Online grocery slows (KR)
According to a survey conducted by Rosie, an e-commerce provider for independent retailers and wholesalers, 80% of shoppers plan to continue ordering groceries online at the same rate or more over the next year. The most popular reason to shop online is to save a trip to the store or avoid lines at 50%. Concern over COVID and other safety concerns was only cited by 18% of the 5,000 respondents. Millennial respondents were the most likely to continue e-commerce grocery shopping at 87%. In addition, 77% of respondents said they picked up their groceries rather than had them delivered. Survey intentions are not matching sales receipts.
In June, the latest Brick Meets Click/Mercatus Grocery Shopping Survey reported a 23% drop in online grocery spends, slowing further from a 16% decline in May. As seen in the chart below, delivery and pickup orders decreased 26% in June, slowing further from a 20% decline in May. Mass merchants like Walmart and Target have become the closest online competitors for the grocery retailers making it unlikely that consumers will pay for pickup fees in the future.
SpartanNash recently opened a micro-fulfillment center in Michigan at the cost of $5.3M. The center provides groceries for pickup at ten SpartanNash stores, currently intending to handle 24 stores in a month. Online sales at the current ten stores handled by the micro-fulfillment center comprise 3-4% of sales. SpartanNash’s online transactions have grown 32% since January 2020, but micro-fulfillment centers need larger volumes to be efficient. SpartanNash’s micro-fulfillment center was built to process 1,000 orders daily. When the center is handling the orders for 24 stores, the company expects it to be handling 300-400 orders daily.
Contemplating wine tariffs in the U.K. (VWE)
The U.K.’s trade secretary is considering introducing a 25% tariff on U.S. wine imports as part of an ongoing trade dispute caused by the Trump administration’s 25% tariff on steel imports in 2018. The U.K. government believes that targeting the wine industry will pressure key Democratic politicians like Nancy Pelosi and Kamala Harris, who come from the largest wine-producing state. About 32% of U.K. households purchase wine from the U.S. Wine Drinkers UK (WDUK) has warned that the tariff may raise prices such that U.S. wines will disappear from supermarket shelves. Wine from the U.S. makes up around 10% of bottles sold in the U.K. market. A survey conducted for WDUK found that 32% of U.K. adults who drink alcohol say wine is their favorite alcoholic drink, ahead of the 25% that rank beer and 25% that rank spirits as their favorite. Since June 2018, U.S. bourbon and whiskey have been subject to an additional tariff of 25%. As a result, U.S. whiskey imports into the U.K. have fallen by 53% since June 2018.
Avocado prices tick up (AVO)
More than 3,000 Mexican avocado farmers in the state of Michoacan joined forces and took up arms to fight back against criminal cartels recently. Last year the death of Homero Gomez, a renowned Mexican conservationist, inspired the farmers to unite in self-defense. The farmers are opposing illegal logging and avocado farming in protected reserves. The illegal farming of the crop speaks to its profitability.
The recent increase in avocado prices (as seen below) is not due to a lack of supply, although there is some concern about the threat of the rainy season. Avocados From Mexico, a nonprofit organization, said production grew 13% in 2020 and 18% from 2019. Mexican avocados represent more than 80% of the U.S. avocado market. Mexican imports into the U.S. grew 5% in 2020 and 33% in January. During the first four months of 2021, the volume of avocado imports grew 2.4% while import value dropped 23.5%, with Mexico as the origin of nearly all of the avocados during the period. The Hass Avocado Board reported volume sales of avocados were up 5.2% in the four weeks ended May 16, while the average unit price was down 9.2%. Avocados prices have been one of the fewer respites in a time of food inflation. Mission Produce (AVO) reported a 22% increase in volumes and a 14% decrease in ASPs during the quarter ended April 30, while Calavo Growers (CVGW) reported a 9% increase in volumes and a 10% decrease in prices. Saturday is National Avocado Day. Demand for avocados continues to grow, but so does supply.
