Companies:

Mondelez International (MDLZ) - The Snack Giant Behind Oreos, Ritz Crackers, And Chips Ahoy Cookies

by Alex Mason | Oct 7, 2020 | Companies, Episodes | 0 comments

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Description

  • Snacks have become a huge part of the modern food system. Instead of meals cooked from raw ingredients, there are now a plethora of packaged foods available all over the world. Mondelez International is one of the dominant companies in this space, selling everything from Oreo cookies to Ritz crackers to Trident gum.
  • In today's episode we cover the history, business model, financials, and future outlook of Mondelez International.

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Transcripts:

  • Alex Mason: Today on stock stories. We're going to talk about one of the largest snack businesses in the world, not just food in general, but snacks specifically. So let's talk about Mondelez international. I'm Alex Mason, host of stock stories. This is the podcast where we decode investing principles by analyzing the business behind the stock, as well as learning about mental models in order to help you become a better investor.
  • [00:00:29] You ready? Let's go.
  • [00:00:58] right. Welcome to the show. This is the stock stories podcast. My name is Alex Mason, and I am your host and your stock storyteller for today. Thank you so much for joining me here on the show. If this is your first time here. Welcome. Welcome. Welcome. I want to extend a warm welcome to you. I really want to make this show just the absolute best it can be.
  • [00:01:24] So thank you for being here, taking the time to press play and listen. And if you're not new here. If you've been around a while, maybe you've been listening for a few months or few years. Thank you so much as well. For continuing to come back and listen, and just share this journey with me, share this journey of learning, how to become a better investor.
  • [00:01:48] And I'm so excited today because we have another company episode for you. We're going through the entire S and P 500. And this episode is going to get us one step closer to that goal by studying one of the largest. Snack businesses in the world. So I want to go ahead and just get right into it today.
  • [00:02:10] We're going to talk about Mondelez international,
  • [00:02:22] alright Mondelez international, ticker symbol, M D L Z. So in a quick synopsis. What does Mondelez international do? Well, they are a large business that obviously sells internationally outside of the United States. They sell all around the world and they sell candy snacks and beverages, and they also sell chocolate biscuits gum.
  • [00:02:50] Those kinds of items. So that's what they sell. They sell snacks. Now, the way that this episode is structured, if you're new to the show is first we go through the history of the business because we want to understand a little bit more contextually about why this business even came into existence. Right?
  • [00:03:08] Understanding something's past can help us understand its present and its future a little bit better. And I'm a strong believer. Of that approach. Next we'll look at the business overview. What is the actual business model today? How is the company making money and how is it serving its customers? Now then we'll move into financials because obviously the numbers have to work out.
  • [00:03:29] If a business is not. Succeeding financially, then we should never even consider them as an investment. And then finally, we'll wrap up with the synthesis. The synthesis kind of brings together all of the prior parts of the episode and just some closing thoughts based on everything I've learned. Okay.
  • [00:03:50] Let's go ahead and talk about the history, the history of Mondelez international. This is a company that traces its origins all the way back to the 1920s. Now it actually began in 1923 with the national dairy products corporation. And two men, Thomas McInerney and Edward Riec set out to consolidate what was then a fragmented ice cream industry in the United States.
  • [00:04:19] And as you know, if you listen to other episodes in the past, a lot of industries are fragmented. I mean a lot of fragmented now in 2021, but a whole lot of fragmentation existed way back a hundred years ago, especially because we didn't really have the rise of this huge multinational corporation yet.
  • [00:04:40] And part of the journey of how that actually happened was through consolidation and consolidation started happening around this time in a lot of different industries. And one of them was this ice cream industry. So this sets a consolidate the ice cream industry and they were successful. They met with a bunch of bankers who they convinced that, Hey, we just needed some loans, so we can go and start buying out these mom and pop.
  • [00:05:06] Ice cream businesses. Then there was another company that was founded a year later in 1924 called crafts and crafts became a leader in the cheese industry. Now at the time it was called craft Phoenix and it was known for their Philadelphia cream cheese brand, a brand that still exists to this day, actually.
