Six beverage stocks to buy for profits feature a London-based, multinational provider of premium alcohol, three U.S. soft drink companies, an energy drink…
Six beverage stocks to buy for profits feature a London-based, multinational provider of premium alcohol, three U.S. soft drink companies, an energy drink maker and a creator of healthy coconut concoctions.
Beverage stocks are the top-rated consumer staples sub-sector, according to BofA Global Research. Household, beauty and personal care companies followed closely behind, among stocks that consumers typically reward during all economic conditions.
Britain’s Diageo plc (NYSE: DEO) received an upgraded rating of “outperform,” up from market perform, on Monday, Feb. 6, from Sanford C. Bernstein, a New York-based financial advisory firm. The investment firm projected a potential upside in the stock up close to 30%.
Six Beverage Stocks to Buy for Profits: Diageo Inc.
Diageo’s brands of alcohol feature Johnnie Walker, Crown Royal, JeB, Buchanan’s, Windsor and Bushmills whiskies, Smirnoff, Ciroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness. Its multinational reach encompasses the world’s biggest markets, including North America; Europe and Turkey; Africa; Latin America and the Caribbean; and the Asia-Pacific.
Jim Woods, who concurrently leads the Intelligence Report investment newsletter and the Bullseye Stock Trader advisory service, told me he likes the company’s prospects, especially after a recent pullback that reduces its valuation. Woods, whose trading service features both stocks and options, is an aficionado of fine dining and premium drinks. He has yet to recommend the stock but indicated to me he is keeping an eye on it.
Woods Picks His Favorite ofSix Beverage Stocks to Buy for Profits
On Jan. 26, Diageo reported an 18.4% rise in net sales during the second half of 2022, compared to the same time the year before, primarily reflecting strong organic net sales growth as well as favorable impacts from foreign exchange stemming from a rising U.S. dollar. The company’s operating profit grew 15.2% to $3.86 billion, or £3.2 billion.
However, Diageo reported a drop in operating margin of 92 basis points, or .92%, for the last six months of 2022 compared to the comparable period the previous year, with organic margin expansion more than offset by one-time operating items and foreign exchange. Diageo also reported that its organic operating profit grew 9.7% in second-half 2022, compared to the same six months of 2021, and its organic operating margin expanded by 9 basis points, or .09%, driven by leverage on operating costs due to disciplined cost controls, despite inflation.
Price increases and supply productivity savings more than offset the impact of absolute cost inflation on gross margin, Diageo reported. Growth flowed across most categories, primarily scotch, tequila and beer, the company announced. Premium-plus brands contributed 57% of Diageo’s reported net sales and drove 65% of organic net sales growth.
Consumer staples food and beverage companies have shown “surprisingly inelastic” demand for their products, according to BofA. The investment firm foresees upside for gross margins, along with upgraded earnings revisions, as input inflation plateaus and the U.S. dollar weakens.
Unlike last quarter, BofA broadly predicts earnings estimates for fiscal year 2023 will be in-line or advance due to a brightening outlook.
Atlanta-based Coca-Cola is recommended both by BofA and Mark Skousen, PhD, who leads the Forecasts & Strategies investment newsletter. Coca-Cola is among the Flying Five stocks that Skousen recommends by choosing five Dow Jones Industrial Average positions that have the lowest price from a list of the 10 highest-yielding companies in the index. His Flying Five recommendations have beaten the market most of the years he has used the strategy.
Mark Skousen, a scion of Ben Franklin and head of Fast Money Alert, meets Paul Dykewicz.
Coca-Cola’s total returns have reached 47.2% since Skousen recommended it on July 31, 2017.
Six Beverage Stocks to Buy for Profits: Coca-Cola’s Organic Growth Impresses BofA
BofA projects “solid organic sales growth” from Coca-Cola, aided by price hikes and strong demand. The investment firm set a $74 price objective on the stock, giving it a premium to non-alcoholic-beverage peers.
