Category: Uncategorized

What we all want

With the Harvey Weinstein allegations and recent news from Westminster sexism and discrimination is very much on the agenda.

As a child of the 1970’s I do feel very old when I look back on the media of my youth and see what was considered acceptable at that time.

Watching Benny Hill or the Carry On films today is quite hard: essentially the jokes are about sexual harassment or in some cases sexual assault on women. It’s very hard nowadays to see how that could possibly have been seen as funny.

The positive side is that it is great to see the progress we have made and how unacceptable the humour of the past is today. What would have been regarded as radical feminism is the 1970’s is today completely mainstream.

A couple of days ago my parents celebrated their 50th wedding anniversary and I said a few words about life in 1967 when they married. In the UK in 1967 it was illegal to consummate a male gay relationship and jobs were advertised with one salary for a female employee and a higher salary for a male employee doing the same job. Racial discrimination was also legal and widespread although 1967 saw the very first black policeman in the UK.

At Move Fresh we have a very diverse customer base, more female than male with many races and religions well represented. Kevin and I are both middle aged white men but we love having diverse customers and staff. We both have daughters which I think makes both of us think more about sexism.

All of us are looking for healthy, tasty food and drink delivered to our homes in a convenient way at a good price. We very much hope that everyone feels welcome at Move Fresh.

Brexit

I’ve been asked by quite a few people to write a note on Brexit. It’s a difficult issue to write about as Move Fresh takes a completely politically neutral view and Brexit is a very political subject on which people have very strong views.

As a company, Kevin and I have taken a view that we should not get involved in political issues. This because a) taking a political view annoys a large number of customers and investors and b) although we are pretty good at running a business that skill is not necessarily transferrable into political subjects. Just because someone knows how to make a lot of money does not qualify them to make pronouncements on the big issues of the day.

Which also brings me on to the subject that what is good for business is not always good for society. A classic example would be the Equal Pay Act 1970 which required companies to increase women’s pay to being the same rate as men who were doing the same job. Nobody today would argue against this. However it was bad for business at the time as it resulted in an increased cost but clearly was a great thing for society as a whole.

Taking a view on Brexit is mainly about making a prediction about the future. As Yogi Berra, the baseball star for non-Americans, said “It’s tough to make predictions, especially about the future.”

It is even harder to make a prediction about the future when i) you do not know what the UK government wants and ii) you do do not know if whatever they may want is achievable.

However what we do know is that somewhere in the region of 70% of the UK economy is dependent to a lesser extent (tariffs) or a greater extent (being prevented completely from operating) on membership of the EU. If we assume for the sake of argument that Brexit will ultimately be economically a good thing we have the issue that we have to move from a situation where 70% of the UK economy depends on the EU to a situation where 0% of the UK economy depends on the EU.

So, if Brexit ultimately turns out to be a good thing then we still need to handle a migration of 70% of the economy away from depending on EU membership. It is very difficult to envisage a way this could happen without it being at least a short term negative, unless there was a very lengthy 5-10 year transition period which has been ruled out by both the EU and the UK government.

A way to think about this would be that the set of opportunities for business outside the EU may be greater than the set of opportunities for businesses inside the EU but the intersection between the two sets is small. Therefore many businesses may fail today, even if the future opportunity is better.

So in summary, Brexit looks like a short term negative with the long term being either negative or positive depending on what policy the government decides to adopt and whether or not that policy is achievable.

The only political point I will make is that for Move Fresh we would appreciate greater clarity on what the UK government’s position is so that we can plan the future.

Blue Apron files S1

Blue Apron

Blue Apron (www.blueapron.com) one of the US leading meal kit companies filed its S-1 on Friday giving us some insight into the burgeoning meal kit delivery market.

Although we like the sector, in general, we still feel that churn is the major enemy within this area. Working on around 30% gross margin is fine but 3-year cohort data shows $939 of LTV.  This offers around $280 dollars of contribution before marketing costs.

2016 marketing costs seemed to come in around $144 per customer making a post-marketing contribution (before overheads) of $136. This is spread over 3 years so the cohort is delivering $93 per annum, giving marketing payback at around 18 months.

Everyone in this sector has raised vast amounts of investment and with around $745m in revenue in 2016 Blue Apron is definitely a business of scale. Losses have narrowed but to keep the churn rates in check the business needs to keep investing heavily in marketing.

You can read the full S-1 here.

Online Grocery sales reach 7.3%

Kantar Worldpanel have released new research about the level of Grocery e-commerce adoption both in the UK and worldwide.

The UK hass grown from 6.7% to 7.3% in 12 months,  we alsso see evidence of both higher value basket sizes online compared with similiar offline purchasses.

We expect to see this continue. Interestingly, South Korea is at 19.7%, so plenty scope to grow within the UK.

Full article: https://www.kantarworldpanel.com/en/PR/UK-online-grocery-sales-reach-73-market-share-

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