  • [00:05:30] And then they also made other products like mayonnaise, salad dressing, et cetera. So that was kind of another side of the business that was happening concurrently along with national dairy and then national dairy ended up acquiring crafts, Phoenix in 1930, changing their name to Kraftco and then eventually they became a known by that brand name craft.
  • [00:05:56] Now from the 1950s throughout the next few decades, the business gradually moved away from just making dairy products and they started moving into selling other processed food items, and these things included, candies, macaroni, and cheese dinners, margarine. I mean, these are things that all still exist very much today.
  • [00:06:16] Right. But they were invented or. I would say pack is differently or process differently back around this time in the 1950s. And it was beneficial for management to do this because processed foods could be sold at a higher margin than things that were more commodity, like products such as milk. You know, you're only going to be able to charge so much for a gallon of milk.
  • [00:06:42] But if you turn it into margarine, that's a little bit harder to make, you know, that's going to be another value at, so that's something worth noting there. They started moving to these higher margin products. Now to understand the context too, of the time period. This is also around the post world war II boom in the American economy.
  • [00:07:05] So the typical American household was changing. There were people. Back from the war. They were starting families. They were having children. They were moving to the suburbs. The suburbs were booming. Department stores were booming, retail. All these different industries were just having a lot of success.
  • [00:07:24] And one of those industries was the appliance industry. You had a lot of new appliances. That were being invented and shipped in large numbers to people's homes. Now, one of these appliances was the refrigerator, which allowed people to store food for long periods of time. Now the actual refrigerator predates the 1950s and sixties, but the more modern version of it, something that you and I might recognize today as being a refrigerator that was invented around this time.
  • [00:07:55] And it was pivotal because it allowed these companies, these food companies to start creating different types of products, because they knew that the food wouldn't spoil is easily compared to if people didn't have refrigerators. So that's an important point and industry has to grow up around the technology and the context of the day it can't just exist in isolation.
  • [00:08:20] People have to be able to understand it and use it. So the development of processed foods went hand in hand with the post war economy, in my opinion. Now fast forward, a couple of decades in the 1980s, Kraft merged with a company called dart to become dart and crafts, and they went through a breakup and then it was eventually purchased by none other than the tobacco giant Phillip Morris in 1988.
  • [00:08:50] Now, if you remember from our episode on Austria, which is all the way back at the beginning of this podcast in episode 13, we talked about Altria. The old Phillip Morris saw the food business as a way to diversify out of the tobacco industry, which was just starting to receive a lot more scrutiny. So they said, Hey, you know, people are kind of not liking cigarettes and they're kind of coming at us and we need to diversify our revenue base and our profit base.
  • [00:09:20] So they look to the food industry. Now, Phillip Morris has a big part to play in this story because they were the ones who merged all of the major food companies together. After they purchased crafts in 1989, they merged it with a company called general foods. Now, general foods is a company that owned other large processed food brands that you might recognize things like Oscar Meyer meats, Maxwell, house, coffee, and jello.
  • [00:09:50] Now a decade later in the year, 2000, Phillip Morris also bought Nabisco holdings for nearly $19 billion. And Nabisco was one of the larger cookie and Cracker manufacturers. And you might recognize some of their brands like Oreo, Chips Ahoy, and Ritz crackers. So all of this massive consolidation by the tobacco giant, it ultimately led to a spin off of these businesses to shareholders in the year 2007.
  • [00:10:19] This was this massive spinoff. And then shortly thereafter in 2009, Kraft made a hostile takeover of competitor Cadbury in the United Kingdom. So remember our recent series about Keurig Dr. Pepper. This is the Cadbury half of Cadbury Schweppes. Now what is a hostile takeover? Let me explain that for just a moment.
  • [00:10:43] It's essentially when one company buys out another against the wishes of that company's management. So Kraft made a bid for the business at 9.8 billion British pounds, but it was rejected. Now an offer was ultimately accepted at 11 and a half billion pounds. So eventually they relented and said, okay, fine.
