The Starbucks Super Bean

Well, that didn't take long.

Three days into a historic work stoppage, the International Longshoremen's Association (ILA) union and the United States Maritime Alliance (USMX) reached a tentative deal Thursday that will pause the strikes that began at East and Gulf Coast ports this week until at least 2025. The three-day action at 36 ports was nevertheless enough to cause some serious headaches.

Strike One…

The effects of the work stoppage by 45,000 dockworkers — the first such strike in nearly 50 years — were already adding up. In New York City ports alone, nearly 100,000 shipping containers stand waiting to be emptied, Semafor reported Wednesday. Meanwhile, as shipping companies have scrambled to redirect fleets, roughly 2,000 containers may have been dumped in places that weren't their intended destination, such as in Canada or the Bahamas, CNBC reported. Retail giants, meanwhile, rushed to pre-ship products ahead of the strike and rerouted shipments by air or to West Coast ports, Reuters reported.

The strike, which kicked off Tuesday, could have cost the US economy $2.1 billion if it lasted a full week, according to the Anderson Economic Group. It also caused a miniature panic: retailers reported shortages of toilet paper because of course, Bloomberg noted.

The tentative deal should assuage corporate and consumer fears, for now at least:

• The ILA and USMX agreed to a 62% wage hike for dock workers over the next six years, sources told Reuters. That would bring the average wage from around $39 per hour to $63 per hour over the life of the contract; the ILA had been seeking a 77% pay raise, while USMX had previously offered a 50% bump.
• But they haven't agreed on anything else. The tentative deal, therefore, merely extends their current contract, restarting the countdown clock for a strike to January 15, 2025. In the interim, negotiations over remaining disagreements, including the contentious issue of automation, will resume.

Primetime Players: Meanwhile, over at Amazon, it's all business as usual. The e-commerce giant announced Thursday morning — hours before the port strikes were paused — that it plans to hire 250,000 full-time, part-time, and seasonal US workers ahead of the holidays, or exactly the same amount it hired last year. That's likely good news for anyone worried about prolonged snarls to supply chains.

Clearly, Starbucks doesn't think climate change is full of beans.

The coffee-chain giant announced Thursday that it's buying two farms in Central America in order to conduct research on the crop at the heart of its business — and we're not talking about pumpkins. The price of coffee has climbed and climbed this year as natural disasters upended its usual harvest cycle. A similar story has played out with cocoa, another subtropical bean that powers mankind's economies and emotional well-being. Starbucks' reaction? We need to breed a super bean.

Decaf Darwinism

It's pretty unusual for a chain like Starbucks to conduct its own R&D. But then again, Starbucks is no ordinary café chain. It hoovers up 3% of the world's total supply of coffee beans for its endless stream of double-short-low-fat-no-foam lattes (with just a whisper of cinnamon). Starbucks first shelled out for its own coffee farm in Costa Rica in 2013, and now it's buying two more: one in Costa Rica and one in Guatemala.

This year, prices for both arabica and robusta beans (sadly, not robusta enough) shot up thanks to droughts and frost in Brazil and typhoons in Vietnam squeezing supply:

• New York-listed arabica futures hit a thirteen-year high last month, and robusta futures have risen to their highest level since 1977, according to the International Coffee Organization — arguably a more worrying trend as robusta beans tend to be the cheaper alternative when arabica falters.
• Roberto Vega, Starbucks' vice president of global coffee agronomy, R&D, and sustainability, told CNBC the plan is to hybridize beans on the new research farms to make them hardier. He added that the Guatemalan farm was selected because it's not a great place to grow coffee: Its soil is depleted and it has a low yield. "The farm is not necessarily in good shape, and that's exactly what we were looking for. We wanted a farm that really mirrors the challenges that farmers are having today," Vega said.

Death by Chocolate: The cocoa bean market has been similarly blighted by poor crops this year, and it's caused a major sugar withdrawal headache for confectioners. The Financial Times reported last month that the scramble for high-quality cocoa beans has left warehouses in London with something of a poison pill problem, as the remaining stock is increasingly old beans that no one really wants. "The consequence is that there is less demand for that London stuff, driving prices down," Oran van Dort, commodity analyst at Rabobank, told the FT. Bad luck, old bean.

The decision carried some weight.

The Food and Drug Administration declared an end to the scarcity of Eli Lilly's highly in-demand weight-loss and diabetes drugs on Thursday. That's a boon for the pharma giant as it approaches a trillion-dollar valuation — and a hard knock for firms that are selling cheap knock-offs of the compounded drugs.

Weight Off Their Shoulders

The numbers speak for themselves. Over 100 million Americans have obesity, and that jumps to more than a billion globally. There's a considerable market for Eli Lilly's weight-loss drug Zepbound and diabetes injection Mounjaro. In August, the company trounced analysts' expectations, reporting $11.3 billion in revenue and $3 billion in profit against a $10 billion and $2.4 billion FactSet consensus, respectively, in the second quarter.

Much of that was on the strength of Zepbound, which did $1.2 billion in sales, and Mounjaro, which did $3 billion in sales. Rival Novo Nordisk — whose competing drug Wegovy is currently facing a shortage, while its other competing drug Ozempic is available, according to the FDA — missed on forecasts in part because it was struggling to keep up production capacity. Eli Lilly seems poised to avoid that trap:

• Eli Lilly's market cap was $884 billion as of Thursday afternoon trading, though its shares traded mostly flat. Hims & Hers Health, which sells a knock-off compounded weight-loss drug, was most impacted by the news that Zepbound and Mounjaro are back in stock: Its shares fell 9.6% Thursday.
• Eli Lilly's main problem — keeping up production capacity — got another boost this week. The company said Wednesday it's spending $4.5 billion on a new production facility for drugs in clinical trials in Indiana, where it's headquartered.

Stop the Gravy Train: Eli Lilly's products spent 22 months in shortage, which is what allowed compounders to make cheaper knock-offs under FDA rules. Now that Mounjaro and Zepbound are in stock, they have 60 days to stop. During the shortage period, Hims & Hers revenue soared — a 52% increase in the second quarter — but now it'll only be able to produce its copycat of Novo Nordisk's Wegovy. It'll soon be ejected from the gravy train that is helping people cut back on gravy.