🍳 Zomato’s entertainment bet, why HUL doesn’t make biscuits and more…

Hey folks!

Imagine that you’re trying to get some work done, but your phone beeps continuously.

You pick it up and what do you see?

Well, it’s just another string of notifications some random app is sending to get your attention.

At least that’s what Zepto has been doing. And comedian Vir Das wants them to stop!

And we bet it’s not just Vir Das, but even people like you and me who are tired of these push notifications. In fact, a 2019 survey suggests that the number one reason people delete an app is because they receive too many annoying notifications. So push notifications are actually a user’s least preferred way to be contacted. Guess who’s the winner instead?

Email!

Yup, despite far fewer Gen Z users preferring email notifications as compared to Gen X users, email marketing is still considered more popular than ever.

So maybe it’s time for Zepto’s Gen Z founders to find other creative ways to reach their old school yet tech savvy audience?

Meanwhile, guess who sends you just one email and one notification a day? Hint: You’re scrolling it right now. 😉

Here’s a soundtrack to put you in the mood 🎵

KHU by Dream Note

You can thank our reader Abhinay Pansari again for this lovely rec.

What caught our eye this week 👀

Zomato’s entertainment bet

Zomato is eyeing Paytm’s movies and events ticketing business. And it’s willing to pay ₹1,500 crores for it. But why?

Well, first things first. India’s food delivery market can get quickly saturated despite currently being run by the Swiggy-Zomato duopoly. So if Zomato has to keep growing it must diversify its business.

In 2018, for example, Zomato launched Zomaland, a food and entertainment carnival across various cities. It wanted to create a new experience for its users and expand its ‘going out’ business.

And this going out business now accounts for about 2% of its revenues. Yeah, we know it sounds measly, but its year over year (YoY) growth is impressive. For context, while food delivery which brings in close to 60% of Zomato’s revenues grew by nearly 30% YoY in FY24, its going out business grew by over a whopping 200%!

So focusing on this ripe opportunity simply makes sense.

Coincidentally Paytm also wants to spin off its non core businesses to focus on its financial services and payments business. Courtesy: the RBI’s recent crackdown on Paytm Payments Bank. And Zomato couldn’t be happier about taking over something it would have to otherwise build from scratch.

This new acquisition could also help expand its user base and cross promote its offerings. For instance, you could be booking a movie ticket on Zomato and the app could nudge you to book a table at a nearby restaurant soon after.

The only worry?

Zomato will have to compete with BookMyShow which commands at least a 60% market share in the online ticketing segment and live entertainment space in India. But considering that it has tasted success in the past with its Blinkit (formerly Grofers) acquisition despite Swiggy Instamart and Zepto being early movers, this might not seem too hard, no?

After all, Zomato knows that the more it lets users plan different aspects of their ‘going out’ itinerary, the less likely they are to switch to another app.

Maybe this is actually how you build a superapp without telling people you’re building one?

Infographic 📊

This didn’t make the cut ✂️

Why HUL doesn’t make biscuits

On Thursday, we told you how HUL’s (Hindustan Unilever’s) new palm oil reduction plan for its soaps is worrying the Asian Palm Oil Alliance.

And while we were reading about the FMCG (Fast Moving Consumer Goods) giant, here’s something we got curious about. HUL is known for a wide variety of brands. There’s a brand for almost everything ― coffee, tea, soap, shampoo, detergent, beverages, cosmetics, you name it. But why doesn’t HUL then make stuff like snacks and biscuits?

Well, here’s what we found out. Nearly two decades ago HUL, then HLL (Hindustan Lever Limited) acquired Modern Foods, then Asia’s largest bread manufacturer and the first government owned company to be privatised. The idea was to make a soft entry into the snack market through Modern and Kissan brands.

But apparently, this foray didn’t prove very successful for two reasons.

One, HUL used soya as an ingredient in its biscuits which despite being healthy hadn’t pleased the Indian taste palette back then.

And two, the snack market, especially biscuits, was already dominated by giants like Britannia and Parle. Profit margins were wafer thin too because the incumbents were selling to price sensitive consumers who’d frown even at a small price rise of a pack of glucose biscuits.

That may have got HUL to abruptly exit the snack market. In 2015, it officially stopped pursuing the snacks business by selling its bread and bakery business to Nimman Foods, a company backed by private equity fund Everstone Group.

Do you think HUL could have made inroads if it had waited longer? Or did it make the right decision by letting go of a business that didn’t contribute enough to its top line? Let us know.

This Day in Financial History 📜

20th of June, 1975 ― Steven Spielberg’s Jaws sparks off Hollywood’s ‘summer blockbuster’ trend

If you’ve watched this classic horror film, you’ll associate it with a terrifying giant shark that devoured any living creature that came its way. And for those who haven’t, the story revolves around a great white shark that preys upon a small Long Island resort town and three men who attempt to capture the killer beast.

And this movie was the first to create history by earning over a whopping $100 million with a summer release back then (or $580 million adjusted for inflation today).

That’s because summers were usually meant for getting tanned at a beach resort or going out swimming, rather than sitting indoors and watching a movie. So releasing a new film during this season was akin to a film failing financially.

But here’s how Jaws changed that.

In 1974, Peter Benchley completed a novel with the same title as the movie, a book which was commissioned by its publishers a few years ago. The film’s producers bought the rights to the novel even before the book was released, to make it into a motion picture.

But since they weren’t sure of how the audience would receive the story, they decided to mail hard copies of the book to different people in and around the industry. This preliminary exercise hinted that the storyline may not have been something that the public would be excited about.

So the filmmakers decided to focus on just the main characters ― the shark and the three men to go ahead while converting into a movie. Steven Spielberg was chosen to direct the film. And promotions for the film began through book distributions even when the film was just being made.

The one thing that remained constant in these promotions was the image of the jaws of a huge shark coming towards a woman swimming in the ocean.

Soon there were billboards and even editorial pages of newspapers carrying Jaws advertisements. And while you think that this is quite a normal promotional strategy, it was something that no movie had ever done before. The film even came up with a Jaws-themed ice cream! Days prior to the release, the filmmakers bought 30-second advertisement slots on every primetime show on television. And all of this cost a whopping $2.5 million.

And guess what? Jaws grossed $7 million in the opening weekend and sold 25 million tickets in the first month, successfully running in over 460 North American theatres.

You could attribute a part of that success to the growing number of multiplex cinemas in America at the time. Thanks to an 8x growth in the number of malls between 1965 and 1970.

But ultimately, it was Jaws and its publicity blitzkrieg that encouraged Hollywood to bet on the summer release trend and that’s also how summer blockbusters came to be.

Readers Recommend 🗒️

This week our reader Ishan Saraf recommends reading How Proust Can Change Your Life by Alain de Botton.

It’s a book or rather a rare self help manual on how the life, work, and observations of the French novelist Marcel Proust, can influence the way you think and act in your life.

Thanks for the rec Ishan!

Finshots Weekly Quiz 🧩

It’s time to announce the winner of our previous weekly quiz. And the winner is…🥁

Roshan Singh! Congratulations. Keep an eye on your inbox and we’ll get in touch with you soon to send over your Finshots merch. And for the rest of you, we’ve moved the quiz to our weekly wrapup. So make sure you answer all the questions correctly and tune in here next week to check if you got lucky.

That’s it from us this week. We’ll see you next Sunday.

Until then, don’t forget to tell us what you thought of today’s newsletter. And send us your book, music, business movies, documentaries or podcast recommendations. We’ll feature them in the newsletter! Just hit reply to this email (or if you’re reading this on the web, drop us a message: morning@finshots.in).

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