Coffee star bucks up

Also in today’s edition: Ambani takes a fizzy turn; Meta’s (kinda) done with ads; SpiceJet’s cup of woes brims over; Disney apes Amazon

Good morning! Japan wants to get rid of floppy disks for good, according to Bloomberg. The humble floppy, now an ancient storage format, is still in demand by the Japanese government. At least 1,900 government procedures in the country deem it necessary to use storage devices, CDs, and mini-discs. Japan’s Minister for Digital Affairs wants to play catch up and move the submission process online. This probably signals the floppy disk’s entry into the fossil era. 

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The Market Signal*

Stocks: Domestic benchmarks crashed 1% as India reported a GDP growth of 13.5% in the June quarter which was much lower than expected. Goldman Sachs and Morgan Stanley have lowered India's growth projections. It didn't help that US markets ended in the red on Wednesday for the fourth straight day. Indices fell across Asia, barring Shanghai. The yen hit a 24-year low. 

Early Asia: The SGX Nifty rose marginally higher (0.18%) at 7.30 am India time. The Hang Seng Index (-0.30%) and Nikkei 225 (-0.060%) crawled downwards.

BRANDING

Bottled Nationalism, Fizzy Socialism

Another cola war might be brewing with the Reliance Group buying Campa Cola and Sosyo. Unlike the long-drawn marketing epic that was the Coke-Pepsi duel, this one can take a political colour, with Campa Cola pitched as the nationalist alternative to western rivals. After all, that is the Indian cola’s origin story. 

Indian-western: Campa Cola started life in the post-Emergency euphoria when Coca Cola was thrown out of India. The copycat drink’s brand building was all about being Indian even though its ads pandered to a western sensibility. Incidentally, film star Salman Khan, then only 15, made his first ad appearance swigging Campa Cola on a yacht with bikini-clad companions.

Reliance Retail’s second buy, Sosyo, also has a slightly political past; the brand name itself is derived from socialism. Who would have thought a capitalist billionaire would serve up “nationalism” and “socialism” in bottles of cola?

🎧 Reliance is bringing back India’s desi soft drink from the '70s. Snapchat's struggling. The Signal Daily is available on Spotify, Amazon Music, and Google Podcasts, or wherever you listen to your podcasts.

TECH

Zuck Has Ad Nauseum

Meta is weaning itself away from the one thing that made its world go round: advertising dollars. The Verge reports that the Mark Zuckerberg-led company—which suffered its first-ever fall in revenues for the quarter ending June 30—has a new vertical called ‘New Monetization Experiences’. This team will identify paid features across Instagram, WhatsApp, and Facebook.

Details: Meta already has paid features in the form of Instagram creator subscriptions, WhatsApp Business, and Facebook Groups charging for exclusive content. It’s unclear what additional features will be launched, but an executive said paywalled-anything could make a significant difference over “a five-year horizon”.

Why this matters: Meta’s revenues are ad-driven. But inflation, a strong dollar, and Apple’s new privacy controls fuelled a digital advertising ebb. Interestingly, search is the only category with bumper ad revenues; just ask Google.

STRATEGY

Starbucks’ Venti Ambitions With A Cup of Tech

The world’s most famous coffee chain is going back to the drawing board. Starbucks is developing new ways to meet the rising demand for coffee, all while fending off growing attrition and satiating employees’ unionisation efforts. Outlets that once averaged 1,200 daily orders are now struggling to fulfil 1,500 orders a day. So Starbucks is testing new equipment and store layouts to shave off seconds, even minutes from brewing a macchiato or frappuccino.

Behind the scenes: The company’s tech lab is overhauling kitchen plans to minimise barista trips across café floors. Discussions are on not only to upgrade equipment, but reposition them closer to one another. Engineers are also testing portable blenders that whip foam faster.

In related news, Starbucks has a new CEO: Laxman Narasimhan, who recently stepped down from Reckitt Benckiser.

The Signal

Starbucks’s sales are rising, but higher costs cut net income by 21% in the quarter ending July 2022. It doesn’t help that baristas are leaving the job quicker than ever: an internal survey revealed that one in four Starbucks baristas are quitting within 90 days.

