00:00 Speaker A

We got to talk about then the big elephant in the room, the so-called Maha effect on this industry, right? The make America healthy again, RFK Jr. um effect here. President Trump just saying in a social media post in the last 24 hours that Coca-Cola has agreed to stop using high fructose corn syrup, will transition to cane sugar in its beverages. Um, Coke hasn't confirmed that it's doing that. Do you think this is where the industry is going? What effect is that going to have on margins, for example?

01:08 Speaker B

Um, well, it it all depends on the the tariff situation, right? One of the reasons why I think sugar was not being used in the US is because it it was a much higher cost of good than high fructose corn syrup. Uh now, interestingly, when you think about quote-unquote Mexican Coke, right? This is the the Coca-Cola that comes from Mexico into the US and the glass bottles, that tends to do very well and and tends to uh sell at a premium. So, you know, I think there's some positive implications if that indeed happens, but it really is going to come down to what what the cost of good situation will look like uh as it relates to buying sugar and importing sugar into the US market.

02:31 Speaker A

I mean, how big of a change would this be, you know, when you're talking about a reformulation for the, you know, the biggest products here. I mean, and presumably Pepsi would have to follow suit.

03:05 Speaker B

Yeah, I mean, I I think it's just going to take a little bit of time to kind of get all the supply chains and all the manufacturing we re-equip, but remember, they already make the product. So it's not like they have to reformulate. They already have the formulation. Uh they just have to produce it at scale in the US market.

03:45 Speaker A

Um, would they have the capacity to switch over American uh manuf because as you mentioned, Mexican Coke, it's in the name. It's Me they important from Mexico. Um, you know, presumably they would still have to import the sugar, right? To your point about the corn is here already. Um, so, you know, what is that how big of a supply chain changeover would are we talking about?

04:47 Speaker B

Uh I don't think it's it's going to be that abrupt. Uh I think it is very manageable uh for for them and their and their bottlers, uh which also would be part of that process. Um so I I don't think that's really a big issue. Now, when it comes to artificial ingredients and things like that, obviously the entire food and beverage landscape are making adjustments. Um and and that's that's a good thing, right? The reality is no one ever wanted to be first because you don't want some kind of optical disadvantage using a natural dye versus uh an artificial dye for example. But if everyone has to do it, it harmonizes the playing field and brings ubiquity and then I don't really think we'll see much impact as a result.