Grocery delivery (KR)
Sales of groceries by delivery/pickup have been slowly declining in 2021. Walmart continues to be the leader with a 48% share, while Instacart is a close second with a 45% share according to Bloomberg Second Measure, as seen below. Walmart has the lead in this analysis because pickup orders are included. Shipt orders that originate on Target are not included as well as Amazon’s grocery transactions. Grocery delivery peaked in January 2021, with sales up twice that of the previous year. In June, overall industry sales declined 24% from the January peak. June grocery delivery sales were down 3% YOY. Doordash and Uber Eats has recently announced a series of partnerships with grocery chains to deliver orders which are also not captured in this analysis. Instacart is said to be planning its IPO in the near future, but it seems like sales should be growing when it is going public.
California wine shipments (VWE)
The U.S. is the world’s largest wine market and the fourth largest wine producer. California wine sales to all markets, including shipments to the U.S. and export markets, were 279.2 million cases in 2020, up 2% by volume according to bw166. California’s 240.3 million cases shipped within the U.S. represented 55% of the total U.S. wine market. The volume of California wine has steadily increased each year since 2012 until the 3.9% decline in 2019, as seen in the table below.
The retail value of the U.S. market was estimated to be $66.8B in 2020. Thus, the retail value of the U.S. wine market has grown every year since the previous recession, as seen in the following table.
It has been a number of years since a stand-alone wine company has been public until Vintage Wine Estates and Duckhorn went public this year. The wine industry has had favorable growth, and both companies have been strong operators that should change investors’ perceptions.
Antitrust in the grocery aisle (TFM)
The National Grocers Association (NGA) counsel said that the large food retailers have been pressuring their suppliers for more at the detriment of smaller and regional grocers. At the American Antitrust Institute, the NGA said large food retailers are increasingly asking for things like nearly 100% fill rates which effectively force them to serve the larger customers at the expense of their smaller customers. The NGA would like to see federal regulators taking a harder look at the anti-competitive practices in retail and scrutinize proposed grocery mergers and acquisitions more closely.
The timing of the antitrust meeting was a couple of weeks after the Biden administration’s executive order on promoting competition. Grocers have been pulling in more inventory ahead of price increases, making the out-of-stock situation worse for the smaller retailers. Large mergers are likely behind us in the grocery industry. Last year the King Kullen acquisition by Stop & Shop was called off after a year and a half of review by regulators. In the future, mergers in the grocery industry may consist of small independent chains acquiring other independents like the Tops and Price Chopper merger announced in February. The Fresh Market, often cited as a potential acquisition target, is looking to return to the public markets.