“In our view, a premium multiple is warranted by balanced and resilient organic sales growth,” BofA wrote in a research note.
Outperformance could occur with strong growth in developed and emerging markets, a weakening U.S. dollar compared to other currencies and improved free cash flow conversion, BofA opined. Risks to meeting that price target include volatility in developed and emerging markets, earnings per share (EPS) headwinds if the U.S. dollar strengthens and consumer concerns about sugar and calories, the investment firm wrote.
Six Beverage Stocks to Buy for Profits: PepsiCo
Harrison, New York-based PepsiCo (NASDAQ: PEP) is another major beverage stock. The company also owns the popular Frito-Lay brand of snack foods, as well as Quaker Oats. BoA put a buy recommendation on PepsiCo, along with a $205 price target.
“We expect PEP is set up for another quarter of strong organic sales growth, modeling 4Q22 organic sales growth of +8%,” BofA wrote.
PepsiCo received a premium valuation to its non-alcoholic-beverage peers that is “justified” based on the stock’s positioning to deliver against its long-term algorithm and return cash to shareholders via dividends and share repurchases, according to BofA’s research note. Further pluses for PepsiCo include low-to-moderate foreign exchange headwinds, growth opportunities and improving volume/price/mix in soft drinks.
Potential risks to reaching the price target include foreign exchange becoming a drag on results and Frito-Lay North America incurring a decline in volumes due to price hikes. As a personal fan of Quaker Oats products, I have noticed prices for those goods rising sharply to the point that I recently switched to buying store brands instead.
Six Beverage Stocks to Buy for Profits: ‘Pepsi Please,’ Connell Says
Michelle Connell, chief executive officer of Dallas-based Portia Capital Management, also recommends Pepsi. Even though inflation has caused many consumers to trade down with their consumer staple purchases and buy cheaper products, Pepsi has not felt this pressure, Connell commented.
While Pepsi had a strong performance in 2022, the stock is off 4.89% year to date. Wall Street analysts estimate that the stock has upside of 10-15% over the next 12 months, Connell told me.
Pepsi can no longer be considered a pure beverage play, Connell said. Convenience foods represent 55% of the company’s sales, while beverages account for the remaining 45%.
“So, every time you walk into a convenience store and grab a package of Lays, Cheetos or Doritos, you are purchasing a Pepsi product,” Connell told me.
Wall Street expects Pepsi to beat the company’s guidance when it reports results on Feb. 9. Pepsi has been able to pass on price increases caused by inflation. Sales have not diminished, as Pepsi has raised prices, since consumers largely are shunning generic beverages, she added.
“The company has also been able to increase its beverage market share, especially in the water and athletic beverage categories,” Connell continued.
One area of potential weakness is negative currency effects from a strong U.S. dollar, Connell counseled.
International markets have become increasingly significant for Pepsi’s future, Connell said. Currently, 40% of the company’s sales and one-third of its operating income come from outside the United States.
“Emerging markets have younger consumers that are just turning the corner from poverty to middle class status,” Connell said. “Disposable income allows these individuals to purchase more foods and beverages more in line with those of their developed market peers.”
In addition, economic forecasts indicate emerging market countries may be the only nations to report positive gross domestic product (GDP) this year. They include China, India and several others in Asia, she added.
Six Beverage Stocks to Buy for Profits: Keurig Dr Pepper
Keurig Dr Pepper (NASDAQ: KDP), of Burlington, Massachusetts, is another BofA recommendation. The investment firm placed a $45 price target on the stock. The valuation takes into account KDP’s “attractive portfolio” of products that can grow sales and earnings, particularly with the addition of the C4 energy drink brand, BofA wrote.
Potential to outperform the price target could come from additional synergies, reduced volatility in the coffee business, increased adoption of Keurig brewers and pods, as well as attractive mergers and acquisitions (M&A) candidates.
