Five year high for the Beer Purchasers’ Index (STZ)
The National Beer Wholesalers Association’s Beer Purchasers’ Index showed 80 in May, up from 64 a year ago. April had a reading of 79, and March had a reading of 63. The Beer Purchasers’ Index is a diffusion index in which a reading over 50 indicates expansion and below 50 indicates contraction. The index is a forward-looking indicator for distributors to measure expected beer demand. 80 is the highest level for the index in over five years. In comparison, April 2020 had the lowest reading for the index of 34. Last May, the off-premise channel was booming while the on-premise channel was nearly shut down.
The at-risk inventory (inventory that will go out of code in the next 30 days) had a reading of 31, well below average. Craft beer had the biggest improvement compared to the prior year at 65 compared to 42 last year. FMBs and hard seltzer had a reading of 82, but that was below last year’s reading of 90 and April’s 90. Imports had a reading of 68 compared to last year’s 53. Premium light had an index of 64 which was also lower than last year’s 69. Below premium’s reading was 36, down 15 points from April and below last year’s 71. Regular domestic was 48, and cider was 46. Craft beer, which has the highest mix of on-premise consumption, has the easiest comparisons this year. Constellation Brands' comparisons are easier because production was shut down for a period of time last summer.
AI grocery shopping (KR)
Hungryroot raised $40M in a Series C funding round led by L Catterton, valuing the company at $750M. The startup describes itself as the first and only AI-powered personalized grocery service. Hungryroot intends to use the capital to expand the number of groceries it offers, automation, and employees. The company says its proprietary technology predicts the groceries for each customer, reducing the average time grocery shopping from just a few minutes each week. Hungryroot says that its predictive technology is so accurate that the majority of items are pre-selected. The company says it has been profitable since the beginning of 2020 and is tracking towards $175M in revenue this year and $300M in 2022. Hungryroot has competition with conventional grocers, meal kit companies, delivery companies, and online grocers like Good Eggs, Weee, and Imperfect Foods. Kroger and Albertsons may have more competition online than in brick-and-mortar. Grocery investors should not expect capital investments and returns to be accretive online while the grocery e-commerce market is still in the early innings.
Cow masks (OTLY)
According to Bloomberg, Cargill will deploy smart masks for European dairy farmers next year. Cargill has partnered with Zelp, a U.K.-based startup, to reduce the methane production from a cow’s belching. The mask utilizes a set of fans powered by solar-charged batteries to suck up the burps, trapping them in a chamber with a methane-absorbing filter. The filter uses a chemical reaction to turn the methane into CO2. 95% of the methane released by cows comes out as burps or through the nose.
At $80 per cow per year, the device is uneconomical for farmers from a P&L perspective. Plant-based milk’s lower environmental impact is a key selling point for the industry. Reducing methane from the cow’s rumination would significantly lessen the dairy industry’s carbon footprint. As shown in the chart below, livestock digestion is less than half of the industry’s greenhouse gas emissions. Even with the mask, the dairy milk industry would not be more environmental than plant-based milk. We are waiting to hear what Bessie thinks of wearing the mask.
