Drinks With Caroline
Caroline Levy, a veteran Wall Street analyst, delves deep into the world of beverages with some of her hero's.
Caroline’s quick wit, empathetic approach, and vibrant personality allow leaders to be vulnerable and speak truths not typically heard outside of closed-door conversations.
Drinks With Caroline
Nik Modi, Consumer Analyst at RBC - How to Manage Your Life and Business for Sustainable Growth
Whether you're a business leader navigating market uncertainty, an investor seeking strategic insights, or simply curious about the forces reshaping consumer behavior, this episode offers a master class in thinking beyond conventional boundaries to prepare for a rapidly changing future.
So all this obsession over innovation, maybe the company should go back to basics and think about how they actually do business versus the business that they're actually doing.
Caroline:Hello friends, old and new, and welcome to Drinks with Caroline. I'm so happy you've joined me for what I believe will be another stimulating conversation with an industry expert, founder or otherwise fabulous person in the consumer industry. Nik Modi, I am so happy to have you on Drinks with Caroline. Really, truly, it's an honor. I think back to the days when we were on the same team at UBS and you came into my office one day and said I need to go to London for tea, and it was a very enigmatic comment. But what then happened was you met your now wife for tea in London.
Caroline:It was a setup by your parents and it worked, and Disha is the most amazing wife and mother. You're an amazing husband and father and it's just been gorgeous to see you grow as a human being and in your career, which is really wonderful. And I haven't got to know your boys yet, but I know I will over time. They're getting quite big already. So, Nik, I wanted to just ask you a little bit about your approach to life and your approach to career and how those two things converge.
Nik:Absolutely. But, caroline, before we get into that, don't? We have to share our drink? Oh sorry, this is Drinks with Caroline. That's right, this is.
Caroline:Drinks with Caroline. Needless to say, being a Celsius board member, I've chosen to drink that in the morning here. What?
Nik:are you?
Caroline:drinking Nik.
Nik:I'm drinking the viral TikTok sensation known as proteinin Coke, which is basically Coke Zero in my case and a Core Power vanilla protein drink, and I'm drinking it for my post-workout drink. Actually, I just went weight training before this podcast. You know I need to get a little bit of protein in me.
Caroline:That's excellent.
Nik:Yeah, it's delicious. It's like a vanilla float, but not really.
Caroline:Oh yum, talk to us a little bit about your approach to life and how you balance life and work, and a little bit about strategy, because I think you're a very strategic thinker.
Nik:Well, first of all, I would say this kind of comes back to when I started working for you. Actually, you know, prior to joining your team, it was 20 hours a day nonstop, you know, with all my prior gigs in the same job actually. And when I joined you I realized that you can do both. You can enjoy your life, you can be really relevant in your job and work hard. And at the time you had a family I didn't, but you did that as well and it made me kind of rethink and reevaluate how I thought about everything and you know, as you kind of get through equity research and covering stocks and companies and talking to CEOs, you start realizing that everyone has a strategy right.
Nik:And so I said, well, why don't I just act like a corporation and put together a strategic plan of where I want to be, what I want to do? And it took time to think about and then I planned it out and honestly I got to say it's a big reason why I am where I am. I think, like you know, there's advice I can give to anyone, whether you're young or old, it's, it's hey, think about your own life as a corporation and think about where you want to be and how you can get there.
Caroline:So thank you for the opportunity to actually introduce you properly. Nik Modi, my guest, is the co-head of consumer and retail, I believe, at RBC, and Nik covers an astounding number of stocks officially and an even more astounding number unofficially, and has really carved out a place for himself where boards invite him to come and present to them on his ideas for how they could do better, maybe what they're even doing wrong and he is not afraid to speak up, which he has done recently about a need to reset earnings expectations. But I don't think we're done on the personal yet. We're going to go back to that first, I think. Just really well respected. One of my favorite images is of you talking to the CEO of Procter, who is probably twice your height, and John treats you with great respect, which is very well earned, and it's just a lovely picture. So, Nik again, let's just talk a little bit more about how your career has gone through the decades and the period of being solo, then married with kids, and now where you are and how it's shifted.
