Higher truck rates forecasted (UTZ)
Truck rates have continued to push higher in 2021, but the last week was flat sequentially. The USDA reported that refrigerated truck rates were flat for the week ended December 14, but were up 10% compared to a month earlier and 44% higher than the beginning of the year. DAT Freight & Analytics published their forecast for dry van spot rates to increase another 3% over the next month as seen in the chart below.
According to a new Consumer Brands Association survey conducted by Morning Consult 70% of voters in four swing states said they have experienced shortages at grocery stores. 50% said supply chain issues had a “major” or “big” impact on their ability to get critical products. 90% of the respondents said it is important to expand trucking capacity to help fix supply chain issues and 70% said they would be more likely to back candidates who support measures to boost trucking capacity. I’m sure the questions weren’t leading in any way. Supply chain issues must be one of the key issues for voters right after the economy and COVID-19. Left unsaid is how respondents would answer, “Would you like to see more trucks on the highways when you are driving?”
Business groups continue to lobby lawmakers to alleviate supply chain issues, starting with the truck driver shortage. Lawmakers themselves have not addressed how changes they made to laws and regulations in recent years contributed to the challenges we have now like the Hours of Service rules and the Drug & Alcohol Clearinghouse registry to name a couple. There are numerous causes for the current supply chain challenges which lawmakers will likely address in part. Most likely the actions taken will be like pushing on a balloon - causing an unforeseen bulge somewhere else unless addressed with multiple parties working in concert across interest groups.
DELIVERING MEXICAN BEER (STZ)
According to Grubhub’s 2021 “Year in Food” report based on more than 32 million diners, the top convenience orders were 2% milk, toilet paper, instant ramen, paper towels, and pepperoni pizza rolls. The top order of the year was the Impossible Cheeseburger. Alcohol orders increased 11% with the margarita at #1 and Mexican beer at #2. Vegan and vegetarian-friendly orders grew by 16% and 13% respectively YOY.
New hard seltzers (BUD)
Bud Light Seltzer will launch two new hard seltzer variety packs in early 2022. The Hard Soda Pack will launch on January 3rd featuring the flavors Classic Cola, Cherry Cola, Orange Soda, and Citrus Soda. From December 27 through April 24 Bud Light Seltzer Sour will have a limited run featuring the flavors Blue Raspberry, Watermelon, Lemon, and Green Apple. Bud Light Seltzer has about 8.5% share by volume according to Fintech, a distant third after White Claw and Boston Beer.
AB InBev probably has the right approach in the category with seasonal offerings featuring new flavors. Hard seltzer’s dependence on customer trial has been a challenge and one of the reasons we remain on the sidelines for Boston Beer. The changing shifts in flavor popularity of hard seltzers can be seen in the following chart. Lemonades, teas, and punch are the most popular currently. We’ve previously ruminated why groups like MADD have not been more vocal opponents to alcohol drinks venturing towards flavors that would appeal to children. Teenage alcohol consumption has been in decline, but these flavors seem to be trying to turn that around.
A second agreement (K)
Kellogg’s announced that it reached a new tentative agreement with the Bakery, Confectionary, Tobacco Workers, and Grain Millers International Union. There have been changes to the previous agreement around COLA adjustments and legacy employee status. However, the cap on the number of lower-tier employees remains which could lead to another rejection. Union members are concerned there would be many more employees at the lower tier without the cap that would change the priorities of the union.
Senator Bernie Sanders announced he would be joining striking workers on Friday ahead of the new agreement. President Biden said hiring permanent replacements would be an “existential attack on the union and its members’ jobs and livelihoods.” Voting on the agreement will take place on Sunday and votes would be counted on Tuesday.