  • [00:11:05] You can buy us out, you know, pay us a couple billion, more, more pounds, and it will do it. Now. There's more to say about this history of craft, but we're going to cover that in a separate stock story. Now, as far as Mondelez international goes, this is how it actually came into existence. It came into existence because shareholders became upset that.
  • [00:11:25] Kraft's performance. Wasn't going so well. I mean, their CEO who was Irene Rosenfeld at the time essentially was engaged in empire building and they weren't producing good results, at least not from that acquisition. So eventually in 2011, the board of directors decided that they were going to split the business into two parts.
  • [00:11:46] There was going to be the North American grocery company, which would remain as crafts and then the international snack business. Would become Mondelez international. Now, if you're wondering like where Mondelez international comes from, like how do they even come up with that name? It just seems kind of random, right?
  • [00:12:03] Like, how you get that from craft. Well, apparently the craft employees had some input on it and it comes from Mundus, which is the Latin word for world and Delez which is just a modification of the word delicious. So they combined that and they got Mondelez. Another big part of the story is just a few years ago in 2016, when Mondelez international made a bid for the Hershey company, and yes, they tried to buy out Hershey.
  • [00:12:35] They offered them a lot of money, too. They offered them $23 billion, which on a per share basis, that would have been about $107 per share. And the offer was ultimately rejected, which, you know, at the time, uh, I don't think I was a Hershey shareholder yet, but I was definitely paying close attention because I was like, Oh man, I don't know if I would want Mondelez to buy Hershey.
  • [00:13:02] I didn't know a whole lot about Mondelez international at the time, but I'd heard some things about the CEO, Irene Rosenfeld. And I just wasn't really sure about that, but nonetheless, it didn't end up happening. Remember. Back in our Hershey episode, Hershey is controlled by a trust and the trust basically turned down the offer.
  • [00:13:25] So that's what happened there. Okay. Now let's talk about the business overview. What is the business like today? Well Mondelez international. It's one of the world's biggest snack companies. They sell cookies, biscuits, chocolate gum, they sell drinks and they sell other snack items in over 150 countries.
  • [00:13:48] So they're truly an international business. Now what brands are they known for? Well, we talked about a few of them already. Most notably, they have brands like Oreo cookies, Philadelphia cream, cheese, Trident gum. They're really big in the gum business, Ritz crackers, Chips Ahoy, and the Belvita brand.
  • [00:14:09] Now what are their actual strengths? Because they have a lot of brands, but are they leaders in any of them? Well, they have the number one market share in biscuits and the number two positions in chocolate and gum and candy actually, which I was actually surprised to find out that they're number two in chocolate.
  • [00:14:28] I mean, we talk about businesses like Hershey or Nestle, which is really big in the chocolate space. And then of course, there's the privately held Mars. Company, which owns brands like Snickers and, and Milky way and things like that. But yeah, I was a little surprised to see that they're number two in chocolate, kind of surprising, but nonetheless, they, they seem to have a lot of brands in that.
  • [00:14:56] In that area. Now as you can tell from their name, they predominantly sell food outside of the United States. And about 75% of their revenue comes from nine us countries. And most of those are considered developed markets. So they really do sell their candy and their gum and their cookies all over the world.
  • [00:15:20] Now as you might guess, the growth in this industry is relatively slow. So overall the packaged food industry, it's only growing at around 4% per year. So not, not really great growth here, but Hey, that's something right now. This makes sense to me because it's a pretty mature industry. I mean, processed foods, like I mentioned in the history section, they were invented several decades ago.
  • [00:15:46] So there hasn't been. At least from my point of view, it hasn't been a whole lot of innovation in this industry. And frankly, there probably doesn't need to be at least until food. Uh, genetically modified food kind of takes this next evolutionary step. I don't really see a whole lot of innovation really needing to happen in this industry because when people go to the grocery store, like they just want to buy some Oreos.
