Raphael Stevens

Kenvue CEO Thibaut Mongon told CNBC on Thursday that consumers are still spending on the company’s branded health care products like Tylenol and Neutrogena, even as they pull back on name-brand products elsewhere.
Consumers have cut back spending on discretionary items at retail stores and traded down on some essential items by changing their usual purchase size or switching brands for lower prices. 
Like Kenvue, some beauty and beverage companies may not see the same kind of trade downs as other consumer staple segments during periods of economic uncertainty, one analyst told CNBC.

Thibaut Mongon, CEO of Kenvue Inc. a Johnson & Johnson’s consumer-health business, speaks during an interview to celebrate its IPO at the New York Stock Exchange (NYSE), May 4, 2023.
Brendan Mcdermid | Reuters

Most consumers have pulled back on spending as inflation squeezes their wallets, but they have not stopped paying up for brand-name health and personal care products, Kenvue CEO Thibaut Mongon said.
Mongon told CNBC on Thursday that consumers are still willing to spend on the company’s branded products – even as they reduce discretionary spending at retail stores and trade down on some essential items by changing their usual purchase size or switching brands for lower prices. 

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The Johnson & Johnson consumer spinoff Kenvue beat second-quarter revenue and adjusted earnings estimates on Thursday, fueled by resilient demand for the company’s wealth of widely known brands such as Band-Aid, Tylenol, Listerine, Neutrogena and Aveeno.
Still, the company’s stock price fell after J&J announced that it would launch an exchange offer to reduce its stake in Kenvue far earlier than expected.
Kenvue also noted that “private label” penetration in the consumer health product market was stable for the quarter. Private label refers to products made and sold under a specific retailer’s name that are sold at a lower price and aim to compete with branded products like Kenvue’s. 
Those spending trends could bode well not only for Kenvue, but also for other companies in the consumer health, beauty and beverage spaces that may not see consumers trade down to cheaper products as often despite stubbornly high prices.
“Now, we live in a volatile environment with consistent consumer uncertainty and continued inflationary pressures,” Mongon told CNBC. “But I think people are very focused on their health and well-being right now.” 

“They want to make sure they do what it takes to improve their health,” he said. “They are looking for trusted, science-backed and efficacious solutions to take better care of their health, and that’s what we and our brands do. That’s what we’ve been doing for a long time.”
Kenvue expects to see the strong demand continue in the coming quarters. The company forecasts 2023 sales will increase between 4.5% and 5.5% from last year. 
RBC Capital analyst Nik Modi expressed confidence in Kenvue’s ability to “maintain its momentum,” highlighting consumer trust in the company’s brands and health and personal care products overall.
He noted that trade-down pressure has increased for certain companies, based on market share changes over the last few months. Meanwhile, Kenvue has gained market share, and could potentially continue to do so despite the broader environment, he noted.
“If we were going to see trade down with them, we would have started to see it already,” Modi said.

Who else could benefit 

Like Kenvue, some beauty and beverage companies may not see the same kind of trade downs as some consumer staple segments are during the current period of macroeconomic uncertainty, according to Modi. 
He said beauty products like makeup are increasingly seen as “an affordable luxury” even as inflation shrinks consumers’ budgets.
“They don’t want to feel crappy about their situation and buy cheaper makeup,” Modi said. 
Companies like Ulta, which sells makeup, skin and hair care and other beauty products, have benefitted from the resilience of the beauty category.
Earlier this year, Ulta said its 2022 revenue exceeded $10 billion, while annual net income topped $1 billion — both records for the company. Ulta also reported first-quarter earnings that topped expectations in May, largely driven by demand for its beauty products.
Oddity Tech, a beauty and wellness company that uses AI to develop cosmetics, also appeared to benefit from the strength of the beauty category when it debuted on the public market on Wednesday. The direct-to-consumer platform’s stock popped 35%.
Modi said beverage companies are also well-positioned, noting that big brand names like Coca-Cola aren’t very exposed to private label penetration.
Coca-Cola’s first-quarter earnings beat expectations on high demand for its drinks. But price hikes on its products, which were implemented to mitigate the impact of inflation, also helped to fuel the results.