Much of this has to do with working conditions. Honcho Howard Schulz wants 90% of Starbucks’ US outlets to have drive-throughs. This translates to quicker turnaround times, or the time taken to brew your favourite cuppa. The task is virtually impossible without kitchen efficiencies– something employees have long complained about given how physically taxing the job is.

Suffice to say that any innovations Starbucks pioneers will be replicated across the global coffee industry.

AVIATION

SpiceJet’s Bland Equity

2022 has undone the airline that once had the second-largest market share of all Indian carriers (it’s now fifth). SpiceJet shares fell 15% early Thursday owing to losses of ₹789 crore in April-June. This was despite an 80% rise in passenger revenues per seat compared to a year ago; gains were undone by a depreciating rupee and 105% spike in ATF prices.

CFO Sanjeev Taneja stepped down. A Delhi-Nashik SpiceJet flight suffered an autopilot snag.

Turbulence: In July, aviation regulator DGCA ordered SpiceJet to operate 50% of its flights after several technical issues. It also deregistered two aircraft for non-payment of lessors’ dues. The airline has reportedly delayed employee salaries and is mulling a stake sale and $200 million infusion.

Postscript: Competitor IndiGo has a codeshare agreement with Virgin Atlantic. And airfares will no longer be capped.

STREAMING

Disney Takes A Page From Amazon’s Playbook

Walt Disney may execute its most Captain Obvious project in recent times: it’s considering a membership programme that will encompass streaming services, theme parks, and merchandise. Discussions are in the early stages. 

Why?: Loyalty. The move, dubbed ‘Disney Prime’ internally, is an attempt to get more customers aboard the subscription train and cross-sell multiple offerings under the ‘value’ umbrella (aka convert shoppers to viewers and vice versa, akin to Amazon Prime’s core strategy).

Only two weeks ago, Walmart entered into a streaming deal with Paramount+ to fight another streaming giant, Amazon. 

Shell out: Advertisers will have to pay a premium for Netflix’s ad-supported tiers ($65 for 1,000 viewers) if they want to feature in the four minutes of ads-per-hour schedule.

FYI

Win some, lose some: Indian startups raised $1 billion in August, up from $870 million in July but still one of the lowest funding months since January 2021.

It’s here!: We’re talking about the Twitter edit button. Caveat: you’ll have to pay for it.

Laundry list: Reuters reports that the US was probing Binance CEO Changpeng Zhao for money laundering– two years before India cracked down on Binance-owned WazirX for the same reason…

…Speaking of: The Centre is issuing notices to Indian startups funded by Chinese investors in the past two years, over suspected circumvention of FDI laws.

Breakthrough: India will launch its first indigenously-developed cervical cancer vaccine, Cervavac, within a few months.

Full throttle: Tata Motors and Maruti Suzuki clocked a 41% and 30% rise in domestic passenger vehicle sales for August, respectively.

No love lost: Boris Johnson has done the worst job of any British PM since World War II, per an Ipsos poll.

FWIW

New Bermuda Triangle just dropped: Bad luck has been swamping the Suez Canal of late. The 250-metre long Affinity V tanker was stuck in Egypt on Wednesday. But tug boats refloated the oil tanker in a few hours. Previously, the cargo ship Ever Given was stuck for a week, which exacerbated the supply chain crisis. And birthed a continuous supply of memes. 

Soft power: Japan's doing everything it can to bring in tourists. This time, it's hoping a cartoon bear called Kumamon will give tourism a much-needed boost. In the works: bear-themed attractions to lure visitors. Kumamon was previously chosen for a new chip plant. Will this help turn the tide?

Move over Tesla: This is also courtesy Japan. Self-driving cars are so yesterday; if that seems like hyperbole, hop over to read about the autonomously-steered ship Mikage. The self-captained vessel debuted just a week after the world’s first ship of this kind, the Soleil. Autonomous ships make sense for a country comprising 6,500 islands. Whoever said that Japan’s days as a tech powerhouse were over?

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