  • [00:16:14] Right. Or they just want to buy. Uh, a box of Mac and cheese, they, they don't really, or Chips Ahoy or the bell or Belvita. They don't really mind that it's the same product year after year. In fact, I think it's that consistency of the product that makes it somewhat attractive, right? Because if I were to go to the store right now and buy a package of Oreos, I'm pretty sure it's going to be exactly the same kind of tastes and texture and size as a type of Oreo that I used to have when I was a kid.
  • [00:16:51] So this consistency of product I think is actually a great advantage for a business like this, because not much needs to really change. I mean, sure. The packaging changes things behind the scenes change, like supply chain, distribution, raw materials. You get more efficient, you cut costs, et cetera, et cetera.
  • [00:17:12] All of those things are happening behind the scenes, but from the consumer's eyes, all I really know is that okay? The only thing different I'm seeing is that. There's a new type of Oreo with double the stuff in it this year or whatever it is. So there are some innovations happening, but it's a much more slow to change industry compared to something like say software or I don't know.
  • [00:17:40] What's another faster like industry. I meet my mind immediately jumps to technology, because that seems to be the only type of stocks that a lot of people talk about, but you get the point. So what you get in exchange for the slow growth rate is the stability. And as we'll see in the financial section, Mondelez's cash flows are pretty stable.
  • [00:18:05] Now another interesting note about the business as it currently stands today is other than their core business, they have significant stakes in other businesses that are in related categories. So they actually have an 11% stake in Keurig Dr. Pepper. And that stake is worth around $4.6 billion. So check out episodes one 58, one 59 and a one 60.
  • [00:18:31] For an entire series on that business. I pretty much said everything I needed to say about Keurig Dr. Pepper over the course of those three episodes. So be sure to check that out if you didn't listen a few weeks ago and then they actually have a stake in another business called J D E Peet's and they own 23% of that company.
  • [00:18:50] And that's a company based in the Netherlands that is the largest pure play coffee and tea company in the world. And this was a new one to me. I just hadn't been exposed to it, but I recognize the Peet's brand. And so I also see that they're publicly traded as well. And Mondelez's stake in that business is worth about $4 billion.
  • [00:19:10] So even though the business is really focused on snacks and on processed foods, they have their hands in the beverage space. They've got their hands in coffee, they got their hands and soda. They've got their hands in tea. So I think it's really interesting that they own stakes of these businesses. Now, geographically, we know they're diversified based on the number of countries that they sell in.
  • [00:19:34] Right. But how are each of these regions doing? How diversified are they? Really? So what I did is looked at the spread of revenue across each region of the world, and they really do seem to be spread out well across each region. Now I did notice that they seem to be picking up some steam in North America.
  • [00:19:55] The sales seem to be growing in North America, relatively steadily. Whereas, if we look at the Latin American segment, their revenue is actually decreasing a bit. So I think that maybe if they're losing market share in that region of the world, they may want to pay some more attention to that side of things.
  • [00:20:15] If they aren't already. Because there's such an international business, tens of thousands of their employees are represented by unions. So that's another thing to consider and something that I picked up reading the annual reports. Now only about a quarter of the United States. Employees are represented by unions.
  • [00:20:34] Now, the reason that I bring that up, I don't think I've mentioned unions much in past episodes because they're usually not really a factor. As far as how I think about the business in general, but unions can certainly be a factor unions, protect workers rights. That's what they do. That's what they're created for.
  • [00:20:54] Now unions often come into direct conflict with the wishes of management because management, I mean, let's be honest. Like sometimes management is just kind of ruthless with how they, how they do things. And that's for real, like sometimes they'll just lay off thousands of people and unfortunately that's the reality of business and, you know, I think there needs to be the right balance between.
  • [00:21:22] Between preserving the larger economic engine of a business and obviously helping people and protecting, protecting people's jobs. Right. There's the big picture. And then there's a small picture. They're both important. They're both important, but unions can present a problem to management and look no further than there is a strike several years ago with Boeing actually.
