Happy Monday, Flux fam!

Here's everything you need to know today - in under 3 minutes.

Today's big stories: 

🍻Australia's headed for a beer crunch this summer

🥦Coles wants to boost its Coles Local stores 

🇨🇳Apple made a US$275 billion deal with China

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Coronas are out this summer (and not the bad kind) thanks to YEP another supply chain shortage

Background: Lion and Carlton & United Breweries are two of Australia's biggest breweries. And just like pretty much every other industry...they've both been hit by cruel, cruel supply chain issues. 

What happened: Lion own cult faves like Tooheys, XXXX, Hahn and Furphy. And this crew are running out of timber pallets used to transport beer across Australia...which means they need to shut down some of their production lines.

What else: CUB are also facing supply chain issues. And as a result, the companies have had to warn customers and sales reps that they're gonna have to get through Christmas lunch on the waters.

So what's the key learning?

💡The global supply chain relies on a whole host of unsung heroes: we're talking cargo ships...shipping containers...trucks...humans (obv) and of course, the humble timber pallet.

💡And the timer pallet is endangered right now for a few reasons:

1. An increase in consumer spending means pallets are in huge demand.
2. The building and reno boom is consuming a HEAP of timber
3. There is a lack of workers who can repair broken pallets and make new ones

💡So now we've got a pallet problem. And it means stock can't be moved around the world...and that includes our fave festive drink - beer.

Turns out size really does matter as Coles preps to beef up its smaller Local chains

Background: Back in 2012, Coles started replacing their 1,700-sqm stores with 2,700-sqm stores. 

What happened: Fast-forward to now, and Coles has done a full 180. Now, they've rolled out much smaller stores called Coles Local. 

What else: Coles plans to have 17 Coles Local stores by the end of the current financial year...but they eventually want way, way more. It's all thanks to the pandemic increasing the popularity of neighoburhood stores - and a heating up property market.

So what's the key learning?

💡Thanks to higher rents, a lack of prime real estate and rising inventory costs and wages...Aussie supermarkets are shrinking.

💡Retailers have responded to the changing conditions in one of two ways:

1. Rightsizing - aka shutting down underperforming stores and unprofitable locations (like Myer and DJs)
2. Downsizing - aka shrinking store footprints (like Coles).

💡Downsizing allows stores to maintain their physical presence...but at a more affordable cost (smaller space = cheaper rent). And, often local stores are stocked to fit local needs, which means a more personalised experience for the shopper.

Apple and China had a secret US$275 billion deal and that explains...a lot

Background: Chinese regulators have been cracking down on big tech companies in China. And this crackdown has seen some huge players leave the country.

What happened: Twitter and Facebook have been banned since 2009...Google bounced in 2010 and LinkedIn and Yahoo pulled out earlier this year. But it's been smooth sailing for Apple. Coincidence? We think not.

What else: Turns out Apple signed a US$275 billion deal with China's officials back in 2016. It meant Apple needed to invest in China's economy and tech industry in return for...well...that's unclear.

So what's the key learning?

💡Being diplomatic can come at a cost - and companies need to weigh up whether it's worth it in the long run. For Apple, it kinda seemed essential.

💡 Not only was Apple trying to appeal to China's fast-growing consumer market...but they also assemble nearly ALL of their products there, so leaving wasn't an option.

💡While deals with the Chinese government aren't uncommon, they're not always so secretive. But now, with the US and China's trade tensions more shaky than Travis Scott's career...it'll be interesting to see whether this news affects Apple's share price.