Consumer trust

Mongon said consumers turn to brands and products that they “know and trust” during challenging economic times.
He said that behavior – and an increased focus on health and well-being – is boosting demand for Kenvue’s products, which have been “in households for years, for decades, sometimes for generations.”
Modi agreed, adding that the Covid-19 pandemic significantly elevated consumer attachment to brands, especially those that helped people take care of their health. 
Demand for Tylenol, for example, soared and outpaced other pain relievers during the outset of the pandemic as people scrambled to stock up on essential health products. 
“During the Covid time frame, you were looking to save your family or get your kids through a tough period of time with certain medicines and products, and I think that kind of emotional connection and engagement helped with brand stickiness,” Modi told CNBC. 
“Consumers tend to trust these brands during very traumatic moments in their lives, so I think that’s why we’re seeing brands like Kenvue’s remain so resilient despite the macro pressure,” he said. 
BNP Paribas Exane analyst Navann Ty added that the pandemic made consumers more empowered to “take their health into their own hands at home.” 
She said that shift is likely benefitting Kenvue and others in the consumer health space, and is an “additional differentiation from other consumer categories.”
Ty noted that Kenvue isn’t “fully immune” to trade downs and private-label competition. But she said product recommendations by healthcare professionals are providing “some protection.”
Third-party surveys on certain U.S. healthcare practitioners from 2020 to 2022 found that Tylenol was the top doctor-recommended adult pain medication nationwide, according to Kenvue’s IPO filing in April. 
Those surveys also found that Neutrogena was the U.S.’s leading over-the-counter sunscreen and acne brand, while Listerine was the country’s top dentist-recommended mouthwash.
Mongon noted during the company’s earnings call that those recommendations “ultimately foster lifelong loyalty to our brands, loyalty that is passed down from generation to generation.”  More

Pfizer said there seems to be no major damage to the drug manufacturing areas of its plant in Rocky Mount, North Carolina, after a tornado hit the facility two days earlier. 
The plant supplies nearly 8% of all sterile injectable medicines used in U.S. hospitals, including anesthesia, analgesia, therapeutics, anti-infectives and neuromuscular blockers.
The pharmaceutical company did not say whether it expected damage elsewhere in the facility to lead to new drug shortages or exacerbate any current ones – which has worried some health experts. 

In this aerial image, damage is seen to a Pfizer pharmaceutical factory after a tornado hit the facility two days earlier, on July 21, 2023 in Rocky Mount, North Carolina.
Sean Rayford | Getty Images

Pfizer on Friday said there does not appear to be major damage to the drug manufacturing areas of its plant in Rocky Mount, North Carolina, after a tornado hit the facility two days earlier. 
The plant supplies nearly 8% of all sterile injectable medicines used in U.S. hospitals, including anesthesia, analgesia, therapeutics, anti-infectives and neuromuscular blockers. Pfizer added that the facility manufactures about 25% of the company’s sterile injectables. 

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4 hours ago

An initial assessment found that the tornado primarily damaged a warehouse facility, which stored raw materials, packaging supplies and finished medicines waiting to receive quality assurance, according to Pfizer. 
The drugmaker did not say whether it expected that damage to lead to new drug shortages or exacerbate any current ones – a concern for some health experts. 
The damage comes as the U.S. is already facing an unprecedented shortage of medicine, ranging from ADHD pills to pain medicine to injectable cancer therapies. Those shortages are driven by manufacturing quality control issues and surges in demand, among other factors. 
The North Carolina plant is closed while Pfizer and both local and federal authorities further evaluate the damage.
The 3,200 Pfizer employees and contractors who worked at the plant were able to evacuate and reach storm shelters before the tornado hit, the company noted.

The drugmaker said it is working to move medicine products to nearby sites for storage and identify sources to replace damaged raw materials and supplies. 
Pfizer is also exploring alternative manufacturing locations in the U.S. and internationally through its own sites and partners. 
The company said it’s “committed to rapidly restoring full function to the site, which plays a critical role in the U.S. healthcare system.” It’s one of 10 Pfizer manufacturing sites in the country.
Pfizer also noted that it is working closely with Food and Drug Administration Commissioner Robert Califf, North Carolina Gov. Roy Cooper and other state, local and federal officials.
Califf said in a Twitter post Thursday that the FDA is “following the situation closely.”  More

Sanofi expects its infant RSV shot Beyfortus to launch before respiratory virus season this fall.
CDC advisors will meet in August to make recommendations on the shot.
Sanofi said it is working with the panel to include Beyfortus on the childhood immunization schedule and the Vaccines for Children Program.