  • [00:21:49] And I remember hearing about it. And the unions where they were fighting for basically increases on their pension. They want a guaranteed retirement benefits. They wanted. This, that and the other. And from the employee side, obviously this, this was great, right? Because they collectively had a lot of power, especially up in Seattle, in the Boeing facilities.
  • [00:22:13] There there's, they had a lot of sway with their workforce and eventually they came to an agreement with Boeing's management over pension benefits. Now this benefits, the employees, but from the shareholder perspective is not such a great thing, right? Because if a company is paying out pension benefits in, I forget what year this was, this might've been 2014 or 2015.
  • [00:22:42] If they're paying out pension benefits in 2015, I mean, that's just another drain of cash that could be going to shareholders, or it could be going to more research and development. It could be going to a lot of other things. It's just another internal obligation for the company's funds. So just want to point that out.
  • [00:23:02] So you get an idea of why unions can be a risk depending on. The particular situation, and I'm talking about a risk from the shareholders perspective from the individual investors perspective. So just wanted to point that out. I don't see a massive risk here with Mondelez international because of unions specifically, but just something to consider because they do have a lot of people who are represented by unions.
  • [00:23:31] And that's not the case with many other businesses. All right. So let's talk about the financials. The numbers have to work now in order to go over the financials, I'm going to be comparing the numbers from two different fiscal years to keep things simple. So we'll look at 2012, and then we'll fast forward to 2019.
  • [00:23:56] And so over the seven year period, we'll be able to hopefully see some trends with the financials of the business. Let's start with the sales back in 2012 Mondelez international made 35 billion in sales. And then in 2019, this number was just 25 billion. Now we'll get to this in a moment, but there were a number of factors that led to the sales declines, notably from 2014 to 2016, but we'll come back to that.
  • [00:24:26] Now, as far as the profit, what was the net income of this business? In 2012, the company made $3 billion. And then in 2019, it was just underneath $4 billion. So they went up about 4%, 3% or so annually. And then as far as earnings per share, remember, well, we care about is not just the net income, but also how much income we get on a per share basis.
  • [00:24:52] As a shareholder, it went from a dollar and 69 cents. Up to $2 and 65 cents. It's about a six and a half percent growth rate there. Now let's turn our attention to the balance sheet. What does the company own versus what does the company? Oh, and the amount of cash on the balance sheet has decreased significantly.
  • [00:25:14] Over the years, they went from about four and a half billion in cash to just 1.3 billion in cash. And then let's look at their debt load, a company like this, a company is so big and the fact that it's a multinational, I didn't even have to look at the balance sheet to tell you that they probably have a decent amount of debt.
  • [00:25:34] And I was right. The long-term debt. The business had 15 billion several years ago, and now it's just about 14 billion. So it seems like they've managed their debt. Okay. It's not a huge, huge amount of debt, but it is a decent amount. Pretty typical of a large S and P 500 company. Now let's look at the cashflow.
  • [00:25:56] The operating cashflow of the business in 2012 was just under $4 billion. And then in 2019, the operating cashflow of the business was just under $4 billion. Doesn't look like it's changed that much, but this is actually more impressive than it looks because of some changes of the business that I will discuss in a moment.
  • [00:26:16] Now the investing cashflow has gone down a lot. Um, it went from about 1.7 billion to just under 1 billion. They've been investing less in the business, but that's because the size of the business shrunk, as far as financing cashflow, there are no big trends here. Just know that in 2019, they. Shipped out about $3 billion, a little bit less than $3 billion in financing cash for various reasons.
  • [00:26:45] About half of this one and a half billion came from dividends. So one and a half billion dollars came from dividends and then their dividends per share in 2012, it was a dollar per share. In 2019, it was a dollar and 9 cents per share. It looks like. No dividend growth at all. Right. But the dividend has actually grown at 14% annually.
  • [00:27:10] Over the past several years, dividends were just decreased in prior years due to the business restructuring. And then lastly, let's look at the shares. Outstanding. So how many pieces of shares have existed? Remember the less shares that exist in the open market, the higher the earnings per share, because the denominator of that metric is going to decrease, right?