Nik:I have two people to really thank for kind of why I am where I am. First was Carlos Laboy, who is now a competitor, but at the time was a Rutgers alum and I reached out to him, cold called. I said hey, I'd love to meet with you. And I went up to New York while I was still in college and he got me in the door at Bear Stearns where I first started my career. Before consumer goods I covered internet, wireless telecom, I covered for-profit education, I covered Latin American telecom companies. So I had a lot of kind of exposure. And then, after jumping around a little bit, I met this most wonderful woman. Her name was Caroline Levy. You might've heard of her.
Caroline:I paid Nik to say this. You should all know I did, I paid him.
Nik:Well, do you remember when you asked me for letters of recommendation and I gave you a recommendation or a letter from my mother?
Caroline:Well, the amazing thing is, I called the formal ones and I called his mother and I said hello, Mrs Modi, I'm calling because I might hire your son, Nik, and I just need to know what kind of person he is. And she said oh, he's such a good boy. Now, if there's any descriptor that I would not necessarily use, it was good boy because he told me afterwards afterwards, you were a total rascal.
Nik:I was a rascal.
Caroline:There are no regrets. Thank you, Mrs Modi.
Nik:Yeah, and you know, caroline, I always love to take public forums to thank you, because you never forget where you come from At least that's my philosophy and you really gave me a lot of confidence. You let me kind of do things my way, but helped me build my own fence. So I was a wild animal at the time and a lot of what I do is because of how you train me. So I just can't thank you enough for giving me the opportunity and giving me that confidence.
Caroline:Thank you so much, Nik. So again, let's talk about the path to being a beverage analyst was working on the team, and while you were on that team my team you came up with such a great idea about a futures conference. It was an enormous amount of work, but together we published something about what the future of consumer would look like, and it was ideas that were really hard to sell at the time. Passion brands are what counts and now we're really seeing socially driven brands. I know you're going to talk about that, but the consumer, the passionate consumer, can build a brand. It happened on Liquid Death. It happened on Celsius. We talked about the big getting big and the small getting small in the middle getting pushed out. We talked about health and wellness. There were other themes and it was a massive undertaking. We hired outside people, but, Nik, you really pushed that through. So let's talk about how you've taken that approach in your own career.
Nik:Part of our job is to forecast and you know, if you think about any company or any organization listening, everyone wants to kind of get a handle on how they should manage the future right, or what they need to spend in today to build a capability to thrive in the future.
Nik:And so the best way to do that is to think laterally right, and to think about what's going on around the world, not necessarily what's happening in your industry, but what's happening in the world that could have an ultimate effect on your industry.
Nik:And I think oftentimes, because everyone in every industry gets so specialized, they kind of lose that lateral perspective. And so part of the futures process which, again, I've done it now four times, twice at RBC and twice at UBS it is just such an illuminating process right, where you are sourcing ideas and concepts from people that you would have no business talking to, like carbon credit traders and farmers and nurse practitioners and neurologists, on understanding how the consumer is going to act and shape over the next five years. And so I think, taking a lateral approach and you're right, it was a really hard thing to do, but just like anyone that's trying to innovate, you have to have courage right, and I felt so convicted that this would help us and give us another tool to help us do our jobs better, that I just wouldn't give up. And I didn't give up, and I'm glad I didn't give up.
Caroline:I'm glad you didn't either. One of the more fascinating things was we went to Boulder, colorado, and toured a high school and not to date myself, but I'd never heard of friends with benefits and the head of the school was describing how that was an issue. And there were also cops in the school, which I was like why are there cops in the school? And it's like, oh, it's dangerous, dangerous. This was all new and this was 20 years ago. So you know, you do see things. You've got to get away from Manhattan and LA. You've got to get into the field and talk to people and understand people, and I think you actually talk to managements about that, about this incredible network they have within their own four walls. So let's segue a little bit into that.
