The future of wine (VWE, NAPA, STZ)
Wine's time is now. As a 6,000-year-old CPG time is on a different scale, but as a public investment wine is back. The wine industry is fragmented with 10,000 wineries, but it is on the path of consolidation. Since the pandemic, consolidation has accelerated. The public markets will facilitate the consolidation. Wine never left the public markets, but there have not been pure-play investment vehicles to publicly invest in wine growth in decades. Then last year four wine companies went public.
We are hosting a Black Book on the wine sector on Thursday, March 31 at 12:30 PM ET.
We will present a deep dive into the wine category. Our Black Book will cover:
- the current state of the market
- demographic trends
- channel power
- the importance of scale
- M&A
- and where we see the sector in five and ten years.
We will also present our investment case for Vintage Wine Estates (VWE), Constellation Brands (STZ), and the Duckhorn Portfolio (NAPA).
Produce inflation (ACI)
Fresh produce prices were up 10.3% in the broad multi-outlet channel in February vs. the prior year and 16.8% compared to February 2020. Overall produce volumes decreased 5.7% in February. Produce dollar sales grew 4.6%. The price per pound of fresh produce increased by 10.9% YOY in February. Fruit prices were 16.1% higher in February compared to fresh vegetable prices up 6.2%. In February produce dollar sales grew 4.6% while volumes dropped 5.7%. The 10.3% percentage point gap between volume and dollars was due to inflation and less promotions. The largest increases in price per pound were limes up 57% and avocados up 36.6%. Of the top ten produce items, salad kits had the lowest rate of inflation at 9.8%. Sales of salad kits, which are among the top five things people make for lunch when working from home, were up 3.7%.
Campaign down under (OTLY)
Oatly launched a new marketing campaign in Australia called “The New Norm&Al Show. The campaign seeks to kick off a nationwide conversation about how eating a plant-based diet is a normal choice these days. Oatly is an effective marketing company, it is too bad they expend so much effort on self-manufacturing. Oatly has a larger international presence than similarly sized brands, but it is supply-constrained in many of its markets. A comparison to Truly and White Claw highlights the difference in international sales with the hard seltzer brands having a small presence outside the U.S., but much larger revenue bases than Oatly.
