Happy Independence Day!
Craft brewing, EPIC takedown, and AMZN pharmacy.
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Stock summary: 📊
US:
S&P 500 - down 0.017%
Nasdaq - down 0.12%
India:
Nifty 50 - down 1.08%
Sensex - down 1.13%
Filter Coffee wishes all our readers a very Happy Independence Day.
Craft beer revolution going mainstream 🍺
The craft beer revolution is still relatively young in India but the brand that brought it mainstream is making waves with global investors. Bira Beverages has apparently drawn the attention of international brewers as well as private investors for a stake of upto 20% in the company.
Estimates put Bira’s valuation at just under $250 million. Among majority stakeholders is Sequoia Capital with roughly 45% in its pocket while CEO Ankur Jain and his family own about 30%. Last year the company made about $25 million in revenue, growing 15%. But with losses at $27 million for that year, they’re still quite in the early stages of building operations out.
The CEO shared that they’re looking for investors that have little to no competition in India so far, thereby making a case for strategic expansion and not a sell off. Early reports suggest that Japanese beer maker Kirin Holdings is the top contender.
Bira which launched just 5 years ago in 2015 has already carved out an attractive niche for itself, holding about 5-10% of the metro city market share.
Cash could help resolve a ton of its problems including more capacity, wider distribution, and of course branding. Also, the company has bigger goals in sight—eventually an IPO for which this investment will be critical. Read more.
Bottomline: India’s beer market is a $7 billion endeavour each year. Bira is just getting started no doubt, but an investment could truly stimulate the industry offering the market a much needed stimulus post COVID.
EPIC takedown 👿
So last week we highlighted how Apple is locking horns with Facebook and Microsoft over its app store policies.
Last night Epic Games, the creator of Fortnite, had a similar bout with Apple as well as Google which got its game banned from both the app stores. Apparently, to avoid paying Apple 30% commissions on in-game purchases, Epic was asking people to buy coins on its website to use inside the game later, and was offering a 20% discount on purchases made directly on their webpage and not through the IOS app.
This infuriated Apple and the smartphone company promptly took Fornite down from its App Store. Fortnite retaliated and filed a suit in US courts. Soon thereafter Google took down the game from its own Play Store and Epic sued them as well.
Epic’s actions have put the company in an elite club now that includes Spotify, Netflix, Facebook and Microsoft and thousands of other independent developers who are challenging Apple’s App Store policies. Will the government look into the matter? Most likely yes, and Apple will have to do some tough answering.
But what complicates matters further is that Epic is 45% owned by Chinese internet company Tencent. And the Donald has little love for the Chinese right now. Read more.
India returns to trade deficit 🤑
India’s trade deficit for July came at $4.8 billion, thanks to investors running to buy gold amidst economic uncertainty, which shot up gold prices and the value of our imports.
In layman terms, each month we send some goods out of the country, and we buy some goods from other countries. And usually we want to sell more than we buy, so that we get the extra money.
June 2020 was actually the first month in 18 years when India had managed to post a trade surplus of about $800 million, as the pandemic killed domestic consumption so imports were considerably low, while other countries had continued to buy from us.
Anyway, for July, strength in exports came from growth in engineering goods (+8.5%) pharmaceuticals (+19.5%), iron ore (+39.6%), rice (+48%) and cotton yarn (+7.4%) while petroleum products (-51.5%), gems and jewellery (-49.6%), leather products (-27%), marine products (-20%), readymade garments (-22.1%) were the biggest decliners. Read more.
AMZN follows Reliance into online pharma 💊
Following its success in international markets, and to counter local competitor RIL, Amazon is launching an online prescription medicine delivery service ‘Amazon Pharmacy’, starting with Bengaluru.
The service will offer home medical supplies & equipment, healthcare packages, prescription medication, and healthcare devices, among other things and will be made available in other cities in a phased manner. Management believes the pandemic has prompted customers to move to online consultation, treatment, medical tests and it can use its scale to add a lot of value while building a sizable business.
Per independent data sources, startups in this space such as Practo, NetMeds, 1mg, PharmEasy, Medlife are all witnessing a demand boom. However, many are actively exploring sales or strategic investment partnerships to increase their scale. Amazon might even be considering those.
Bottomline: India’s digital health market is expected to grow 3x to about $4.5 billion this year alone. Covid had likely marked a permanent shift in the space, and you can expect investing activity to be hot here. Read more.
Streamlining taxation 👏
In a bid to revamp the tax paying process, Prime Minister Narendra Modi launched a programme meant to encourage more citizens to volunteer to pay their dues.
Under the new process, any tax officer will randomly be allotted assessments, reducing familiarity with the taxpayer. At the same time the process of appeals will be streamlined using tech, making it easy to file complaints and request refunds. The idea being that a move like this could encourage people to pay their fair share while reducing the scope for corruption and over reach by officials which generally act as deterrents.
Exceptions to the faceless appeal include serious frauds, major tax evasions, Black Money Act and Benami property.
The PM appealed to the citizens to pay their fair share and contribute to nation-building. So far, in a nation of about 1.3 billion people, only 15 million people pay their taxes. Read more.
Tweet of the day -
What else are we snackin’ 🍿
💃 Like TikTok - a smaller rival to TikTok, Likee, has been making waves clinching almost 150 million monthly active users as of the second quarter. Taking a unique approach, the platform allows creators to receive virtual gifts from fans and has been quite successful with the strategy.
📱 Domestic investment - Micromax will invest Rs 500 crore towards manufacturing and Research and development (R&D) as it plots a comeback in India's smartphone market, backed by the government's incentive scheme and weakened position of Chinese rivals. The company had decided to exit the smartphone space two years ago, caving in to pricing pressures from Chinese companies.
✖️ No China in India’s 5G - China’s Huawei and ZTE are set to be formally shut out from India’s 5G trials that will begin soon. Early reports suggest that India will apply investment rules amended on July 23 that cite national security concerns to restrict domestic buyers to buy networking gear from Chinese players.
💉 COVID vaccine IPO - CureVac raised $213 million in its initial public offering, setting the stage for the first stock market debut of a company developing a promising vaccine to combat the coronavirus. The German firm notched a $2.8 billion valuation on its first trading day.
💰 WeWork thrown a lifeline - the coworking company has secured $1.1 billion in debt financing from SoftBank, even as memberships continue to fall. Up till the second quarter, the company’s revenue run rate was at just $882 million worldwide.
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