Nik:When you speak to a consumer company, you know, at the end of the day, everyone wants to be consumer centric, and so they say, you know, consumers at the center of everything we do.
Nik:But the reality is, over time, the consumers become less important and stakeholders have become more important Analysts, investors, the government, ESG, et cetera, et cetera and in often cases like you have in beverage alcohol, the actual customer is not even the end consumer.
Nik:It's the distributor, and then the retailer and then the consumer. And so one of the things that I've been talking to a lot of companies about is how do you take the periphery of your organization, the people that are closest to the actual people that are consuming your product the merchandisers, the salespeople, the route drivers and how do you make them part of your decision-making process? Right, and with AI, there's all types of ways to garner information, but you have to really kind of leverage that part of the organization to give you those ideas and concepts. I mean, when I spend time in the market with bottlers, with distributors, whoever and we're in these local markets I'm learning about competitors and trends that no one ever talks about, but then six months later, all of a sudden they're a big deal, and so it's very clear to me that there is so much information that resides in the periphery of the organization, and I think companies need to tap into that a lot more.
Caroline:I've got a couple of examples of that myself.
Caroline:I remember going on a tour, actually with Hal Kravitz, who is now the independent lead director at Celsius, but at the time he was working with some organization that did some business with food trucks and there was this energy drink called Bang and it was flying off the shelves and out of the warehouses that serviced food trucks and that was a real important data point on a brand that became very big.
Caroline:So I really hear what you're saying. I think it's exactly right, and the one other example that strikes me is Procter Gamble was struggling in China, but they missed the trend because the people were being paid on scanner data through supermarkets, but the market for diapers had shifted to mommy stores, which was an unmeasured channel, and so the locals on the ground knew they were losing share, but they weren't about to report it back to head office. So I really second what you're saying. Nik, what other avenues do you take to think about your research and maybe talk a little bit about your recent report asking companies to be brave, step up, lower the bar and get yourself into position to be what a consumer stock supposed to be, which is defensive?
Nik:Again, because I'm in the market so much and I'm spending so much time in the industry, it's becoming very clear to me that a lot of the consumer companies a big chunk of them are not prepared for the future. Right, I think the reality is a lot has shifted. The market's more volatile, the environment's more volatile, more flex needs to be created in the earnings statement in order to deliver while still investing. They're not hiring certain talent that might be more costly, like in AI. Right, it's very expensive, as we know, and in terms of AI capabilities, I think they're very behind and we're not in a. You know, caroline, back in the good old days, when we worked together, being a fast follower was okay and you could actually make a business out of it, right? I don't know if you can do that today. The reality is, if you're not first, you're last. I really believe that, and I think AI is going to only accentuate that over time, and we can talk about why I believe that if you want to get into details. That's why I'm urging all the companies to lower the bar, and we're starting to see that. Procter did it, pepsi did it, kimberly-clark did it, constellation Brands did it, so we're seeing it happen Now. We need to make sure that they're investing to make sure that they're future ready.
Nik:Right, and when I think about the future and I think about AI and I think about agent-based shopping, it is pretty scary. I might just put a prompt saying I'm having a party Super Bowl party. Please provide me all the products that I need, all the snacks. We're going to have a barbecue. I'm going to have 20 people, 10 will be kids, 10 adults, kids aged 5 to 11. And we have three vegetarians and two people with celiac Enter. And all of a sudden, I'm going to have an agent go shopping for me and I'm going to have products at my doorstep. I didn't mention a single category or brand in that statement, and so how are all of these companies going to survive and thrive in that kind of shopping environment? That's where we're headed.
Caroline:And it's very possible to prepare if you anticipate it was. You know, this disruption of e-commerce was terrifying and people thought you'll just buy what you first planned to buy online and move on. But now you get suggestive selling and ads and there is a way to get this right. But to your point, you have to invest. And the other big thing about a brand I think Mike Cesario of Liquid Death said it a brand is not a set of attributes. A brand is something that people specifically want and ask for. And how do you then market to consumers today?