  • [00:27:32] So that's going to increase your earnings per share. And that's exactly what happened with Mondelez international. They used to have about 1.8 billion shares. And now there's only about 1.4. So they've been gradually buying back stock over time at about a 3% rate year over year.
  • [00:27:53] Now let's talk about the synthesis. So how do we put this all together? So the first thing that came to mind is. The sales declines, like why are sales falling? This, this doesn't make sense to me on the surface. So I had to look a little bit deeper to understand, like, why did sales fall? Well, it turns out between the years, 2014 and 2016, the sales of Mondelez decreased from about 34 billion to about 26 billion.
  • [00:28:24] So you think about that as like, wow, that's a huge drop that's. That's like almost $10 billion. What's going on. Why the huge drop for what seems like such a stable business? Well, there's no one reason I found out there's a couple different reasons for why this happened. The first reason is that the company J D E Peets was formed.
  • [00:28:46] And so Mondelez's stake in that business shifted substantially. I think that's really the, the big piece of it. Another part is the company's Venezuelan operations. They were deconsolidated. Because there was major trouble with the political stability of that country. And that's due to things like the currency was devalued significantly because they were dependent on oil exports.
  • [00:29:12] So when the price of oil crashed in 2014, the country went into significant hardship and a lot of multinationals, not just Mondelez international, but a lot of multinational corporations that had operations in Venezuela. Really really suffered economically there because of that reason. And then the third thing is that we can't forget, this is an international business.
  • [00:29:38] So currency effects come into play. If you have a business that existed in the United States, for example, and makes its money entirely in the United States, then you don't have any currency effects. Everything is done in United States dollars, but when you have a business, that's selling things in 150 countries in the world, then you have to account for.
  • [00:30:03] You know, Japanese Yen you have to account for the peso. You have to account for all these different currencies that gets translated back into United States dollars. And depending on the ratios between any two currencies in the world that may be favorable or disfavorable based on how the results are reported, you follow me.
  • [00:30:26] So the currency effects. In this case negatively affected the results because United States dollar was strengthening during this time compared to a lot of other currencies in the world. Now, this is typical for US-based companies that have significant international operations. It's similar for a company like Coca-Cola or Philip Morris, international, other businesses that have significant.
  • [00:30:51] Operations across the globe, but report their earnings in United States dollars. You're going to see something like this because there's a lot of currency effects. Okay. Now that we have addressed that when I step back and look at the overall numbers of this business at first glance, it appears to be a business in moderate decline.
  • [00:31:14] Right? That's that's what it seems like when I first look at it in reality though. To me, it looks much more stable than that. Once I peel back all the layers. So the business in its current form is relatively young. It was only created in 2012, so less than a decade ago now they had a big mishap of the Cadbury acquisition, which didn't grow earnings like they hoped.
  • [00:31:39] And then they reorganized due to the JDE business transaction. So it's all kind of messy. But looking at the picture in recent years, though, it becomes a little bit clearer. This is a boring stable business that makes a lot of money. They make around $3 billion or so in free cashflow and management seems pretty intent on shipping it back to owners in the form of both dividends and share repurchases.
  • [00:32:06] So they're giving a lot of money back to shareholders, and I think that that's a great thing. So, what will we be getting if we purchase shares of this business, what will we be getting? Well, right now, the stock I'm recording, this is trading at around $55 per share, or so, and it earned around $2 and 47 cents per share in 2020.
  • [00:32:30] And that puts the price to earnings ratio somewhere in the neighborhood of 22. Now that seems a little high, but not too much, especially in this period of super low interest rates, this seems pretty typical. So I wouldn't, so I wouldn't say that it's significantly overvalued or undervalued at this time.
  • [00:32:47] It just looks like it's kind of just sitting there right around where it, in my opinion, now the dividend yield, remember this is a company that pays dividends. A yield right now is about 2%. So it's a pretty small dividend yield. But management, interestingly has explicitly stated that they want to grow the dividend faster than earnings per share growth.
