UK trade deal with Asian nations and a proposed ban on vaping

And a brief history of THG, the owner of Myprotein, Lookfantastic and over 100 other brands

Good morning and welcome to trxn if this is your first daily email. Today’s topics include:

A trade deal between the UK and 11 Asia & Pacific nations
Local councils call for a ban on disposable vapes
A brief history of The Hut Group, which owns brands such as Myprotein, Lookfantastic and Glossybox

The UK has signed off on a trade deal with an un-catchy name: the CPTPP (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership). The agreement contains a pledge to eliminate or reduce 95% of import charges or tariffs, and reduced restrictions on trade between members.
Existing members of the agreement include 11 Asia & Pacific nations, in total covering 13% of the world's income and 500 million people.
However, the government's own estimates indicate being in the bloc will only add 0.08% to the size of the UK's economy in 10 years.
- This is significantly smaller than the OBR’s forecast (in 2021) that Brexit would reduce long-term economic growth by ~4%.
- One of the reasons for the small impact is that the UK already has deals with many of these nations, so the marginal benefit is minimal.
- In opposition, the UK’s business secretary (Kemi Badenoch) has argued that the nations in this trade deal will be the epicentre of economic growth over the coming years. Therefore, it could prove highly beneficial to UK businesses to be in this bloc.
The deal hasn’t yet come into force - that will happen in a year’s time once it has been agreed on by existing member states.

As the graph shows, the use of e-cigarrettes, more commonly known as vapes, has increased more than 5-fold over the past 10 years.
Single use vapes have become more popular over the last few years. Research commissioned by Material Focus found that now 1.3 million single-use vapes are thrown away every week, enough to cover 22 football pitches each year.
Disposable vapes, often infused with a flavour of fruit or sweets, offer a few hundred puffs. This makes them easier to use than conventional vapes, or e-cigarettes, which need to be refilled with pods or liquid.
Local councils are unhappy about single use vapes for several reasons:
- Batteries in disposable vapes cannot be separated from the plastic, making them 'almost impossible' to recycle;
- Disposable vapes contain a small lithium battery, which can increase in temperature when crushed. This has caused 700 fires in bin lorries and recycling centres; and
- They believe disposable vapes appeal more to under-age vapers due to the colourful design of the vapes.
Opponents to this ban, which include anti-smoking charity ASH and UK Vaping Industry Association, point to the importance of vaping as an alternative to smoking and its success in driving down rates of smoking in the UK.

Virgin Media are being investigated for making it too difficult to cancel contracts. Complaints include having to wait a long time to speak to someone on the phone to cancel a contract and others saying they had to ask multiple times to cancel.
McDonald's has made a blanket decision to drop tomatoes from its menus in India as the cost of tomatoes increased 4-5x. This has been driven by bad weather conditions that have damaged crops. The Indian government has taken innovative step of launching the ‘Tomato Grand Challenge Hackathon’ to tackle this issue. You can read the full story on BBC here.

The Hut Group’s (THG) share price is 85% lower than the level they listed at. However, here we’ll look at the rise of the Hut Group and it’s successes over the years.
THG’s founders, Matthew Moulding and John Gallemore, started the company in Manchester with a £500k investment in 2004. They initially sold CDs & DVDs. Out of the gate, they did very well as e-commerce grew rapidly.
However, in 2007, the first iPhone hit the market. Apple were making music digitally available and the sale of CDs was vulnerable to shifts in consumer demand.
At that point, THG changed their strategy to grow through acquisition. In 2009, THG bought the brands in the Zavvi portfolio, a popular UK chain for pop culture products and collectables from the world of film and comics. And in 2010, THG acquired Lookfantastic, now a huge retailer of beauty products.
Initially, the acquisition strategy was to focus on beauty and lifestyle sector with its large margins and potential for international scaling.
2 of the largest acquisitions since, have been Myprotein in 2011 and Glossybox in 2017. The portfolio now includes hotels and spas alongside their bread and butter DTC (direct to consumer) brands.
THG succeeded in going public at a £5.4bn valuation in 2020 and even soared 30% shortly thereafter. However, recent poor financial results have led to the dip in share price as shown above. For now, the saga continues…