Several risks could create headwinds to attain the price objective, according to BofA. They include any industry shifts away from single serve coffee, which could lead to slower than anticipated de-leveraging, along with weak consumer spending around the holiday season that could negatively impact sales of the Keurig brewers.
Six Beverage Stocks to Buy for Profits: Monster Beverage
Corona, California-based Monster Beverage Corporation (NYSE: MNST) is a holding company for its consolidated subsidiaries that develop and market energy drinks, including Monster Energy.
Six Beverage Stocks to Buy for Profits: Vita Coco (NASDAQ: COCO)
New York-based Vita Coco (NASDAQ: COCO) offers brands that provide coconut water, Vita Coco, clean energy drink Runa, sustainable enhanced water and protein-infused water. Vita Coco and Captain Morgan announced an agreement on Feb. 1 to team up to sell Vita Coco Spiked with Captain Morgan spiced rum. Both companies are No. 1 in their respective beverage niches.
BofA put a buy recommendation on Vita Coco and a $16 price objective on the stock. The investment firm valued Vita Coco’s shares in line with “platform companies,” concluding a premium is not warranted despite expecting COCO generate stronger earnings before interest, taxes, depreciation and amortization (EBITDA) growth. Indeed, the forecast is highly dependent on the ocean freight market, which is beyond COCO’s control.
A chance exists that Vita Coco could exceed its price objective if ocean freight rates decline faster than expected and result in meaningful margin expansion, if growth in the product category remains strong and COCO keeps growing market share. Risks to Vita Coco meeting its price objective are inflationary pressures worsening and delaying margin recovery, volume growth slowing meaningfully in a recession, competition stiffening and COCO losing market share.
The six beverage stocks to buy for profits are largely protected from the ferocious fighting now taking place in Bakhmut, Ukraine, where Russian forces are seeking to seize control of a key highway and capture that important transportation route. Russian airborne units have joined Wagner mercenary fighters in the battle for the city.
Russia’s troops are “leveling Bakhmut to the ground, killing everyone they can reach,” Pavlo Kyrylenko, a Ukrainian prosecutor and politician who also is the current Governor of Donetsk Oblast, wrote on Telegram. Russia claimed on Tuesday, Feb. 1 to have captured a village just to north of Bakhmut as it tries to surround the city and seize control.
The U.S. State Department accused Russia of violating a key nuclear arms agreement by refusing to allow inspections of its nuclear facilities. The only agreement left to regulate the nuclear arsenals of the United States and Russia is the New START treaty, but inspections have been on hold since 2020 due to the COVID-19 pandemic.
Russia is sustaining its onslaught of increased strikes that began in October, targeting Ukraine’s energy and civilian infrastructure. Ukraine is seeking and receiving additional tanks by its allies to fend off Russia’s unrelenting onslaught.
President Biden, in his State of the Union to a Joint Session of the U.S. Congress on Tuesday night, Feb. 7, said Russia’s President Vladimir Putin ordered a “murderous assault” against Ukraine, evoking images of the “death and destruction” Europe suffered in World War II. During the speech, President Biden recognized the presence of Ukraine’s Ambassador to the United States Oksana Markarova.
“She represents not just her nation, but the courage of her people,” Biden said. “Ambassador, America is united in our support for your country. We will stand with you as long as it takes,”
President Putin launched what he called a “special military operation” in eastern Ukraine on February 24, 2022, by attacking his neighboring nation in violation of international law.
China’s Officials Admit to 82,000 COVID Deaths in Past Two Months
China continues to be criticized for its lack of transparency in reporting the COVID-19 cases and deaths in its country. Its officials tweaked the country’s death toll to include those caused by COVID-related illnesses, bringing the total to 82,000 deaths in the last two months. However, only people who died in hospitals are counted, not those who perished at home, news reports indicated.
