Grocery retail sales (GO)
Grocery store retail sales grew 8.7% YOY in November, decelerating 60bps from October. On a two-year average basis, sales accelerated 30bps to 9.5% from October. According to Nielsen, 78% of the top 100 food product sub-categories had YOY volume declines during the four weeks ended November 28. The volume declines despite the sales growth points to inflationary headwinds for consumers. Customer switching to smaller package sizes, cheaper brands and private labels, or to lower-priced retailers is the expected response by consumers.
Food manufacturing PPI (CPB, UTZ, SJM SBEA)
The PPI index for food manufacturing increased 11.7% YOY in November, decelerating 110bps from October. On a two-year average basis, the index slowed 50bps from October to 6.3%. For snack food manufacturing the index increased 5.8% YOY, accelerating 100bps from October. On a two-year average basis, the index accelerated 20bps to 2.1%. The drivers behind the acceleration in the PPI index for snack manufacturing remain in place for the next several months at least.
The PPI index for roasted coffee manufacturing increased 1.9% YOY, accelerating 10bps from October. Despite the increase in the price of coffee beans in recent months, the overall manufacturing costs for the roasters have risen at a much slower pace.
A stick to vaccinate (KR)
Kroger announced it will remove two weeks of emergency leave for unvaccinated employees who contract COVID-19. The company will also add a $50 monthly health insurance surcharge for managers and nonunion salaried employees if they are unvaccinated. Both policies are effective January 1. In a tight labor market, the policies will likely lead to some attrition, but it does not apply to the large, unionized workforce. Kroger has been encouraging vaccinations with a $100 payment carrot, but penalties and sticks are likely more effective.
Free SNAP delivery (ACI)
Instacart is waiving the delivery and pickup fees on all EBT SNAP orders from January 1 through March 31. In 2021 the company offered free delivery or pickup fees on the first three EBT SNAP customer orders. Instacart’s data shows that SNAP customers opt for delivery most of the time from stores that offer both delivery and pickup. 41 million Americans receive a total of $108B in SNAP benefits for an average monthly benefit of $415 per household per month. Instacart is not the only grocery provider reaching out to SNAP beneficiaries. Safeway announced a pilot program to allow SNAP beneficiaries to utilize e-commerce to order groceries for pickup, but not delivery. It took longer for the government to enable EBT cards for online use compared to credit cards. Most states are still extending emergency SNAP benefits in December.
More shares to be sold (APPH)
AppHarvest announced it entered into a $100 million stock purchase agreement with B. Riley Principal Capital. AppHarvest has the right without obligation to sell and issue up to $100 million of shares to B. Riley over a 24 month period. AppHarvest issued 197,628 shares as consideration. AppHarvest reiterated its full-year outlook for sales and losses as well as its construction timeline. It sounds like any uptick in the share price will be quickly monetized by the new stock purchase agreement.
