SNAP tailwind for grocery (KR)
Starting in October, the average benefits for the Supplemental Nutrition Assistance Program (SNAP) will increase by more than 25% after a USDA report found that the cost of a nutritious, cost-effective diet is 21% higher than the base calculation for SNAP benefits. The base calculation had not increased since 2006. The $36.24 increase per month will be available to all 42 million SNAP beneficiaries, representing one of every eight Americans. The base calculation was expected to be finished by the end of 2022 as outlined in the 2018 Farm Bill, but the Biden Administration expedited it. In addition, Congress passed a 15% increase to SNAP benefits at the end of 2020 that had been extended through September. As a result, the number of SNAP beneficiaries is up more than five million from March 2020. Grocery spending has had several tailwinds; the new tailwind will more than offset the sunsetting of a previous tailwind.
Draft beer sales continue to recover (SAM)
According to BeerBoard, which tracks $1B in draft beer sales nationwide, nationwide draft beer volume increased 3.8% during the August 12-15 weekend compared to July 22-25. However, draft beer volume was still down 31% compared to the same weekend in 2019. Most tracked states are down about a third from pre-pandemic levels, but Nevada is down 19%, South Carolina is down -39%, Minnesota is down 56%. The open rate (the percentage of locations open and pouring beer) was 91% for the weekend, similar to the previous period. The open rate has been consistently above 90% since late January, as seen below. Draft handle capacity is down 30% compared to pre-pandemic levels.
Potato sales above pandemic levels (LW)
According to IRI, potato sales increased 3% in the year ended June 2021 but declined 0.3% by volume YOY. Compared to pre-pandemic levels, consumers purchased 577 million more pounds or ~1% more potatoes from July 2020 to June 2021 than July 2018 to June 2019. Refrigerated potatoes had the largest YOY increase of 10.6% in dollars and 5.3% in volume. Frozen potatoes sales grew 6.3% in dollars and 4.6% in volume. The two largest potato categories in volumes – chips and fresh potatoes, grew in dollars, but both fell 1.8% in volume. Lamb Weston reported retail volumes were up 15-20% compared to pre-pandemic levels, but management expects that to slow over the remainder of the year. Lamb Weston also sees foodservice demand steadily recover such that it is expanding production capacity. However, the greater challenge currently is not demanded; it is higher cost headwinds for transportation and cooking oils.
