff. Pectin added, the concoction would then be left in the yard where it was temporarily stored with ill fitting lids pending movement to the production line.

So, it seems we were making raspberry jam with a soupcon of 'Wasp and fly' flavouring..That's what some of the bits were in the jam....yum yum!

Put me off jam for quite a while.

( I was actually fired from Robinson's because I needed to leave a week earlier than they wanted...they claimed I had signed a contract to work for so many weeks ( I hadn't). I asked them to show me this contract ...they couldn't! They were not pleased that this young upstart should question their authority and they decided to sack me instead (!) ?...I bet I could have sued them nowadays for unfair dismissal! )


I worked for one year at ICI in Runcorn, BioScience where they were trying to improve corn yield. One of my duties was to analyse the corn from the greenhouses. They had money falling like rain. I had a great time. Free language courses, subsidised meals, cheap trips to France etc. Trouble was, despite all the Oxbridge overpaid scientists, they refused to accept the new genetic engineering techniques.

The rest is history. AstraZeneca etc.

Steve

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Re: Nestle, Hershey, etc

#626538

Postby TheMotorcycleBoy » November 10th, 2023, 10:29 am

Interesting topic.

Looking at it from the Devil's Advocate side....aren't weight-loss drugs incredibly expensive?

With ageing populations, and massive pressures to cut, not raise, social welfare costs, will these drugs really have a noticeable impact on consumption, hence food company profits?

Matt

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Re: Nestle, Hershey, etc

#627669

Postby Charlottesquare » November 15th, 2023, 10:22 am

Do people who eat less spend less?

There can certainly be substitution where ones buys better quality leaving total spend very similar. As an example I seem to buy less beer and wine but better beer and wine these days, far nicer /more expensive breads are consumed by us these days (though with other half retiring end of next week, and Paul Hollywood 100 bread recipe book on order from Abe, we will soon buy more flour and less bread).

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Re: Nestle, Hershey, etc

#627673

Postby servodude » November 15th, 2023, 10:27 am

Charlottesquare wrote:Do people who eat less spend less?

There can certainly be substitution where ones buys better quality leaving total spend very similar. As an example I seem to buy less beer and wine but better beer and wine these days, far nicer /more expensive breads are consumed by us these days (though with other half retiring end of next week, and Paul Hollywood 100 bread recipe book on order from Abe, we will soon buy more flour and less bread).


They spend different... certainly not necessarily less.

I can't see niche injected weight loss drugs having the long term effect on every related sector that we've seen hit.

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Re: Nestle, Hershey, etc

#633816

Postby Lootman » December 13th, 2023, 8:54 pm

servodude wrote:The weight loss aspect of Ozempic appears to work by slowing down the emptying of the stomach and also making one feel nauseous.

I had to look up who makes Ozempic. Turns out it is a Danish pharma company that now has the largest market cap of any company in Europe.

Clearly there is money to be made from fatties.

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Re: Nestle, Hershey, etc

#634302

Postby ElCid » December 16th, 2023, 10:29 am

Lootman wrote:
servodude wrote:The weight loss aspect of Ozempic appears to work by slowing down the emptying of the stomach and also making one feel nauseous.

I had to look up who makes Ozempic. Turns out it is a Danish pharma company that now has the largest market cap of any company in Europe.

Clearly there is money to be made from fatties.


Actually the Danish company is Novo-Nordisk. They as a very large supplier of insulin which is used to treat diabetes; this is where they have made their money. The weight loss drug is new to the picture and in fact, is a development of their diabetes related activity.

Am an indirect holder as they are (were) the second largest holding in Fundsmith Equity.


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