Nik:And who's doing a good job In this world of agent-based selling? No one is at this point, but I know there are certain companies that have capabilities and are spending in those areas. I feel very good. I just upgraded Procter Gamble because the stock came down. They reset their earnings.
Nik:This is a really well-managed company that has very advanced capabilities and they're still investing and I think that they have a pretty big headstart versus their peers, even in the world of retail. I think Walmart, who I just presented to a bunch of their digital folks not too long ago in Bentonville they're also very advanced relative to other retailers, right. So the reality is we're starting to already see players that I think are already on the cutting edge of some of this stuff. But it's going to be real and I don't think people are talking about this because they don't see it. But again, this is why we do the futures work. Right Is what we have to understand what's happening outside of the industry and what's happening in the startup world to really help inform us of what we're going to be facing in the future.
Caroline:So it sounds very scary for small companies. That's getting more and more expensive just the cost of entry. Is there still place for the startups and the innovators, or is it in fact an opportunity for them, because they can bring unique capabilities and unique innovation?
Nik:For me, the way brands will be built in the future is really going to be product efficacy. That's going to be the key. Okay, why do I say that? It's because we're in a world of social selling, right? We're in the world where our social networks are basically informing us what to buy.
Nik:It's not the advertisement on television anymore, and sometimes it might be people we don't even know, but we follow online and in that environment, the only way you can get a recommendation is if your product works so well that someone's willing to recommend it. Right, because we could see through paid advertisements online and things like that. So product efficacy is going to become really, really important, because if a product is better it tastes better, smells better, makes you feel better it is basically going to be something that you're going to tell someone else to buy and that's how it's going to work. And so I think product superiority, I think blind wins, I think things like that, like what Procter Clorox are doing, are absolutely the right strategies for most consumer companies to take advantage of, whether you're large or small.
Caroline:What role do you think M&A is going to play now? Does this make it more necessary, less necessary? And I think we probably should have started with a tariff discussion. But just given the uncertainty in the world today, do you see M&A stepping up or people taking a step back and saying let's just get our house in order first?
Nik:Coming into the year, I thought M&A was going to be a real big theme for this year, but the market is so volatile I think that has taken a step back, probably put on the back burner for now. As things settle hopefully they will I would expect M&A to become resurface as an important strategy for many companies and it may not just be two big companies combining or whatever it might be, a bolt on, it might be a capability, but in the beverage industry, I absolutely believe in the next three to five years we will have complete beverage companies. I don't think you're going to have a beer company separated from a spirits company, separated from a carbonated soft drink company or a non-alcoholic company. It's all going to be the same because the supply chains are already starting to consolidate and as that happens, I think the suppliers will eventually follow, almost like what we see in the international markets. Now. There's obviously certain rules and regulations you have to be mindful of, but ultimately I think that's where we're headed.
Caroline:On the point of distributors carrying both alcohol and soft drinks, it's legal for alcohol distributors to carry soft drinks, but not the other way around, and that's part of what's called the three-tier system. For those people who aren't close followers of the industry, you're not allowed, as a manufacturer, to sell alcohol directly to a retailer or customer. In most places. Reyes, I think, the largest beer distributor in the country, probably one of the largest in the world, if not the largest. They're also a very large Coke bottler, but they do not put the Coke products on their beer trucks, is my understanding. Why is that and when could that change? Or would that change?
Nik:They just want to keep the regulatory barriers pretty finite. You don't want to have a mistake of someone merchandising a non-ALC product with an ALC product as an example, especially as certain trademarks are starting to be used across both businesses. Right, because one mistake can be pretty costly. I think they're approaching it the right way. Over time, though, regulations will likely get relaxed. There'll be more infrastructure and systems in place to make sure that doesn't happen. So I think, over time, there'll be opportunities for this to be more of the norm, but I think that's probably why they keep it separate at this point.
Caroline:Right. Do you see the big beer companies and spirits companies actually making significant moves in soft drinks and have there been examples of successes?
