Produce imports up (DOLE)
U.S. imports of fresh fruits YTD through May grew 13% YOY according to the USDA. Total fresh fruit imports YTD through May totaled $8.03B. Vegetable imports grew at a slower rate than fruits. Vegetable imports YTD through May grew 4% to $4.88B. The growth by fruit and vegetable can be seen in the following chart. For example, some produce prices have fallen, like avocados and tomatoes, so the dollar value does not tell the volume story. The import data does not suggest that the rapid expansion in greenhouses or vertical growth contribute to meaningful changes in market share for domestic produce vs. imports.
Dole Food Company filed its S1 for an IPO last week. Dole Food Company and Total Produce are combining later this month to be the largest production company in the world. As one of the largest producers of fresh bananas and pineapples, Dole will be the best-known brand in the industry. The combined company will also be one of the leaders in value-added salads and packed vegetables in the U.S. The company will also be competing in several other categories, including berries, avocados, and organic produce. The combined company had Pro-forma revenues of $8.97B last year. Dole was taken private in 2013 by its current CEO. The company seeks to grow in berries and avocados, organic and value-added salads, Dole branded produce in Europe, and improve margins through supply chain optimization. Will Dole be able to get a valuation like plant-based food or indoor to grow companies?
Beer imports accelerate (STZ)
Alcohol import and export results were reported through May 2021, as seen in the chart below. Total beverage alcohol imports grew 5% by value over the last 12 months and grew 26% over the last three months. 35% of all imported beverage alcohol came from Mexico over the last 12 months. Total beverage alcohol exports grew 12% by value over the last three months. 26% of all exported beverage alcohol went to Canada.
Imported beer grew 14% by volume and 16% by value over the last 12 months. Over the last three months, imports grew by 27% by volume and grew 31% by value, accelerating from April’s 5% and 8% growth, respectively. 73% of imported beer by value comes from Mexico. Constellation Brands represents a majority of Mexican beer imports and 60% of imported beer. The latest three months indicate growth in price/mix. Constellation Brands is now lapping the shutdown of production at its plants last year, which is driving the strong YOY growth.
Imported packaged spirits by volume grew 24% in the last three months and grew 29% by value. Imported packaged wine volumes grew 16% and grew 28% by value over the last three months. As a result, exported packaged wine grew 30% by volume and 40% by value over the last three months.
Beer Purchasers’ Index drops from May’s peak (SAM)
The National Beer Wholesalers Association’s Beer Purchasers’ Index fell to 70 in June, down 11 points from last June and down from 80 in May. 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. The 80 in May was 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. In addition, the measure for at-risk inventory (inventory at risk of going out of code in the next 30 days) was below 50.
The index for imports was 72 in June, up from 68 in May and 66 last June. The index for craft beer was 53, down from 65 in May and above 46 last June. The regular domestic beer index was 40, down from 48 in May and 62 last June. The below premium index was 35, nearly flat with 36 in May and well below 65 last June. The FMB and hard seltzer index were 69, down from 94 last June and 82 in May, and 90 in April. Above 50 still means the category is growing, but more distributors are ordering the same amount as last year. The “at-risk” inventory measure for FMB/seltzers was higher than all other beer segments. Constellation Brands’ $12.5M write-down of hard seltzer inventory in the most recent quarter seems to be a sign of the aging of the hard seltzer inventory. The return to on-premise likely led to a fill-in period of inventory stocking, which drove the index to a high in May.
