Mondelez acquires Chipita (MDLZ)
Mondelez announced the acquisition of Chipita, a global packaged cakes, and pastries baker. Chipita owns the brands 7Days, Chipicao, and Fineti. The company’s products include croissants, bagel chips, cake bars, and biscuits and spreads. Chipita is global with sales in 50 countries, but it will provide Mondelez a larger market presence in central and eastern Europe. Mondelez is paying $2B, or 3.4x sales. Chipita had sales of $580M in 2020. The acquisition will be accretive and fits with Mondelez’s focus on global snacks. Mondelez has been acquisitive this year; Chipita is the fourth acquisition in 2021. M&A will likely pick up this year; Mondelez, to its credit, found a way to complete its due diligence during the pandemic.
Craft beer’s decline in 2020 (SAM, TLRY)
36 to 39 of the largest 50 craft brewers had volume declines in 2020 (3 did not publish production figures). According to the Brewers Association craft, brewer production declined for the first time in 2020 by 9% to 23 million barrels. Boston Beer’s, the second-largest craft brewer, beer production fell 16% to 1.7 million barrels in 2020 (excluding hard seltzer, tea, and cider). Since 2014 the company’s beer production has declined by 850,000 barrels, and the share of the craft market has fallen from 10% in 2015 to 8% in 2020. Total production was 7.37 million barrels in 2020, highlighting the importance of its non-beer portfolio. Sweetwater (TLRY), the #11 craft brewer, volumes declined 13%. Three of the five craft brewers that fell out of the top 50 were located in California, as the state had greater restrictions than most. Craft beer skews to the on-premise channel, so the difficult year was expected. What was unexpected was for the number of craft brewers to continue to grow during the pandemic. Craft beer will likely continue in its secular growth trends in place pre-pandemic while keeping its expanded off-premise presence.
Amazon casts a shadow in grocery (KR)
Amazon (covered by Brian McGough) has effectively used its Prime Day and Cyber Weekend events to drive market share in consumer packaged goods (CPG). Amazon’s share of CPG sales on Prime Day has averaged 5x more than its share in the month leading up to the event. According to Numerator, Amazon’s share in the category increased from 4.2% the month preceding Prime Day to 14.8% on Prime Day. The share losses come from in-store spending, while online spending at other competitors has increased on Prime Day in the past. Kroger’s CPG in-store share fell 0.4 points on Prime Day last year. Amazon’s CPG share has increased from 2.4% in 2018 to 39% YTD in 2021. Despite all of the growth, Amazon’s share in grocery is still less than 1% (0.9%). Amazon’s share in household products is 8.7%, 13.6% in pets, 17.9% in HBA, and 21.4% in babies. Amazon has not announced when Prime Day will be in 2021. Kroger and Albertsons vie in the most competitive sector in retail, where Amazon is looming but still has yet to penetrate.
