CEO succession (COST)
Costco’s CEO Craig Jelinek announced his plans to retire on Tuesday. Ron Vachris, President and COO since February 2022, will be the next CEO on January 1. Did Craig Jelinek leave important decisions, such as an overdue membership fee increase for his successor? (Not to mention the $1.50 hot dog and $5 rotisserie chicken.)
Ron Vachris has worked for Costco for more than 40 years, starting as a forklift driver. Since price increases are inevitable, it makes more sense for the outgoing CEO to make the decisions so his successor can settle in. Did Craig Jelinek sign up to be an advisor through April 2024 to be a welcome presence or to watch Ron Vachris deal with the unfinished business he left behind? Costco is a Best Idea long.
Creami competition (SN)
ColdSnap is about to commercially launch its countertop ice cream maker. Three years ago, its product garnered a lot of attention at CES. Since that demonstration, the company has been refining its machine and expanding the capacity of its pods. ColdSnap’s liquid product comes in large aluminum cans. The company projects that it will have the capacity to manufacture 30 million pods annually. ColdSnap’s ice cream maker can produce ice cream from a room temperature can. ColdSnap is initially targeting the office and business markets before entering the consumers’ kitchens. The machine was initially expected to retail between $500 and $1,000, and the pods would cost $2.99.
SharkNinja’s Creami is available again on Amazon for $199 and $249. Although the mix has to be placed in the freezer the day before, consumers prepare the ice cream themselves. The lower price points open a much larger TAM for SharkNinja. The Creami has been sold out for long stretches this year despite being on the market for a couple of years. The story behind Creami illustrates many of SharkNinja’s competitive advantages. SharkNinja differs from most of the Consumer Staples universe by not having any GLP-1 exposure, unit growth, and margin expansion drivers that are not dependent on higher prices.
Confectionery acquisition (HSY)
The Ferrara Candy Company has reached an agreement to purchase the Jelly Belly Candy Company. Ferrara is a privately owned candy company that owns more than 20 brands including Nerds, Gobstoppers, SweeTARTs, Black Forest, and Trolli. Ferrara, based in Illinois, is a subsidiary of Ferrero Group, based in Italy, the maker of Nutella and Tic Tac. Jelly Belly has been owned by six generations of the Rowland family. M&A has recently picked up in the Consumer Staples sector, and we expect the year to be one of the most active in some time.
