Commerce Riff with Sri & PVSB - August 11, 2026

PVSB 0:01

It's August 11th, 2026, and this is the Commerce Rift brought to you by the CPG guys. Ten minutes of the news stories that matter in commerce this week. I'm your co-host, PBSB, and I'm joined as always by Papa Raj, the father of Pop Stars, co-founder of Think Blue Consulting. Shree, how are you doing this week?

SPEAKER_00 0:20

I'm doing great. I'm excited to actually record this from the Raj Mall. How about that? So you're visiting SoCal. Dodgers are back to the winning ways, two in a row. And uh you've taken your daughter for a VIP tour of Universal Studios. Can it get any better? And I'm seeing you again on Friday, all the way in San Diego.

PVSB 0:37

Absolutely, Shree. Looking forward to it. All right. Tarafree funds are signaling windfalls for CPG. Is Amazon ready for the grocery battle? Kraft Heinz is investing in marketing in Albertson's is the latest with an AI plugin. Let's get started. Tarafree Funds. ELF Beauty's profits nearly doubled during its fiscal first quarter thanks to a windfall of cash it received in tariffree funds from the federal government, the company said Wednesday. In the three months ended June 30th, ELF received about $50 million in tariffree funds, plus some interest payments related to the duties that were struck down by the Supreme Court, leading its net income to grow by about 100% and its gross margin to grow by 14 percentage points compared to the prior year. Quote, our plan is to fully reinvest the money in both pricing to have a superior value proposition, as well as increased marketing across our entire portfolio of brands, unquote. CEO Tarang told CNBC in an interview, we feel we never should have had the tariffs to begin with, so let's invest in our brands to drive the strength that we see. While the company is still waiting for about $8 million in additional refunds, the major impact to profitability seen during the quarter will be a one-time blip that won't continue moving forward. It is now expecting adjusted earnings per share to be between $3.50 and $3.55, beating expectations of $3.33, and up from a prior range between $3.27 to $3.32. Though the tariff refunds was the primary driver of ELF's outsized profitability during the quarter, Amon said the company's gross margin still would have been up by about 3.5 percentage points without it, primarily due to price increases it implemented last year and lower tariffs. The benefit of those higher prices will start to wane in the current quarter as ELF begins to lap some of those price increases and walk them back. Last quarter, Amon said the brand planned to reverse some of the tariff-fueled price increases it implemented last summer so it could stimulate demand from cash-strapped consumers, telling CNBC shoppers were suffering from high gas prices and other concerns. Over the past few months, the company conducted a pricing study across 80% of its assortment when it walked back prices on average by $1 to see if there would be an impact on demand. However, it found the lower prices on the vast majority of the assortment, around 90%, didn't have an impact on unit sales, and only about 10% of the assortment could benefit from a price reduction to stimulate volume. Use the actual consumer behavior of consumers voting with their wallet, of which items do we see a massive improvement in unit volume, which one didn't really see that much of a difference, which told us that those items were appropriately priced to begin with, AminSet. So we took advantage of the tariff free fund to be able to do that broad testing, and we feel really great about the data that we got back in terms of which items we could identify that could really drive unit momentum. For example, volume growth for ELF's best-selling power grip primer didn't really budge when the price was reduced. But the company did see a change when it reduced its cream glide lip liner from $3 to $2. Sharia, over to you. All right.

SPEAKER_00 3:56

For more than two decades, the grocery and guru has maintained that retailers who would ultimately dominate food retail would not necessarily have the most stores, but they would have the most relevant customer experience. That winning formula has always been remarkably simple. Price plus quality plus service plus convenience plus portability equal to customer value. Today, Amazon is demonstrating that price value-service equilibrium is no longer theory. It's becoming one of the company's greatest competitive advantages. Amazon's second quarter performance demonstrates that consumers increasingly want retailers to solve today's meal occasion than simply sell tomorrow's grocery. CEO Andrew Jassy's comments reveal a company rapidly evolving from an online marketplace into one of America's most formidable fresh food retailers of all things. Here's what the numbers that were announced look like. Net sales climbed 20% year over year to 200.6 billion. North American sales increased 16%. Monthly active perishables customers surged more than 50% since the beginning of the year. Same-day grocery customers purchase more than three times as many items per order. Grocy now represents six of Amazon's top 20 selling categories. Amazon expanded 30-minute Amazon now services into 80 additional US communities. Consumers are buying meals, not grocery departments, is what we're learning. The grocery industry historically has been organized around departments: produce, deli, bakery, frozen meat. How many of us have lived by that rule forever? Consumers don't shop that way anymore. Today's shopper has one simple question: what's for dinner tonight? And that's where Amazon is gaining momentum. The Gorseran Guru has maintained a long, long time, all the way back, that the future belongs to those that merchandise meal solutions rather than groceries organized by IELTS, fresh prepared meals, ready-to-eat foods, heat-and-eat entrees, fresh bakery, produce, beverages, healthy snacks, desserts. Consumers increasingly assemble meals the same way they build playlists, mixing, matching, and personalizing every purchase to their liking. No one understands this better than Amazon, and especially than traditional supermarket operators. Therefore, I think we're gonna say Amazon has become customer-centric, it's store-centric. Traditional stores are still measuring success by departments, square footage, weekly ads, center store sales. And how many merchants over the course of my career have asked me those questions? Amazon measures success differently. Consumer location, shopping frequency, delivery speed, basket expansion, repeat purchases, personalization. That customer first mindset increasingly separates Amazon from legacy competitors. Amazon is here, folks, in the fresh food category. Peter, I hear Kraft Heinz is doing something incredible with marketing.