President Biden recently announced plans to end the current U.S. public health emergency declaration due to COVID-19 this May. However, worldwide COVID-19 deaths rose to 6,846,764 people, with total cases of 672,033,032, Johns Hopkins reported on Feb. 7. COVID-19 cases in the United States totaled 102,645,744, while deaths reached 1,112,124 as of Feb. 7, according to Johns Hopkins University. Until recent reports that China had more than 248 million cases of COVID-19, America had ranked as the nation with the most coronavirus cases and deaths.
The U.S. Centers for Disease Control and Prevention reported that 269,064,626 people, or 81.0% the U.S. population, have received at least one dose of a COVID-19 vaccine, as of Feb. 1. People who have completed the primary COVID-19 doses totaled 229,719,115 of the U.S. population, or 69.2%, according to the CDC. The United States has given a bivalent COVID-19 booster to 49,078,211 people who are age 18 and up, equaling 19% as of Feb. 1, compared to 18.8% as of Jan. 26, 18.5% on Jan. 18, 18.2% on Jan. 11, 17.7% as of Jan. 4, 17.3% on Dec. 28, 16.8% the previous week, 16.3% the week before that one and 15.5% the preceding week.
The six beverage stocks to buy for profits offer refreshing investment opportunities when the market overall has been struggling in the past year to find sustained strength.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Special Holiday Offer: Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for special pricing on multiple-book purchases.
Move over carbon, the nanotube family just got bigger
Tokyo, Japan – Researchers from Tokyo Metropolitan University have engineered a range of new single-walled transition metal dichalcogenide (TMD) nanotubes…
Tokyo, Japan – Researchers from Tokyo Metropolitan University have engineered a range of new single-walled transition metal dichalcogenide (TMD) nanotubes with different compositions, chirality, and diameters by templating off boron-nitride nanotubes. They also realized ultra-thin nanotubes grown inside the template, and successfully tailored compositions to create a family of new nanotubes. The ability to synthesize a diverse range of structures offers unique insights into their growth mechanism and novel optical properties.
Credit: Tokyo Metropolitan University
Tokyo, Japan – Researchers from Tokyo Metropolitan University have engineered a range of new single-walled transition metal dichalcogenide (TMD) nanotubes with different compositions, chirality, and diameters by templating off boron-nitride nanotubes. They also realized ultra-thin nanotubes grown inside the template, and successfully tailored compositions to create a family of new nanotubes. The ability to synthesize a diverse range of structures offers unique insights into their growth mechanism and novel optical properties.
The carbon nanotube is a wonder of nanotechnology. Made by rolling up an atomically thin sheet of carbon atoms, it has exceptional mechanical strength and electrical conductivity amongst a range of other exotic optoelectronic properties, with potential applications in semiconductors beyond the silicon age.
The key features of carbon nanotubes come from subtle aspects of their structure. For example, like a piece of paper rolled up at an angle, nanotubes often have a chirality, a “handedness” in their structure that makes them different from their mirror image. That is also why scientists are looking ahead to materials beyond carbon, which might enable a wider range of structures. One spotlight is on transition metal dichalcogenide (TMD) compounds, made of transition metals and Group 16 elements. Not only is there a whole family of them, TMDs have features which are not seen in carbon nanotubes, such as superconductivity and photovoltaic properties, where exposure to light generates a voltage or current.
To get to grips with the full potential of TMDs, however, scientists need to be able to make single-walled nanotubes in a variety of compositions, diameters, and chirality in a way that lets us study their individual properties. This has proven challenging: TMD nanotubes usually form in concentric multi-walled structures, where each layer might have different chirality. This makes it tricky to find out, for example, what kind of chirality gives rise to specific properties.
