Hard seltzer's broad appeal (SAM)
Hard seltzer's appeal beyond young women to multiple demographic groups is one of the reasons why we do not think it is a fad. The first microbrewery to launch a hard seltzer in Arkansas, Ozark Beer Company saw its broad appeal early on. Marty Shutter, the company's marketing director, said, "The initial market data told us the stereotypical, that it was for women in their 30s. But we knew the research was based on limited data from only a year. We found almost immediately that the research was irrelevant." Ozark Beer has found that hard seltzer drinkers skew younger and more health-conscious than your average craft beer drinker. We hosted our hard seltzer industry black book last week.
|
CLICK HERE for video replay and materials. |
Plant-based milk and offerings continue to grow (OTLY)
AdAdapted provided data from its 70 million app download database that through August, the number of times milk was added to shopping lists decreased 19% compared to the prior year. Almond-based milk was added 20% less, but oat milk was added 64% more. According to IRI, sales of almond milk increased 4.5% to $1.5B in the 52 weeks ended July 11. Over the same period, whole milk sales increased 2.2% to $4.9B. Grand View Research projects the global dairy alternatives market to reach $52.6B by 2028 with a CAGR of 13%. The research firm projects the global plant-based beverage market currently valued at $22.9B to have a 14% CAGR through 2028.
In plant-based milk offerings, food companies have used barley, peas, chickpeas, pinto beans, black beans, and navy beans. Each has its nutritional benefits, taste profile, and allergens. Some plant-based milk has used blends of different plants to get the nutritional benefits while offsetting other negatives. Ripple Foods, Malibu Mylk, and Good Karma Foods are companies that are using the blended approach. Ripple Foods raised $60M in a Series E funding round this year. While taste is paramount, having a clean and straightforward ingredient label is also one of the most appealing aspects for consumers.
SunOpta Q3 preview (STKL)
SunOpta reports FQ3 results on Wednesday. The consensus EPS estimate is $.01. Sales are expected to decline by 34% due to its global ingredients division's not yet anniversaried sale. However, demand for both plant-based milk, especially oat milk and frozen fruit, continues to be strong, providing solid visibility into Q3 results. As a result, we are modeling a slight upside to EPS and sales, but given the recent performance of the shares, an in-line result should be perceived as a positive.
SunOpta's largest customer, Starbucks, said on its Oct. 28 conference call that by adding new suppliers in categories including oat milk, inventory challenges have eased. In addition, SunOpta was named as a backup supplier to Oatly in specific markets last quarter. Starbucks also reported that September-quarter SSS increased 17% YOY, confirming the strength in the on-premise channel during the quarter.
This year, inflationary pressures have been a critical concern in the consumer staples sector, but SunOpta is more insulated than its peers. Oat prices have skyrocketed 150% since the summer. SunOpta's direct exposure to oat prices is limited to the oats it uses in its own brands, while co-manufactured contracts have pass-through pricing. The raw material cost of the oats in oat milk to the end consumer is outweighed by numerous other inputs like transportation, overhead, and packaging.
