Tasting Room recovery (VWE, NAPA)
Visitation to CommunityBenchmark’s database of 400+ tasting rooms showed traffic up 78.9% in February YOY, but down 15.7% compared to pre-pandemic February 2020. That represents a deceleration from the 158% growth in traffic in January. Tasting room sales increased 91.1% YOY and were up 19.2% compared to pre-pandemic February 2020. That represents a deceleration from 155% in January. Wine club sales increased 10.8% YOY and were up 23.6% compared to pre-pandemic February 2020. That represents a deceleration from 19% growth in January. Online sales decreased 16.5% YOY, but were up 60% compared to pre-pandemic February 2020. Tasting room sales are positioned to be one of the strongest channels for wineries in 2022. Tasting room sales for Napa and Sonoma counties are shown in the table below. We hosted our Future of Wine Black Book yesterday.
C-Store beverage sales (BRCC)
Soft drink sales in convenience stores increased 17.7% YOY from November 1, 2021 to January 31, 2022 according to National Retail Solutions. Carbonated beverage sales grew 7.3% for the year ended December 26, 2021 in the convenience store channel according to IRI. Soft drink sales grew 4% for the year ended January 29 in the convenience store channel according to NielsenIQ. Sparkling water sales grew 20.4% boosting the category while seltzer water sales grew 6.8%. RTD coffee sales, while still a small percentage of beverages, had strong growth of 25.3%. RTD coffee growth will be the largest dollar contributor to Black Rifle Coffee Company’s sales growth this year. BRCC currently only has 4 SKUs, but distribution growth has necessitated additional RTD manufacturing capacity.
Plant more corn (PPC)
The USDA released its 2022 Prospective Plantings report yesterday. Corn acreage was estimated to be down 4% to the lowest acreage in five years, lower than analysts were expecting. Supplies could be a significant concern if the yields were to come in short of record levels. Soybeans acreage was estimated to be up 4% to a new record, more than analysts were expecting. Soybeans supplies could be quite high if the yields came in line with the recent trend. The higher soybeans acreage surprise to the industry reflects higher fertilizer costs impacting farmers’ planting decisions. Wheat acreage was estimated to be up 1%, slightly less than expected. The projected wheat acreage would be the fifth lowest on record. Cotton acreage was estimated to be up 9%. The plantings report was bullish for corn and bearish for soybeans.
The market will be signaling farmers to plant more corn after yesterday’s report. Corn and soybeans are the starting input for a large variety of food items, but the correlation to food inflation is not as high as one would think.