Now, a team led by Assistant Professor Yusuke Nakanishi from Tokyo Metropolitan University has come up with a way to do just that. By using boron-nitride nanotubes as a template, they could successfully grow a range of single-walled TMD nanotubes by adding the required elements through exposure to vapor. In previous work, they made single-walled molybdenum sulfide nanotubes. On looking at individual nanotubes in more detail, they have now distinguished a whole plethora of single-walled tubes of different diameters and chirality. Specifically, they measured the “chiral angles” of individual tubes which, taken together with their diameters, determine unique chiral structures. They discovered, for the first time, that the chiral angles of their nanotubes were randomly distributed: this means they have access to the whole range of possible angles, promising new insights into the relationship between chirality and electronic states, a key unsolved question in the field. There were also ultra-thin tubes only a few nanometers across grown inside the template, not outside, a unique platform for observing quantum mechanical effects.
By tweaking their recipe, the team has now also succeeded in switching both the metal and the chalcogen, making molybdenum selenide, tungsten selenide, and molybdenum tungsten sulfide alloy nanotubes. They even made nanotubes with one element on the outside, another on the inside, “Janus”-type nanotubes named after the two-faced god of Roman mythology. The team’s diverse new entries into the nanotube family promise bold new strides in not only our understanding of TMD nanotubes, but how exotic properties arise from their structures.
This work was supported by JSPS KAKENHI Grants (Grant Numbers JP23H01807, JP20H02572, JP21H05232, JP21H05234, JP22K04886, JP22H05468, JP22H01911, JP22H02573, JP21H05017, JP22H05469, JP23H00259, JP23K13635, JP23H00097, JP22H05441, JP21H05235, JPJSJRP20221202), the JST CREST Program (Grant Numbers JPMJCR17I5 and JPMJCR20B1) and the JST FOREST Program (Grant Number JPMJFR213X).
Journal
Advanced Materials
DOI
10.1002/adma.202306631
Article Title
Structural Diversity of Single-Walled Transition Metal Dichalcogenide Nanotubes Grown via Template Reaction
China's Birth Rate Plummets 10% To Lowest On Record
China's birthrate fell 10% last year to its lowest level on record, a significant drop in spite of extensive efforts by the CCP to encourage people to get busy.
The country had just 9.56 million births in 2022, the lowest figure since they began keeping records in 1949, according to a report by the National Health Commission.
The high costs of child care and education, growing unemployment and job insecurity as well as gender discrimination have all helped to deter many young couples from having more than one child or even having children at all. -NBC News
China's population also fell for the first time in six decades, dropping to 1.41 billion people - a demographic shift that's caused officials to worry that the country will 'get old before it gets rich' - with a slowing economy and declining tax receipts amid increases in government debt due to soaring health and welfare costs.
According to the report, the demographic downturn is largely thanks to China's one-child policy imposed between 1980 and 2015. Nearly 40% of Chinese babies last year were the second child of a married couple, while 15% were from families with three or more children.
The sharp decline in births comes despite Beijing's efforts to increase child care and provide other financial incentives. In May, President Xi Jinping presided over a panel to study the topic.
Not just China
As we noted in June, Japan's birth rate has also plummeted to a record low for the seventh straight year, with the number of babies born falling below 800,000 this year, health ministry data showed on June 2.
The number of newborns in Japan fell to 770,747 this year, down 40,875 from the previous year and the lowest since the country began record-keeping in 1899, Kyodo News reported, citing health ministry data.
Japan’s fertility rate—the average number of children born to a woman in her lifetime—fell from 1.30 in 2021 to 1.26 last year, equivalent to the previous low recorded in 2005. The number is far below the 2.07 rate necessary to sustain a stable population.
The decline in Japan’s birth rate is attributed to people delaying parenthood due to the economic impact brought on by the COVID-19 pandemic, as well as the prevailing trend among couples to delay marriage, according to the report.
The US birthrate has also been in decline, falling slightly in 2022 compared to 2021, with roughly 3.7 million babies born nationwide. It still hasn't recovered to pre-pandemic levels according to the CDC.
When the COVID pandemic led to widespread economic shutdowns and stay-at-home orders in the spring of 2020, many media outlets and pundits speculated this might lead to a baby boom. But it appears the opposite has happened: birth rates declined in many high-income countries amid the crisis, a new study shows.
