From Prada to nada

March 19, 2019

Today, Prada loses its stash, Blue Jays clean up the trash, and OneWeb’s taking investor cash, but first…
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Global markets are choked with Chinese caviar, and it’s sink or swim for US producers 

The global market for fancy fish balls is just swimming with Chinese caviar: China’s exports quintupled between 2012 and 2017, and today more than 60% of the salty little fish eggs that top the world’s tiny, trust-funded toasts come from China.

Still, skyrocketing supplies of slimy sturgeon-spheres signify a slippery situation for some seasoned, salt-of-the-sea sellers. According to The Wall Street Journal, sales at many US caviar companies have slipped 50%, causing considerable caviar concern. 

The upstream journey of Chinese fish eggs

Since overfishing almost unnaturally-selected sturgeon to extinction in the ’90s, most caviar has been cultivated in fish farms to save the species.

Fish farming has made a particularly large splash in China: A single Chinese company called Kaluga Queen produces ⅓ of the world’s caviar. The company is increasing output by 20-30% annually and plans to continue growing at that pace for at least 5 more years. 

Today, China’s rarefied roe is among the cheapest and the highest quality in the world, giving the Chinese caviar cartel considerable control.

Caviar competition is causing a roe

China’s newfound dominance has been a source of fish-flavored frustration for American caviar-mongers.

From 2014 to 2018, the amount of caviar imported to the US increased from $7.6m to $17.8m. About half of the 2018 imports came from China, forcing many American producers to drop their caviar prices by 25% to compete with low Chinese prices.

Even a 10% tariff levied on Chinese imports in September wasn’t enough to keep US caviar competitive.

The forecast for fish eggs

Adult sturgeons take 5 years to mature and start producing retail-worthy roe, making fishball-forecasting a slippery business.

But for American caviar companies, there is a real sense of sturgeon-cy: The price of imported caviar dropped 13% in the US last year (and 50% since 2012), and if American companies don’t differentiate themselves from China’s caviar czar, they could sink.

The fanciest caviar-makers have begun adding “Californian grown” labels to continue selling their products at premium prices — hoping, you might say, to brand their Californian fish eggs as the caviar of caviar.

Ruh roe
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Big league bump: The MLB’s Toronto Blue Jays score a big raise for their minor leaguers

It’s been well-documented how poorly pro-hopefuls in minor league ball are treated on their road to the show. Why? Because they’re literally paid in Cracker Jacks… OK, figuratively.

According to NPR, most minor leaguers make an estimated $7.5k a year, compared to the average Major Leaguer’s salary of more than $4m.

Now, according to The Athletic, Major League Baseball’s Toronto Blue Jays plan to increase the salaries of their minor league players by roughly 50%.

Following the basepath of innovation

Thanks to innovations from companies like Big League Advance (BLA), the tide is starting to change, inspiring some of the league’s heavy hitters (like the Jays) to step up to the plate.

In the same way Lambda School offers tuition-free data science and coding courses for a slice of future paychecks, BLA offers minor leaguers lump-sum payments in exchange for a negotiated share of any future MLB salary.

So far, 123 prospects have signed contracts with the company, with plans to sign hundreds more, spelling out just how desperate players are for financial stability.

Some ‘inside baseball’

By bringing this to the forefront of the MLB, the Toronto Blue Jays are positioning themselves as an organization ready to embrace change.

Now, away from influential outside entities like BLA, the Jays will be able to help set the tone for the rest of the ball clubs in the league.

“It puts us right now up at the top of the scale in the industry,” Jays VP of baseball operations Ben Cherington said. “My hope is it doesn’t stay that way. My hope is other teams eventually do the same.

» Batter up

OneWeb raises another $1.25B and takes one giant leap toward space

Investor confidence in satellite startup OneWeb is out-of-this-world after the company successfully launched 6 satellites 3 weeks ago: OneWeb raised $1.25B to continue constructing its massive network of internet satellites.

The race to build extraterrestrial internet continues

OneWeb, which has now raised more than $3.4B in total funding, is in a small-scale space race with SpaceX to build a constellation of low-orbiting satellites to provide increased global internet connectivity. 

Both companies plan to build massive networks of small satellites (OneWeb has plans for 650 with a few hundred to follow; SpaceX is shooting for more than 4k).

SpaceX has now successfully tested 2 satellites, and OneWeb has deployed 6. But OneWeb appears to be closer to the next phase: manufacturing and deploying satellites en masse.

A distant objective

While SpaceX has dabbled in all kinds of ventures ranging from Mars missions to military operations, OneWeb has focused instead on streamlining logistics for its satellite internet program.

OneWeb, in partnership with Airbus, has already built its own custom manufacturing facility. 

According to OneWeb, after launching about 30 satellites per monthly launch, the company will be on track to demo its first internet connections next year and offer limited commercial service by 2021.

» Space is spendy…

A slump in demand from Chinese luxury buyers has led to an $864m slump for Prada

According to Bloomberg, Prada shares tumbled to their lowest since 2016, as stifled Chinese spending played a huge role in the surprising nosedive of the Italian fashion giant’s yearly profit.

The famed luxury group attributed its fall in Asia to Chinese tourists spending less because of the current weakness in the yuan, as Prada’s disappointing earnings call knocked $864m off the company’s market value. 

The power of Chinese consumers

The fashion industry has leaned heavily on Chinese consumers in the past, with China buying up 30% of the $1T in global luxury spending.

But, in the midst of a trade war with the US, not to mention the country’s slowest economic expansion in almost 3 decades, Chinese consumers have turned more conservative when it comes to luxury shop-athons.

While cars and iPhones have taken bigger hits thus far, Prada’s results have ignited worry that China’s newly wealthy middle class is curbing splurge purchases.

Pra-duhhh a $42k handbag is too expensive

Prada has seen its earnings tumble for 4 straight years, falling more than 50% since its 2014 peak as the group raised handbag prices and took too long to come up with a product to follow up on its best-selling Galleria line.

That said, its revenue has resumed growth after Prada released new handbags like the more affordable $3k Sidonie shoulder bag — but the marketing costs to reignite interest have been steep.

» Yo, Pra, live in the now

Exactly how much business value is there in social media? 

It’s not 1998 anymore — we all know it’s good for your company to be on social. But there’s a big difference between just having a social presence, and getting the most out of it

Don’t take our word for it. Check out the numbers: 

  • There are over 3 billion active social users, more than the population of China and India combined
  • 75% of users bought something on a social channel in the past month
  • Customers who receive good customer service through social media spend 21% more
  • 72% of people who follow brands on Twitter are more likely to buy from them. 
  • Meanwhile, companies ignore 70% of questions asked on Facebook

The takeaway? An engaged customer is a better customer. 

Which is exactly why you need to be publishing, monitoring, and interacting on social — and Hootsuite, the world’s most popular social media management platform, is the perfect tool to help you do just that. 

Right now, they’re hooking Hustle readers up with a free demo of their platform.

Enough talk, let’s demo →
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