A doctor is injecting a vaccine to a baby boy
Karl Tapales | Moment | Getty Images

Sanofi expects its infant RSV shot to roll out in the U.S. before respiratory virus season this fall, a company spokesperson said Friday.
The Food and Drug Administration on Monday approved Beyfortus, a monoclonal antibody that is administered as a single dose to infants before or during their first respiratory syncytial virus season.

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6 hours ago

The Sanofi spokesperson said the company does not expect any challenges with manufacturing or capacity to meet demand this RSV season. The French drugmaker jointly developed Beyfortus with AstraZeneca, which is based in England.
A panel of independent advisors to the Centers for Disease Control and Prevention will meet on Aug. 3 to make recommendations about how the shot should be administered.
Sanofi is working with the panel to place Beyfortus on the U.S. childhood immunization schedule, the company spokesperson said. The Affordable Care Act requires most private insurance to cover shots on this list with no out-of-pocket costs for families.
Beyfortus works similar to a vaccine, but the shot is regulated as a drug because it is a monoclonal antibody. This has created some uncertainty about whether Beyfortus will be included in the federal Vaccines for Children program, which provides shots for free to families who are struggling financially.
Sanofi hopes to see Beyfortus included in the program, the spokesperson said. The CDC advisors will vote on whether to include the shot in the program at their August meeting.

Vaccines stimulate the body’s immune system to produce antibodies that protect against viral infections, while Beyfortus injects these protective antibodies directly into the blood stream.
Beyfortus is the first shot approved in the U.S. that protects all infants against RSV, regardless of whether they are healthy or have a medical condition. Another shot called palivizumab is available but it is primarily for babies who are preterm or have heart or lung conditions.
Beyfortus was up to 75% effective at preventing lower respiratory tract infections that require medical attention in infants who got the injection compared to infants who did not receive the shot in a clinical trial.
RSV is the leading cause of hospitalization among in infants in the U.S., according to scientists. Nearly 100 infants die every year in the U.S. from the virus, according to a study last year.
RSV overwhelmed children’s hospitals last fall, leading to calls for the Biden administration to declare a public health emergency in response to the wave of infections.

CNBC Health & Science

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Florida Gov. Ron DeSantis told his government to probe whether Bud Light’s parent company breached its shareholders duties over its partnership with transgender celebrity Dylan Mulvaney.
Sales of Bud Light have plummeted in the wake of conservative uproar and a boycott over the Mulvaney partnership.

Republican presidential candidate, Florida Governor Ron DeSantis, delivers remarks at the annual Christians United for Israel Summit (CUFI), at the Crystal Gateway Marriott in Arlington, Virginia, July 17, 2023.
Kevin Wurm | Reuters

Florida Gov. Ron DeSantis has told his government to investigate whether Bud Light’s parent company breached its duties to shareholders as a conservative backlash continues to rage over the beer brand’s deal with transgender social media influencer Dylan Mulvaney.
DeSantis, who is running for the Republican presidential nomination, instructed Lamar Taylor, the interim executive director of the State Board of Administration, to immediately launch a review into “how AB InBev’s conduct has impacted and continues to impact the value of SBA’s AB InBev holdings.”

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“It appears to me that AB InBev may have breached legal duties owed to its shareholders, and that a shareholder action may be both appropriate and necessary,” DeSantis wrote in a letter tweeted Friday.
“All options are on the table,” he added.
Shares of AB InBev are down more than 2% this year, while the broader market is up.
Sales of Bud Light have plummeted in the wake of conservative uproar and a boycott over the Mulvaney partnership. Last month, the beer lost its top spot in the U.S. beer market to Constellation Brands’ Modelo Especial, which holds 8.7% of overall beer sales, while Bud Light holds 7%, according to data shared by consulting firm Bump Willams.
The firm also found Bud Light sales are down by about 25% from last year. Amid the boycott, shares for the company fell from $66 a share to $58. DeSantis said Florida had $53 million worth of stock in AB InBev.

