The WC – Let’s drink Mezcal

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The WC is a selection of five useful, interesting & notable insights handpicked by CIO Wyatt Cavalier and dropped into your inbox every Wednesday.

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Wyatt

How to sell mezcal sawdust

Mezcal, like tequila, continues to grow in popularity in the US. Both sales and search volume for the spirits increased 17% last year, and revenue topped more than $6B in 2022.

Up and to the right. Via Glimpse

Along with the rise of any industry comes new challenges across a variety of vectors, and these spirits are no different.

Mezcal, which is distilled from the agave plant, produces 17kg solid waste and 10L liquid waste per 1L of bottled spirit.

All industries produce waste, and apart from the environmental concerns (I don’t always prefer fish with three eyes), there’s a significant economic incentive for producers to sell their sawdust.

In 2021, mezcal producers had “136,000 metric tons (nearly 150,000 U.S. tons) of wet bagasse and 80 million liters (over 21 million gallons) of vinasse” to work with.

Tequila makers have even more to work with — they produce around 70x more gunk than mezcaleros.

Clever producers have found a number of ways to profit from the byproducts including producing animal feed, pet food, biofuels, and even a derivative alcohol.

An example of one Mescalero, who sells on his waste in the form of fibre pellets for pet food:

His factory currently produces 2,000 metric tons (2,200 U.S. tons) of fibre pellets a month while having enough demand for 15 times that.

I’m just waiting for them to figure out how to turn the waste into lime wedges and salt.

Dig deeper into mezcal:

What’s solitary confinement like?

Last week, you met Beatriz Flamini, who choose to spend 500 days at the bottom of a Spanish cave.

This week, I dug into what life is like for people who spend time alone because they’re in solitary confinement.

Today in America, there are 48,000 inmates in solitary confinement. That’s more than the entire incarcerated populations of Japan, Australia, and Canada.

This affects two groups of people:

  1. The 48,000 inmates, and
  2. The 20,000 prison employees looking after them

The authors of Way Down in the Hole interviewed 75 of the former and 25 of the latter. Some of the most fascinating takeaways include:

Solitary confinement is dehumanising for both prisoners and staff members.

From a prisoner:

“All human privileges are gone; they treat you like a dog. They bring you food, they throw it to you, you shower in a cage, you exercise in a cage.”

And another:

“I’m treated like I’m in a zoo … I’m being treated like an animal. I feel lost and forgotten.”

And a guard:

“You don’t realize how stressful it is inside the walls. You feel like an inmate. Inmates are running institutions and you have to do things to take care of them, and no one is taking care of us.”

Solitary confinement makes racism worse.

Prisoners in solitary confinement are 45% black, but most prisons are built in poor rural communities that are mostly white.

So the inmates are black, and the corrections officers are white (mostly, more or less, generally, etc).

The resentment among guards on the solitary block is typical (and usually justified) but enhanced among corrections offers:

“I have an elderly family member who had to give up their house to get a medical procedure, and the inmates get the best medical care for $5.”

And:

“Inmates get TVs, tablets, kiosks, email; victims get nothing. They don’t get their family member back.”

Except the guards in solitary spend 23 hours a day looking after the needs of their wards. It’s exhausting:

Every daily need must be met by an officer. Officers hand deliver and pick up meal trays three times a day. Toilet paper is dispensed twice a week. Prisoners must be escorted to showers and the yard and even to therapy sessions.

Because staff are white and inmates are black, the resentment is racialized.

It all paints a picture of a system that’s not working very well for anyone, including guards.

Guards die an average of ten years earlier than their neighbours and divorce 20% more frequently.

Inmates who spend time in solitary commit suicide 78% more upon release than those who don’t.

Further, housing someone in solitary costs 3x more than shoving them into gen pop.

It’s pretty bleak.

If it were me, though, and I were stuck in FPMITA prison, I might choose solitary.

Dig deeper into the hole:

The light at the end of the tunnel is a train

Glenn Felson put together a deep-dive into the state of commercial real estate (CRE) and what landlords (and investors) can do about it.

To set the scene:

Occupancy is nowhere near pre-pandemic levels, nor is leasing activity. Skyrocketing interest rates have significantly ratcheted up the pressure on landlords, and with nearly a billion square feet of office leases coming up for renewal in the next 2 years, the level of anxiety is reaching a boiling point.

What does Glenn think we should do?

  • The future of commercial real estate lies in networks of workspaces that offer flexible solutions for companies of all sizes.
  • Tenant engagement apps and operating platforms play a crucial role in providing real-time workspace availability and seamless access control.
  • Customized packages tailored to each company’s unique needs will be a game-changer, allowing for short-term bookings and generating increased revenue.
  • The industry is evolving to meet changing occupier needs, and is poised for long-term success.

I’m not in CRE, but this all sounds extraordinarily expensive for landlords.

Coincidentally, this tweet from friend-of-the-newsletter John Belitsky popped up on my timeline as I was writing this.

I don’t know where / how office landlords and investors are going to muddle through this, but spending millions turning thousands of stolid office buildings into a global WeWork sort of network sounds far-fetched.

Dig deeper into the slow-motion collapse of commercial real estate:

My editor informs I’ve gone way past my allotted word count, so let’s wrap this up quick style.

Two pieces of news around international growth and expansion that caught my eye:

International growth part 1 – Saudi Arabia

Saudi Arabia launched four new special economic zones (SEZs), as part of the kingdom’s broader strategy to attract more investment and further position the country as a global business hub.

“The incentives offered to companies operating from SEZs cover both fiscal and non-fiscal incentives including competitive corporate tax rates, duty-free imports of machinery and raw materials, 100 per cent foreign ownership and flexibility in employing foreign labour.”

Also women can probably drive there.

Saudi Arabia’s other recent attempts to gain legitimacy include a crooked bid for the 2030 World Cup, funding the LIV golf league, and buying British football club Newcastle United.

Dig deeper into Saudi Arabia’s push toward legitimacy:

International growth part 2 – Formula 1

Formula 1, which has had a bit of a moment since the Netflix series launched a few years ago, is looking to expand into new markets.

F1 currently features 24 races across 20 different countries, but the sport’s regulations limit the series to a maximum of 25 events per season.

So who gets the expansion slot?

Actually, no one.

Because every track must be renewed every year, each of the 24 current slots is up for grabs every season.

In theory, there might not be a Monaco Grand Prix in 2024. Or a race at Silverstone.

And while the prospect gives traditionalists the vapours, the sports’ newer supporters don’t mind as much.

The F1 map is conspicuously missing races in Africa, India, and southeast Asia. There’s only one in South America.

2023 F1 venues. Some notable gaps here.

In the end, races will go wherever the sport can make the most money, which means London, the US, and possibly a token gesture in South Africa.

Dig deeper into Formula 1’s geography problem

That’s all for this week, hope you enjoyed it. And if you did, be a friend and spread the word. We appreciate it

Cheers,

Wyatt

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Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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