Nik:I think BevAlk distributors are looking for non-alk products to bolster their revenue. What's also interesting is non-alk distributors, like bottlers, are interested in getting into alcohol, and so you have this really interesting dynamic where everyone is going to start playing in everyone else's backyard or sandbox, and that's why I'm so convinced that we're going to see this ultimate consolidation over the next several years. I don't know when it's going to happen, but I feel like there's enough ingredients in the pot for making it happen over the next few years.
Caroline:Yeah, it makes sense to me. We're definitely shifting in that direction. I didn't mention Constellation Brands, but for the first time, their beer business has really softened, and so I think they have to be thinking more seriously than ever about alternative products. Would you agree with that?
Nik:Absolutely, look. I still think there's a lot of upside for Constellation. What's happening right now is more of an air pocket than kind of a structural change in their category or their brand dynamics. But absolutely, I think they're thinking about things like that and the way we have to think about the beverage industry and I think Brandy, when you had her on your podcast, made a good point all about mood management. We're really in the mood management business. Everyone listening to this, and you and I today, will have an average of eight drinks amongst us. It could be water, it could be this protein Coke, it could be maybe wine at dinner, whatever it is, and it's upon all the beverage companies to figure out how to get as many of those occasions as possible, because we drink for certain reasons and there's relevancy for why we're having a certain beverage, and so that's why I think it's really important for these companies to think of more holistically.
Caroline:Totally agree with you. So what do you think the rest of the year looks like? How do you see tariffs shaking out? I know that you don't have a crystal ball, but I'm just wondering how you're thinking about them and how you're integrating them into your stock recommendations.
Nik:The way we're thinking about it is look, we think what's happening right now is a lot of public negotiating. I'm not sure it's being executed as well as I think the administration was hoping for, but it's going to take some time to kind of get through this. Maybe by June, july, we finally get to a point where we know exactly what the tariff rates are going to look like. That's the main thing is the clarity, so you can manage around the clarity and so you know, is it 145% with China or not? You know like, what's the real, what's the real number. I think once we get clarity on that, then companies will be able to provide us a better foundation of how they're thinking about the rest of 2025 and 2026. But let's not kid ourselves.
Nik:Regardless of this tariff news, the consumer was under pressure before Trump even took office. We've been talking about it for the last 18 months, again being in the market as much as we are. That's going to take some time to shake out. We have a credit issue with many consumers, particularly low-income consumers. I don't know if you saw some of the latest metrics, but buy now, pay later, which is basically layaway, one of the fastest growing categories on buy now pay later is groceries.
Nik:That is terrible, that is terrifying Right exactly, and the delinquency rate is rising, and so, at the end of the day, higher income consumers. I have three rules of thumb for the consumer. Higher income consumers are governed by the stock market. Well, that's not been going so hot right now, and so maybe there's some weakened sentiment there, which was not the case a year ago. Middle income consumers are governed by the housing market. Well, we're seeing some weakness there, especially around housing prices, and so that's going to obviously weigh on those consumers. And then lower income consumers are impacted by gas and food, inflation and food inflation is very high and wages Right, but the reality is we're not in a great place right now for the consumer.
Nik:So I do think this is going to be a tough year. I think things are going to get tough before they get better. And one of my talk tracks when I go speak to companies and boards is like we have to really face the facts and think about how can we grow in a no low growth environment. And so, if they really be creative and take advantage of a lot of low hanging fruit, what's the low hanging fruit? There are a couple of areas right. One is taking advantage of more merchandising events. I mean, if you think about, especially for the beverage industry, labor Day, memorial Day, july 4th, the holiday four major events and that's where all the activation occurs. Well, what about Diwali? What about Chinese New Year? What about more broad-based Cinco de Mayo? I mean, I'm not Hispanic. I celebrate Hispanic Cinco de Mayo. I'm drinking a lot of margaritas in May.