“Anheuser-Busch InBev takes our responsibility to our shareholders, employees, distributors and customers seriously,” a spokesperson for the company told CNBC in a statement Friday afternoon.
“We are focused on driving long-term, sustainable growth for them by optimizing our business and providing consumers products to enjoy for any occasion,” the spokesperson said.
DeSantis suggested that the probe could prompt a lawsuit on behalf of the shareholders of Florida’s pension funds. “At the end of the day, there’s got to be penalties when you put business aside to focus on your social agenda at the expense of hardworking people,” he said in a Fox News interview Thursday night.
The governor accused the company of neglecting its stakeholders and pensioners by associating with “radical social ideologies.”
DeSantis oversees the state board as a trustee along with the state’s Republican attorney general and chief financial officer. 
The move against Bud Light marks the latest instance of DeSantis jumping into a controversy over a hot-button social issue and flexing his political powers.
The governor has been locked in a bitter feud with Disney, one of his state’s top employers, for more than a year after the company criticized Florida’s controversial bill limiting classroom discussion of gender identity. Disney filed a federal lawsuit accusing DeSantis and his allies of political retaliation stemming from the clash over the classroom bill.
DeSantis, seen as former President Donald Trump’s top Republican primary rival, has kept up his attacks on the campaign trail against Disney and other entities he deems are pushing “woke” progressive political ideology.
“We must prudently manage the funds of Florida’s hardworking law enforcement officers, teachers, firefighters, and first responders in a manner that focuses on growing returns, not subsidizing an ideological agenda through woke virtue signaling,” he wrote in the letter to Taylor.
DeSantis is trailing Trump by double digits in most national polls of the GOP primary race. Less than two months after entering the race, the governor’s campaign is planning a reboot, NBC News reported Thursday.
Mulvaney has criticized Bud Light for not standing by her during the boycott. She said she was been harassed and intimidated as she became the face of the controversy.
“For months now I’ve been scared to leave my house, I’ve been ridiculed in public, I’ve been followed, and I have felt a loneliness that I wouldn’t wish on anyone,” Mulvaney said last month. More

Shares of Digital World Acquisition Corp. soared more than 50% on Friday after the company reached an $18 million dollar fraud settlement with the SEC.
DWAC is the special purpose acquisition company seeking to take former President Donald Trump’s social media platform, Truth Social, public.

The social media app will be developed by Trump Media and Technology Group (TMTG).
Rafael Henrique | LightRocket | Getty Images

Shares of Digital World Acquisition Corp. — the shell company seeking to take former President Donald Trump’s social media platform public — soared more than 50% on Friday following the company’s announcement that it had settled fraud charges with the Securities and Exchange Commission for $18 million.
This surge brought DWAC’s stock to $20.08, still a far cry from its highs above $95 in March of last year.

DWAC is a special purpose acquisition company, or SPAC, that announced plans to merge with Truth Social parent company Trump Media & Technology Group in October 2021. The merger has since faced numerous delays.
DWAC’s SEC settlement dictates that the company must pay an $18 million civil penalty fee if it merges with TMTG and takes the company public. But if the merger does not occur before the Jan. 1, 2025, deadline, and if DWAC returns investors’ money, the SEC has agreed to waive the penalty.
The SEC alleged improper merger discussions had taken place. It is illegal for SPACS to solicit specific merger targets ahead of an actual initial public offering filing.
The settlement also comes on the heels of U.S. government charging three Florida men for DWAC-related insider trading.
The company’s stock has previously seen surges in line with news about the former president, with shares rising, for instance, after Trump’s 2024 presidential bid announcement and indictment.

But the DWAC settlement is the latest in a growing list of legal problems that have ensnared Trump and his businesses since he left the White House in 2021.
He is currently facing state charges in New York that his company falsified business records. He was also indicted in federal court last month for allegedly mishandling classified documents. Trump has pleaded not guilty in both cases.
Authorities in Georgia are also investigating Trump, the frontrunner for the 2024 Republican nomination, over his attempts to overturn his loss in the 2020 presidential election.
DWAC and Trump’s team did not respond immediately to requests for comment. More

ESPN has held early talks about strategic partnerships with the NBA, NFL and MLB that could include the leagues taking an equity stake in the business, sources told CNBC.
Disney CEO Bob Iger talked about bringing a strategic partner into ESPN in an interview last week with CNBC.
Striking a deal directly with the leagues would be unprecedented but would give ESPN a safety net that it would receive premium content from the leagues.

