Spiked juice (TAP)
Molson Coors expanded its agreement with Coca-Cola to develop and distribute a hard seltzer for the Simply brand. Simply is the market leader in chilled juice which gives it the advantages of brand recognition and flavors with proven popularity. Coca-Cola and Molson Coors currently partner on Topo Chico Hard Seltzer. Coca-Cola announced a hard seltzer version of Fresca with Constellation Brands two weeks earlier. Coca-Cola partnering with two different beer manufacturers could be due to the different distribution it is seeking for its brands. Simply Spiked Lemonade will launch this summer, while Boston Beer and PepsiCo’s Hard Mtn Dew will launch in February. The RTD/hard seltzer category has become increasingly crowded so known brand launches are the current strategy (just like the current movie releases with well-known actors).
U.K. away from home recovery (NOMD)
British Prime Minister Boris Johnson announced last week that the government would ease COVID-19 restrictions. Face masks are no longer required in schools and the advice to work from home has been lifted. On Jan. 27 COVID-19 passports will be dropped for large events and the requirement to wear face masks in public will be removed. The requirement to self-isolate for five days if infected will remain until March 24. People must still wear face masks in most indoor public venues except where it is not practical like pubs, restaurants, and gyms. People must still show they are vaccinated to attend nightclubs and large scale events. Scotland and Wales announced a similar easing of restrictions. Food away from home share is greater in the U.S. than the U.K. at ~54% vs. ~36% respectively, but in the U.K. it has already fully recovered as seen in the chart below. Frozen food was a beneficiary of more at-home meal consumption and the U.K. is Nomad Foods’ largest market.
Avocado prices soar (AVO)
With truck rates continuing to make new highs, produce prices with freight costs included are increasing as well. Food retailers are weighing lower produce inventories rather than filling the shelves at any cost. Higher sell-through rates due to greater demand during the pandemic have been one of the largest tailwinds to grocers’ gross margins through lower shrink. When a particular produce item is in demand retailers do not have a choice but to order the item and pass on the price increase. Avocado prices for the third week of the year were 40% higher than any other year as seen in the chart below. Headed closer to the Super Bowl when avocado prices typically rise the crop may hit record prices.