Nik:So the reality is, I think there's a lot of opportunity to activate around these key holidays, especially if you're a distributor, bottler and you can be locally relevant, and you don't need to sell ethnic products to take advantage of these opportunities. You just need to be activated in the market. So that's point number one. The second is how do we take advantage of virality? What is happening online is like you don't have to launch a new product. This Coke protein Coke thing is a TikTok trend. It's not a new product. I just bought a Coke and a core power protein drink and I mix them together that could easily be merchandised at retail. Together, that could actually be a strategy you can take advantage of to leverage some of these viral trends.
Nik:And then the last thing is especially for the C-store industry and for on-premise venues. There are people that own single bodegas that have massive followings online because they do something unique in their store, like cook or make custom sandwiches in Brooklyn. And this one bodega his name, is General Ock. He's got 5 million TikTok followers. He's got lines forming outside of his bodega just one box because people want to get filmed on making a custom sandwich Brilliant. And he ends every video with don't forget your beverage, never, ever, ever. It's like an incredible traffic throughput strategy that so many other boxes can take advantage of, whether you're a Walmart or you're a bar or restaurant or you're a single bodega in the middle of Brooklyn. So I think that is.
Caroline:It certainly happens already, but I think that's going to grow in importance. And you've seen Liquid Death do some very unexpected ones with an ice cream company, with elf makeup, and they make it work and it stands out. So I totally agree with you that creativity and let that bubble up from the field to the extent that you can. And there's the dilemma because, on the one hand, you really need to run centralized IT systems and big marketing, but you also need to give leeway to people in the field, without leading to an Anheuser-Busch type blow up where somebody got it horribly wrong, although I believe the person who got it horribly wrong was actually at head office, so maybe it wouldn't have happened if it had been in the field.
Nik:It definitely wouldn't have, and this is why I had a sense of urgency. In writing. This reset your earnings. Note. In order to equip and organize your company to take advantage of these things that we're talking about, a lot of work needs to be done, and that requires investment, and that's why I feel such a sense of urgency with this message.
Caroline:Who do you think are the most important senior people in an organization today, and do you think that's going to be a slightly different in five years?
Nik:Oh, that's a great question. You cannot discount a good leader. So, ceo to me I mean, as cliche as it sounds, if you have a good leader that understands how to play all the players, you could have a basketball team same 12 people and you can have one coach basically not win any games, and you can put another coach in and all of a sudden you have a completely different outcome. I've seen it over and over again in professional sports, but also in high school and middle school sports coaching my kids. I've seen it over and over again, and so I think a CEO that knows how to leverage his talent is the most critical.
Nik:But I think the boards, caroline, I think I mean and you'll have a good understanding of this because you're on boards Like I feel like the boards can play a bigger role than they are right now. I'm not sure all boards, especially in the world of consumer, have the right people on their board. There's just a very, very small percentage of marketing people on boards that have marketing expertise, and I think that's one of the areas that has really, really been deficient for many of these companies and they're marketing companies right, and that's a problem in my opinion. I think the statistic I saw is like 3% of all consumer company board members have a marketing background. That's too low in my opinion.
Caroline:I couldn't agree more no-transcript, but I think there's room to shake things up, is what you're saying, right?
Nik:Absolutely, and here's another thing to think about. One of the models for many companies is to take their best talent and shift them around the organization, to give them exposures to different parts of the business and to group them for bigger and better things. But I would argue that we're in such a volatile environment and we have been and it's only going to get more volatile that you need people that have subject matter expertise and domain expertise. So I would argue, don't move your best talent around. Pay them well, keep them where they are, because, at the end of the day, the best thing to deal with all the craziness that's going on is to have intuition.
Nik:I've been covering this industry for 25 years. I can see things. Maybe others don't, just because I've been looking at it for so long. I have intuition on certain dynamics, absolutely, and so I think Church and Dwight does a great job about this. Their brand managers are in their roles for a really long time, and that allows them to understand the category so well that they can make better choices than maybe their competitors, and that also allows those brand managers to take on additional M&A and still do their core business really well, right, so there's so many advantages to consistency.
