Inflationary impact on groceries (KR, BYND)
Food and beverages sales for the first 11 months of 2021 were up 1.3% from the prior year and up 15.6% on a two-year stack basis. Unit sales were down 3.5% over the same time period. According to IRI, 90% of shoppers polled said they are seeing higher prices at the grocery store. 48% of shoppers said prices lately are much higher. Slightly more than half of the consumers who have observed higher prices say they are somewhat concerned about the inflation while 42% said they are extremely concerned. 61% of consumers said they are changing their grocery selections due to inflation. More than one-third of respondents said they have experienced out-of-stocks. When faced with out of stocks 39% of respondents said they went elsewhere, 28% said they chose a different brand or variety, 29% did not make a purchase, and 10% went online to purchase the item from a different store.
Inflation in the meat category has been especially pronounced. The overall fresh meat average price exceeded $4 per pound, up 12.3% in the latest quarter. Sales increased 1.2% for the year ended Oct. 3 and increased 3.9% for the 13 week period. Compared to 2019 meat department sales are up nearly 20% in the 52 weeks ended Oct. 3. For the 13 weeks ended Oct. 3 fresh beef sales increased 3.2%, chicken increased 4.7%, pork increased 6.3%, and turkey increased 1.0%. Plant-based meat sales in the fresh meat aisle decreased 2.5% in the same time period. Household penetration of plant-based meat is about 10% with about half purchasing the items only once. Inflationary trends in CPGs, meat, and general food are depicted in the chart below.
Spirits outpacing wine and beer (DEO)
The Gomberg Fredrikson Report estimates total wine sales in 2021 at slightly more than 457 million cases, representing 5.9% YOY growth. The three-year CAGR has been 4.2%. Flavored wine sales have been a bright spot for the industry at 33 million cases, up 28% over the three years. Without flavored wine, the total annual growth for wine was 3% which compares favorably to beer’s 1% growth, but behind spirits’ 4.2% growth.
UK on-premise feels Omicron impact (BUD)
According to CGA on-premise sales of drinks in the U.K. were negatively impacted by the Omicron variant. Drink sales for the week ended December 11 decreased 13% vs. the same week in 2019. That follows a 14% decline for the week ended December 4 and a 12% decline for the week ended November 27. Normally this would be one of the busiest periods of the year for British pubs, but holiday parties are being canceled now. In Scotland, where the restrictions have been the toughest, drink sales decreased 18% for the most recent week while England was down 13% and Wales was down 11%. Spirits sales outperformed the other categories. Sales of spirits were down 6% compared to a 15% decline for beer and a 21% decline for wine.