LeBron James of the Los Angeles Lakers at a game against the LA Clippers at ESPN Wide World Of Sports Complex on July 30, 2020 in Lake Buena Vista, Florida.
Mike Ehrmann | Getty Images

As Disney considers a strategic partner for ESPN, Chief Executive Officer Bob Iger and ESPN head Jimmy Pitaro have held early talks about bringing professional sports leagues on as minority investors, including the National Football League, National Basketball Association and Major League Baseball, according to people familiar with the matter.
ESPN has held preliminary discussions with the NFL, NBA and MLB about a variety of new partnerships and investment structures, the people said. In a statement, an NBA spokesperson said, “We have a longstanding relationship with Disney and look forward to continuing the discussions around the future of our partnership.”

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Spokespeople for ESPN, the NFL and MLB declined to comment.
Talks with the NFL have occurred in conjunction with the league’s own desire for a company to take a stake in its media assets, including the NFL Network, NFL.com and RedZone, said the people, who asked not to be named because the talks have been private.
The NBA and Disney have broached many potential structures around a renewal of media rights, the people said. Disney and Warner Bros. Discovery have exclusive negotiating rights with the NBA until next year.
Iger said last week in an interview with CNBC’s David Faber that Disney is looking for a strategic partner for ESPN as it prepares to transition the sports network to streaming. He didn’t elaborate on what exactly that meant beyond saying a partner could bring additional value with distribution or content. He acknowledged selling a stake in the business was possible.
Disney owns 80% of ESPN. Hearst owns the other 20%.

“Our position in sports is very unique and we want to stay in that business,” Iger said to Faber. “We’re going to be open minded about looking for strategic partners that could either help us with distribution or content. I’m not going to get too detailed about it, but we’re bullish about sports as a media property.”
Theoretically, a jointly owned subscription streaming service among multiple leagues could eventually give consumers new packages of games and other innovative ways to take in content.
The move would be a logical one for Disney as it tries to move past the traditional cable subscriber model and underscores how badly the company wants to find a solution for the sports network as its linear subscribers decline. Still, ESPN ratings have climbed in recent years on major sporting events. There’s no better partner for sports content than the leagues, themselves.
Superficially, it may make less sense for the NBA, NFL and MLB which sign lucrative media rights deals with many media partners that fuel team revenue and player salaries with a range of media companies.
Professional sports leagues could face conflicts of interest if they take a minority stake in ESPN. Owning a stake in ESPN may irritate Disney’s competitors, such as Comcast’s NBCUniversal, Fox, Amazon, Paramount Global and Apple, who help make the leagues billions of dollars by participating in bidding wars for sports rights. Taking an ownership stake in ESPN could give leagues the incentive to boost the value of that entity rather than striking deals with competitors.
There would also be hurdles for Disney. ESPN also employs hundreds of journalists that cover the major sports leagues. Selling an ownership stake to the leagues could cloud the perception of objectivity for ESPN’s reporting apparatus.
Still, the leagues are already business partners with ESPN. It’s possible ESPN could put measures in place to ensure reporters can continue to cover the leagues while minimizing conflicts, but it adds another layer of complexity to any deal.

A streaming-first ESPN

ESPN is trying to forge a new path as a digital-first, streaming entity. Disney realizes ESPN won’t be able to make money like it previously has in a traditional TV model.
Selling a minority stake in ESPN to the leagues could mitigate future rights payments, allowing Disney to better compete with the big balance sheets of Apple, Google and Amazon. It would also guarantee ESPN a steady flow of premium content from the leagues.
Until last quarter, Disney’s bundle of linear TV networks still had revenue growth because affiliate fee increases to pay-TV providers — largely driven by ESPN — made up for the millions of Americans who cancel cable each year. That trend finally ended last quarter, according to people familiar with the matter. Accelerating cancellations have now overwhelmed fee increases, and linear TV revenue outside of advertising has begun to decline.
“A lot has been said about renting [sports right] versus owning,” Iger said last week in his CNBC interview. “If you can rent it and continue to be profitable from renting, which we have been and we believe we will continue to be, then there’s value in staying in it. We have great relationships with Major League Baseball, and the National Hockey League, and various college conferences, and of course the NFL and the NBA. It’s not just about the live sports coverage of those leagues, those teams, it’s also about all of the shoulder programming it throws off on ESPN and what you can do with it in a streaming world.”
ESPN would like to morph itself into a streaming hub for all live sports. Management would like to launch a feature allowing ESPN.com or the ESPN app to funnel users to games no matter where they stream, CNBC reported earlier this year.
While striking a deal with professional sports leagues wouldn’t be easy, Disney appears to be pushing the envelope on its thinking to prepare for a streaming-dominated world that includes its full portfolio of sports rights.
“If [a partner] comes to the table with value, whether it’s content value, distribution value, whether it’s capital, whether it just helps derisk the business — that wouldn’t be the primary driver — but if they come to the table with value that enables ESPN to make a transition to a direct-to-consumer offering, we’re going to be very open minded about that,” Iger said.
WATCH: Disney CEO Bob Iger talks to CNBC’s David Faber about ESPN and its future More

