Spirits and wine sales (STZ)
Spirits sales in the year ended November 28 increased 0.2% YOY in IRI off-premise channels. The only major categories in spirits to record growth were pre-mixed cocktails, spirits-based hard seltzers, and tequila. Two-thirds of the 100 largest-selling spirits actually decreased in the past year. Only 15 of the top 100 recorded double-digit gains. Of the 15 spirits that did see double-digit gains, all but one were premium priced spirits (>$25 per 750ml bottle). The 14 included eight whiskies, five tequilas, and one cognac.
Wine volumes declined 10% in the year ended November 28 in IRI channels. RTD wine-based cocktails and sparkling wines were the only major categories of wine to record growth. Table wine sales fell 7% in the period, but Constellation Brands’ Meiomi had double-digit growth.
Fruit sales accelerate (DOLE, FDP)
All of the top ten fresh fruits grew in the YTD through November. Fresh fruit sales grew 8.5% in November YOY, accelerating from +5.6% growth in Q3 and 3.4% in Q2. Prices for fresh produce were up 6% YOY for the YTD period while fruit inflation was 8%. In November, fruit prices accelerated to +12% YOY while sales were up 8.5%. Compared to 2019 fruit sales were up 18%. Sales of berries, the largest fruit category were up 8.5% in November YOY and 18.5% vs. November 2019. Sales of salad kits were up 7.1% in November, while sales of avocados were up 9.2%.
Despite a robust year for fruit and produce both Dole (DOLE) and Fresh Del Monte (FDP) have not had a good year for stock performance. Agriculture is capital intensive, a long working capital cycle, and subject to commodity price swings.
Delivery fee too steep (KR, ACI)
The NY Post reported that since Whole Foods implemented a $9.95 delivery fee on October 25 orders have plummeted. Grocery delivery had previously been free for Amazon Prime customers. According to several retail consultants cited in the article Whole Foods was losing so much from its delivery offering that it had to institute a fee. Walmart offers free delivery for orders over $35 to customers who pay an annual $98 fee while Instacart offers the same service for $100. Kroger charges $9.95 to $11.95 for a delivery order while also partnering with Instacart. Kroger is also rolling out an annual subscription delivery service by market that would offer free delivery for annual subscription tiers of $59 or $99. Albertsons’ $99 annual membership offers free delivery as well for orders over $35. Grocery delivery has lower margins and is generally unprofitable, but it was a surprise for Whole Foods to implement a delivery fee on top of Prime membership. If Amazon couldn’t make it work, it is hard to see it work for Kroger and Albertsons.