Caroline:I totally agree. In fact I do recall a company years ago used to move their people around a lot and then they found that because they were paid on last year's performance, they would do things that weren't in the longer term interests of the division because they knew it wouldn't affect their comp and then they shifted it. So I think where you put the carrot is incredibly important and I think rolling through your results is probably a really good way to give incentive compensation obviously a base of cash to live on, to live well on if they're a busy executive, but also pay over time for performance that doesn't just arrive in a year and disappear the next year.
Nik:I mean, I think what we're talking about in this whole discussion is there needs to be a lot of innovation in areas outside of innovation Innovation amongst boards, amongst organizational design, amongst incentive structures. So all this obsession over innovation, maybe the company should go back to basics and think about how they actually do business versus the business that they're actually doing.
Caroline:I love that comment, Nik. It's fantastic. I remember being at a Coke meeting and they used to sell the product in what they call the straight line plastic. So gone was that wonderful contour glass bottle and they put a great cartoon up with the graphic and it said the CEO of Coke has a very, very difficult job. And it gave the option of I could have a straight wall plastic two liter, or I could have a contour two liter and you tick which one you want. And it gave the option of I could have a straight wall plastic two liter, or I could have a contour two liter and you, you know, you take which one you want and he goes, tick on the contour. And it was game changing because it was such branding, it was visual branding, you didn't have to say a word, you just make the plastic iconic and sometimes it is so simple.
Caroline:But it's a package innovation. It's, as you know, beverage. People know the right package at the right time in the right place for the right consumer. So again, if we look through 25, 26, 27, what do you imagine the future is going to hold? You said you've done some interesting futures work. Any other conclusions that are interesting to you to talk about?
Nik:We talked about this agent-based buying right and shopping. I think that's going to be a big one. I think wearables, Caroline, I mean, I hear a lot about the GLP-1s and don't get me wrong, I think they're definitely having an impact. I just think it's a lot less than people think, because I think the market is so shallow and narrow. It's 10% of the population and they're not even taking it long-term right. It's like they lose their 15 pounds and then they're off and it's creating a whole host of issues muscle density and bone density and issues that I think a lot of older populations are going to have to deal with in the future.
Caroline:So do you think that this is literally big as it's going to get? And then it's actually shrinking from here because people understand the side effects?
Nik:We'll see. I'm just not as concerned about it as I am about wearables, and I'll get to that in a second. I covered tobacco for a long time and I remember Pfizer came out with Chantix, which was basically a drug that you can take. It wasn't a patch you can take it to quit smoking and everyone thought that was the end of the tobacco industry. But it wasn't, because what ended up happening is that all these side effects, the FDA put a black box warning on it and then people stopped using the product.
Nik:I'm not saying that's going to happen to GLP-1, but I just think that we're thinking about this in a vacuum. First, one of the greatest new product launches in the history of the consumer products industry is Coke Zero Sugar. It came out of a risk. So there's going to be a lot of opportunity for companies to innovate around GLP-1s. But the reason why I'm more concerned about wearables is because it actually changes our behavior. It's not a one-time adjustment, but it actually changes our behavior. So you have a continuous glucose monitor on and you have that second glass of beverage alcohol, wine, beer, whatever it is and all of a sudden your phone starts going crazy. You're probably not going to have the third.
Caroline:Either that or you take the wearable off.
Nik:Yeah, that is also an option, but there's such an going to be an advancement. Like whoop you know, I'm sure you've heard of the whoop tells you how you're sleeping. It's a device you keep on and tells you how you're sleeping. And I have some young guys on my team and they tell me like when they go out for an all night binger they just don't sleep and they see the reading on their, on their. So they're like it helps them cut down. Because they're like like it helps them cut down, because they're like I want to sleep tonight I got to take it easy.
Nik:Wearables, ultimately, will start governing our behavior. The thing about wearables is that the advancements are happening so fast that in the next few years, we're all going to have some kind of device that will literally tell us in real time what is happening in our body. There are patents being filed by all types of scientists on this stuff, and so if that is the case, then we're going to start making decisions not based on what we want. We're going to be starting making decisions based on what our body wants, and that is going to be a really big change that I'm not sure a lot of companies are ready to handle.