The New York couple charged with trying to launder $4.5 billion in bitcoin stolen in a 2016 hack of Bitfinex appear set to plead guilty in the case, a new federal court docket entry suggests.
Ilya Lichtenstein and Heather Rhiannon Morgan have been charged in a new document typically used by federal prosecutors when defendants have agreed to plead guilty.
Netflix last year commissioned a series about the couple.

The New York couple charged with trying to launder $4.5 billion in bitcoin stolen in a 2016 hack of Bitfinex appear set to plead guilty in the case.
The couple, Ilya Lichtenstein and Heather Rhiannon Morgan, have been newly charged in the case with a document known as an information, according to a new Washington, D.C., federal court docket entry Friday.

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An information is a type of charging document that federal prosecutors typically use when defendants have agreed to plead guilty.
Another docket entry shows that Lichtenstein and the aspiring rapper Morgan have been ordered to appear in court on Aug. 3 for separate arraignments and plea hearings on the information.
The nature of the charge or charges in the information was not made public. It is common for informations to have fewer charges than those originally lodged against defendants, or to have different ones.

Booking photos for Heather Morgan and Ilya Lichtenstein.
Courtesy: Alexandria Adult Detention Center.

Judge Colleen Kollar-Kotelly on Friday ordered prosecutors and defense lawyers to provide plea paperwork to her by Thursday, the docket shows.
That paperwork is to include “charged offense(s) and statutory provision; charge(s) in plea and statutory provision; elements of the offense; copy of the plea agreement; penalties; and [federal sentencing] guideline calculations.”

The couple was originally charged in a criminal complaint when they were arrested in February 2022, and had pleaded not guilty to the charges listed in that document – money laundering conspiracy and conspiracy to defraud the United States.
Morgan, known as “Razzlekhan,” is free on a $3 million bond. Lichtenstein, whose nickname is “Dutch,” has been held in jail since February 2022 without bond after a judge ruled that the Russian emigre was a flight risk.
The U.S. Attorney’s Office in Washington, which is prosecuting the couple, declined to comment. Their defense lawyers didn’t immediately respond to requests for comment from CNBC.
Prosecutors had said weeks after the couple’s arrests that they were in plea negotiations with them.
The couple’s case has been repeatedly continued since their arrests. Until Friday’s new docket entries, they had been scheduled to appear at a status hearing on Monday. That hearing was vacated as a result of the new charging document being filed.
Lichtenstein, 34, and the 32-year-old Morgan are accused of trying to launder the proceeds of 119,754 bitcoin that were stolen from Bitfinex’s platform in August 2016. The couple was not charged in the hack of the Hong Kong-based cryptocurrency exchange.
At the time of their arrests, the Department of Justice said officials had been able to seize more than 94,000 bitcoin involved in the hack, which at that time of the seizure was worth about $3.6 billion. That was the largest financial seizure in DOJ history.
The bitcoin stolen in the hack was worth just $70 million at the time of the theft, but soared in value in the following years.
“Over the last five years, approximately 25,000 of those stolen bitcoin were transferred out of Lichtenstein’s wallet via a complicated money laundering process that ended with some of the stolen funds being deposited into financial accounts controlled by Lichtenstein and Morgan,” the DOJ said at the time of their arrests.
Netflix in early 2022 announced it had commissioned a series on the couple. More