Over the last couple months, I have been studying the surge in Nicotine and caffeine products. Specifically, the oral segment in Nicotine has exploded in growth, expected to grow from $7.9 billion in 2024 to an estimated $33.8 billion by 2033. Coffee on the other hand has also exploded, a market of roughly $270b is expected to grow at a 6% CAGR through 2033. Not to mention the explosive demand for energy drinks.
Both markets are quite competitive, so I was looking to spot for any "pick and shovels" within these industries. I am a user of both, and the first thing that came to mind when thinking of these products was ripping enormous amounts of gas, and even diarreha too (TMI?). Knowing how popular of a defensive stock Proctor and Gamble is, I decided to look their first, and the results were astonishing.
Their main product for the stomach is Pepto-Bismol. We've all popped them before, whether we were hung as tits or have just been demolishing the shitter with the increase in slop bowls around us. I started to connect the dots, and recent data suggests an uptick in Gastrointestinal issues among the 20-29 age demo. I believe their is a big correlation to nicotine/caffeine users to these stomach acid products, and expect continue demand to rise in the Pepto department.
The numbers
Pepto has shot up in sales growth, its honestly unbelievable. In the UK, Pepto sales have skyrocketed by 297% (19m) in the last year. The sector growth is attributed to the rise of GLP-1s leading to gastro issues, but I believe the public is hiding the fact that the average consumer is addicted to stimulants driving an increase in stomach acid and diarreha.
Macro
Macro related issues is another reason I find PG attractive. Treasury yields are up, inflation is up, labor market is down, and the fed is stuck holding their junk in their hands not sure how to play this. I believe investors will continue to flock to defensive sectors and leave higher beta names. Not to mention the hisotrical drought we've seen in equities during midterms.
Thesis
Consumers will continue to slam energy drinks and zyns, and the stomach problems will continue as well. We will start to see bottles of Pepto appear in every office breakroom, desk, and nightstand. Investors will flock to defensive names while this macro mess plays out, and PG will post 2%+ sales growth the next two quarters and cite Pepto as a driver.
Position
\- 10x $145 calls expiring dec 26.