Caroline:Nik, I actually think it's the most important thing you've said. I think it is so accurate. You can pretend to yourself that that extra sugar drink or bar of chocolate or bag of cookies it's just a one-off, it's not going to do any harm.
Nik:But if your phone starts blowing up, you're going to be worried Absolutely. And we have to think about this within the context of an aging population. Our entire population is aging, the world's population is aging. So as we age we're going to have different requirements, which is going to give birth to an entire new industry of ailment-based solutions saying oh, I need to sleep, boom, I have my little thing. Oh, you know, I'm really stressed, I need to calm down Boom, I have my little thing. And so I think there's just going to be so much robust opportunity, especially in the beverage industry, that I think is going to pop up as a result.
Caroline:Yeah, I love turning this on its head and saying out of challenge comes opportunity, because I do think that people are looking for higher quality ingredients. So if you're going to have to raise prices because of tariffs or any other reason, give people more of what they need protein, fiber, whatever. It is something that helps you sleep and they'll be more than happy to pay that price. And you don't have to give them enormous servings. The serving sizes have got out of control in some parts of the food chain. So I do think we can consume less, consume better and everybody can win. We just got to change our mindset. As you say, rebase and go forward from there, absolutely.
Caroline:So, Nik, talk about the kind of advice you give to your kids as they grow up and into the world. They're how old now. Sean is 18. He's going to be going to. They grow up and into the world. They're how old now?
Nik:Sean is 18. He's going to be going to college next year, to Pace University, and so he'll be close by and looking to network with a lot of finance people. And Shiv is 15 and he's a freshman in high school. And what I've been focused on and it took me a while to get here so for all you new parents, I figured out probably my oldest was 15-ish that I needed to make them fail as much as possible. I think that's one thing our society has gotten away from is failure and dealing with failure, and so I've gotten my kids into so many situations where I know that they're going to mess up and fail, but I'm around to help navigate them through, Because when I'm not around, I want them to understand how to deal with failure. And so that is my number one thing in parenting is that we must have controlled failure, while we can still influence how they respond to that failure. And so that's been it, but it took me a while to get there, to tell you the truth. So that's number one.
Nik:The second thing I tell them is be organized and, again, plan your life like a company. I had Sean and I had Shiv. Both map out their next four years. They're like well, how do I do that? I'm like just figure out what classes people of your different grades take. Put into a spreadsheet.
Nik:You got to study for the SATs at some point in your life. When are you going to do that? What kind of job do you want? Do research on that? You know, prepare yourself, because if we're prepared, we'll make better choices. It's that simple. And a company can do the same thing right. If you're prepared and you understand what's coming around the corner, you're going to be able to respond much more effectively with agility. And so that's I got to tell you. I mean, like I've learned so much from the companies I cover. I've been so fortunate to A have great training in the very early stage of my career Thank you, Caroline but B to interact with so many amazing CEOs that are just so brilliant, and I've really learned a lot from them in terms of how to manage my own life.
Caroline:Do you want to share any examples, without necessarily naming names? Some things you've learned.
Nik:When I make a call, I know exactly the second, third and fourth call. I'm going to make off of that first call. So before I make any stock recommendation, I know exactly what I'm going to say. A week from now, two weeks from now, three weeks from now, on that same company and I learned that from R&D executive at P&G saying when we put out a product and we start thinking about our pipeline, we are moving you into a certain direction that we want you to go. I will never forget that discussion. I think that's a valid advice.
Caroline:It is. It's wonderful, Nik. This has been such a joy and I'm just proud to count you as a friend, you, Disha, and your family as friends, and if I miss one thing about being on Wall Street anymore, it's just the incredible camaraderie that comes with having a team. But we get to see each other anyway, which is the best.
Nik:Yes, it is.
Caroline:So happy day, and we'll speak soon.
Nik:Okay, thanks, Caroline.
Caroline:Bye. If you enjoyed this session, please do comment, rate and follow us on Apple Podcasts, spotify or wherever you listen, and please share this with your friends and colleagues.