Arnstein Aassve, a professor of social and political sciences at Bocconi University in Italy, and his colleagues looked at birth rates in 22 high-income countries, including the U.S., from 2016 through the beginning of 2021. They found that seven of these countries had statistically significant declines in birth rates in the final months of 2020 and first months of 2021, compared with the same period in previous years. Hungary, Italy, Spain and Portugal had some of the largest drops: reductions of 8.5, 9.1, 8.4 and 6.6 percent, respectively. The U.S. saw a decline of 3.8 percent, but this was not statistically significant—perhaps because the pandemic’s effects were more spread out in the country and because the study only had U.S. data through December 2020, Aassve says. The findings were published on Monday in the Proceedings of the National Academy of Sciences USA.
Birth rates fluctuate seasonally within a year, and many of the countries in the study had experienced falling rates for years before the pandemic. But the declines that began nine months after the World Health Organization declared a public health emergency on January 30, 2020, were even more stark. “We are very confident that the effect for those countries is real,” Aassve says. “Even though they might have had a bit of a mild downward trend [before], we’re pretty sure about the fact that there was an impact of the pandemic.”
Covid Accelerated the Existing Trend
Covid accelerated the already declining birth rates.
Given the 16-year lag between births and the civilian noninstitutional population coupled with the aging of the workforce there will be fewer and fewer workers supporting retired workers on Social Security.
Notice the relatively steep decline in the birth rate starting in 2008 and continuing through today.
That impact will start showing up in 2024 and last a minimum of 12 years.
How long depends on whether the birth rate picks up after Covid. I highly doubt the birth rate will pick up.
Deflationary and Inflationary Impacts
Inflationary: Shortage of workers increases wage pressures
Deflationary: Fewer workers support an increasing number of retirees
Deflationary: Older workers need more assistance, buy fewer things, travel less.
Deflationary: More government debt and deficits. Government spending has a negative impact on real GDP.
Few directors in Hollywood have more power than Martin Scorsese, the Oscar-winning director of box office hits such as "Goodfellas," "Casino," "The Departed," and "The Wolf of Wall Street."
But even the legendary filmmaker lacked the clout to save the fate of his movie "Kundun" (1997) when the Chinese Communist Party (CCP) came knocking on Disney’s door.
The film is probably one that most readers have never heard of, even though it was nominated for four Academy Awards and included the legendary Mr. Scorsese. A historical drama written by Melissa Mathison, "Kundun" explores the life of the young Dalai Lama, who in 1950 saw his homeland of Tibet invaded by the CCP.
Ms. Mathison conceived the project after meeting the Dalai Lama in 1990, and although she had concerns that Hollywood wouldn't be interested in such a film, she caught a break when she convinced Mr. Scorsese to direct the film.
“I’m not saying he wants to do it, but I know he’s going to get it,” Ms. Mathison recalled thinking. “I knew he’d understand the society, the moral code, the journey, and the spirituality of it,” she said in the documentary "In Search of Kundun with Martin Scorsese."
Disney eventually agreed to distribute the film, which was given a $28 million budget. But China had other ideas.
Tibet, along with Taiwan and Tiananmen, is among the forbidden Three Ts—the issues considered most contentious by the CCP. So with China becoming an emerging global power in the 1990s, the CCP decided to flex its muscle and attempted to nix the project.
Two days into the production of "Kundun" in 1996, a representative from the Chinese Embassy approached Disney's chief strategic officer, Lawrence Murphy.
“You started shooting a film in Morocco about the Dalai Lama called 'Kundun,'” the diplomat said before explaining that Beijing had concerns with the film’s subject matter.