  • [00:33:13] Now, why is that interesting? Most of the time, if a business has a dividend policy, They'll just say we intend to grow our dividend and like that's all they'll say, or they'll say maybe a little bit more clear. Clearly we want to target a payout ratio of 60% or 70% or whatever it is. Basically. We want to grow our dividend in line with our earnings per share growth, but that's not what Mondelez international is saying.
  • [00:33:41] Mondelez international is saying, look. We plan on giving you more money year after year in the form of dividends. And we're going to grow this faster than our earnings per share growth. So they are intent on accelerating that dividend growth. And they're very explicit about that, which not a lot of managements are going to say that.
  • [00:34:01] So I think that that's an interesting piece there, especially if you're looking at this business from a dividend or income perspective, it might be more attractive based on that alone. Now another thing we want to put together with this story is the share buybacks. So they're reducing share count at around 3% per year.
  • [00:34:22] And once we start putting the pieces together, it looks like this. So then that income of the business, it's a slow grower. It's likely not going to grow faster than three to 5% as far as their profits. I wouldn't really expect much more than that. So we've got that. We've got the 2% dividend and we've got an average 3% or so reduction in the share count.
  • [00:34:45] You can see where I'm going here. Right? I think we're looking at mid to high single digit returns. Here. You start adding these up two plus three plus three. So maybe in the seven to 9% return range. Now I want to emphasize again that these are strong brands. This is definitely a slow grower, but Hey, Oreos and Ritz crackers, more likely than not.
  • [00:35:07] I think they're going to be around 25 years from now. I can't say that about a lot of other businesses, but Ritz crackers, probably going to be around. Now I also think the ownership in Keurig, Dr. Pepper and JDE Peets is interesting. They could sell their stakes gradually over time, or just hold on and realize some gains later because I haven't studied JDE Peet's, but if it's the largest pure play tea company in the world, they're probably making money.
  • [00:35:37] And then we've studied Keurig Dr. Pepper in depth, and we know that they are indeed a profitable business that seems to have good prospects. So they couldn't hold on and realize some of these gains later. Now there'll be interesting to see how management handles this. I don't know yet, but I think there is potential here.
  • [00:35:57] So ultimately Mondelez international, it seems like a solid, slow growing business. That's in a very stable industry. People like sugar. They're going to buy Oreos year after year. They're going to buy their Chips Ahoy. They're going to buy their sour patch kids, and yeah, they're going to send that money back to owners.
  • [00:36:21] So I think it's a solid, slow growing business. Again, I wouldn't expect super high growth, but in exchange for the lack of growth, you get a little bit more stability. So that's my opinion on this business. And before I end this episode, I want to give a quick shout out to Mike who messaged me on Instagram.
  • [00:36:41] And actually brought up Mondelez international, which is the reason I decided to study it and create an episode for you today and quick correction, Mondelez international has actually reduced their stake in Keurig Dr. Pepper now to about 8% instead of the 11 that I stated earlier. So they've actually been shedding some of their stake over time, but yeah, Mike, thank you so much for reaching out to me on Instagram.
  • [00:37:06] If you want to reach out to me and connect with me in any way. I'm on social media @stockstoryteller. Again, that's @stockstoryteller or you can send me an email at Alex at stock stories, podcast.com. So thank you for that. And I look forward to hearing from you. I look forward to talking with you about investing.
  • [00:37:27] I hope you've enjoyed this episode and that's all I've got for you today now. Next week, we're going to be talking about a mental model and this is a mental model that I think is so critical. In fact, it may be the most fundamental mental model out of all of the ones that I have studied so far, but that's a story for another day.
  • [00:37:48] We'll see you next week on stock stories.
  • [00:38:11] The information on stock stories is informational educational and entertainment purposes only you and you alone are responsible for your investment and financial decisions. Please consult inappropriate tax legal or financial advisor that can analyze your specific situation in the context of your goals and circumstances.

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