PVSB 6:37

Yes, Sheree. Kraft Heinz is heaping another hundred million dollars on its turnaround plan, with most of that investment concentrated on marketing. The company said and prepared remarks for its Q2 earnings. Marketing now will represent at least 6% of net sales in 2026, up half a percentage point. That move follows the package foods giant start stating it over-delivered on expectations in the first half when it began deploying $600 million of incremental spend into areas including product superiority, pricing, marketing, sales, and research and development. Quote, I see it working virtually everywhere we're putting it. And so condiments is probably the first area where we've seen really market improvement craft, Heinz CEO Steve Callahan said in response to an analyst question about the effectiveness of the pumped-up investment on an earnings call. Quote, quote, Heinz is back to growth as it should be, strong growth, strong consumption growth, which is terrific. So across the board in the U.S., we're seeing better performance. So looking at it by the numbers, $100 million, additional incremental spend Kraft Heinz is investing in its turnaround, much will be concentrated on marketing, 6%. That is the percentage of Kraft's net sales that is expected to be commanded by marketing in 2026. And 1.4%, that is the decline in net sales for Kraft Heinz in Q2 2026. The marketing of Philadelphia Cream Cheese Jello and Orida have been directing its dollars toward a smaller number of heavy-hitting media partners as part of the turnaround. That approach recently manifested in major sponsorships, including a five-year pact with the NFL and WorkAround America 250 celebrations, as well as a strategic partnership with the Walt Disney Company that encompasses the House of Mouse's media outlets, cruise lines, parks, and events. Not only are we spending more to support our brands, but we are spending more efficiently. We've allocated dollars towards higher return brand media, improved efficiency through fewer, more effective media partners, and launched strong consumer-driven creative, Kayla Haynes said during the earnings presentation. Importantly, we're measuring direct sales impact as we are seeing clear improvements. Campaigns for individual brands such as Heinz, it has to be Heinz in Philadelphia's Really Philly Good, the latter of which positions cream cheese as a kitchen fixture, are also helping to shore up brand equity and establish green shoots in the U.S. headcount. Increases have also been targeted at marketing and sales, Kraft Heinz said. Shree, close it out.

SPEAKER_00 9:10

Would you please? Hey Peter, guess who's joined the AI crazy race in retail? It wasn't just Amazon and Walmart and Kroger and a handful of others. But it's Safeway. Albertson's announced Wednesday a Safeway plugin in ChatGPT that lets customers discover products and build a shopping list in the artificial intelligence platform. The plugin experience aims to take the requests and preferences customers put into ChatGPT and show them relevant Safeway options. When shoppers are done using ChatGPT to browse and add items to their card, they're redirected to the Safeway platform for checkout. This tie-up with ChatGPT builds on Albertson's efforts to strengthen its digital customer experience. Something the grocer said at the start of this year is one of its four AI priorities for 2026. Here's what we got from Dive Inside. Albertson said that the new plugin builds on the company's larger AI-powered shopping foundation it's after, which also includes the grocer's AI shopping assistant, and Ask AI capabilities. To access the Safeway plugin, customers type at Safeway into ChatGPD, followed by a prompt such as reorder my weekly shopping list, help me plan a quick pasta dinner for four, or what ingredients should I add to my omelet. From there, ChatGPD presents relevant items that shoppers can purchase from Safeway. Users can add or remove suggested items, and when they are ready to purchase, are redirected to the Safeway e-commerce platform for a seamless checkout. Research tells us that consumers are increasingly interested in AI to help with grocery shopping. Jill Pavlovich, who of course has been on none other than the CPG Guys on this show, so you can easily find that by going to cpgguzz.com, all episodes, and simply typing Jill or Pavlovich or Albertsons, and you should be able to find it. She's of course the senior vice president of digital customer experience. She said in a statement, referring to Dunhambi's 2026 Customer Trends Tracker, by enabling a plugin in ChatGPT, we're making grocery shopping as simple as having a conversation by meeting our customer when and how they choose to shop. This is another practical way. We are using AI to reduce friction and make everyday shopping easier. In that report, which was published in February, Dunhamby found that 15% of US consumers surveyed said they had used AI tools like ChatGPT to assist with grocery shopping, with shopping lists, price comparisons, and stop use cases. This new plugin is in Albertson's first time leveraging the OpenAI platform in February. Albertson said it had joined a pilot program run by OpenAI to explore conversational advertising formats, presented to ChatGPD can drive better customer experiences. Albertson's is also encouraging AI directly into its own platforms. In December, the company launched an Agentic AI shopping assistant on websites across its banners, noting that the tool would come to its banners apps in early 2026. The tool can generate meal plans, shopping lists, reorder frequent purchases, find recipes based on what users already have, import recipes from images, and curate product ideas based on themes. Wrap it up for us, will you, Peter?

PVSB 12:00

That's a wrap on this week's Commerce Riff. A quick reminder to catch up on our recent episodes. We've had two great conversations recorded in Cannes, France, that you don't want to miss. Nick Hammett, CMO of New Brands, and a panel hosted by Sensor Tower from CBG Guys La Residence at Cannes, recorded live earlier this year. If anything we covered today sparks a thought, drop it in the comments. We read everyone. And if you're not following us on LinkedIn, Instagram, TikTok, Facebook, and YouTube yet, well, now is the time. We'll see you next week.