'Play by China’s Rules' ... or Else
At the time, Mr. Murphy hadn’t even heard of the film. But it would soon become clear that the CCP wanted the shooting of "Kundun" shut down. Why Beijing would want the movie censored is obvious. "Kundun" describes atrocities that China’s communist regime committed in the 1950s following its invasion of the Himalayan country.
“The Chinese have bombed the monastery of Lithang. It has been destroyed,” an adviser tells the Dalai Lama at one point in the movie. “Nuns and monks are made to fornicate in the streets. They put guns in the hands of Khumba children and force the child to kill the parents.”
While the description is horrifying, even more moving is the scene in which an elderly Tibetan woman tearfully and frantically insists that she's “happy and prosperous under the Chinese Communist Party.”
This isn't exactly flattering stuff for the CCP, any more than "Schindler’s List" is for the Nazis. Yet history isn't always pretty.
In any event, the CCP’s decision to lean on the film left Disney CEO Michael Eisner in a pickle.
If Mr. Eisner shut down the film, he’d anger Mr. Scorsese and look weak for caving to the CCP. If he proceeded with production, he risked losing Disney’s commercial and manufacturing foothold in China, as well as the 1.4 billion potential consumers.
So Mr. Eisner opted for a third way. He allowed the shooting of "Kundun" to proceed, but he limited the film’s distribution and marketing. "Kundun" was released on Christmas Day in 1997—in two theaters nationwide.
In other words, in the contest over truth and creative freedom versus government censorship, Disney blinked, and film producer Matt Tabor describes what Disney’s decision meant going forward.
“If foreign companies wanted access to [China’s] market, they were going to play by China’s rules,” Mr. Tabor noted in a recent production by the Foundation for Economic Education on the showdown. “'Kundun' marked the first opportunity for China to flex that muscle in the movie business.”
It was a watershed moment. And if there was any doubt that Disney caved to China, which officially considered the film “an interference in China’s internal affairs,” one need only read the groveling message that Disney sent to China after the dust had settled a year later.
The Apology: ‘We Made a Stupid Mistake’
Despite “sending 'Kundun' quietly to the gulag,” Disney found itself kicked out of China’s burgeoning market, along with other U.S. film studios.
“These films are full of inaccuracies,” a Chinese official told The Washington Post. “That’s why they are not popular within China.”
“We made a stupid mistake in releasing 'Kundun.' This film was a form of insult to our friends. The bad news is that the film was made; the good news is that nobody watched it. Here I want to apologize, and in the future, we should prevent this sort of thing, which insults our friends, from happening. In short, we’re a family entertainment company, a company that uses silly ways to amuse people.”
Mr. Eisner’s complete capitulation would have a profound impact on the global entertainment landscape for years to come. It explains why "Kundun" can’t be streamed on Amazon or Netflix even today. It explains why NBA executives go apoplectic when a single general manager tweets his support of protesters in Hong Kong.
One can appreciate the tough situation that Mr. Eisner was in without agreeing with his decision to banish "Kundun" to Siberia. Companies have commercial interests, and balancing those against doing the right thing or supporting creative expression isn't always easy. Indeed, this balancing act existed before Disney banished "Kundun," evidenced by one executive’s stated reason for passing on the film.
“I don’t need to have my spirits and wine business thrown out of China,” Edgar Bronfman Jr.—the CEO of Seagram, which briefly owned Universal Pictures—replied when pitched on "Kundun."
Yet, the message of Disney’s showdown with China isn’t really about the ethics of dealing with a powerful communist regime. The real lesson is that we should prevent governments from amassing such dictatorial power in the first place, and remind ourselves that governments are hardly arbiters of truth. Indeed, if the past few years have taught us anything, it’s that government officials have no business deciding what's true and what's false—even though it’s a power they clearly desire.
The reality is that those who wish to censor speech are usually far more interested in power than truth—the CCP’s attempt to censor "Kundun" reinforces that idea—and reminds us that sometimes the best way to exercise freedom is to watch a movie they don’t want you to see.
Matt Tabor contributed to this article.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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