Alcohol imports accelerate (STZ)
Total beverage alcohol imports grew 20% by value over the last 12 months ended February. Over the last three months, imports grew 15%, accelerating from 10% growth for the three-month period ended February.
- Imported beer grew 9% by volume and 11% by value over the last 12 months. Over the last three months, beer imports grew 4% by volume and 6% by value. That represents a swing from January when the last three months had a volume decrease of 3% and a value decrease of 2%. 78% of imported beer comes from Mexico.
- Imported packaged wine grew 12% by volume and 29% by value over the last 12 months. Over the last three months, volumes declined 4% and grew 7% by value. That represents a slowdown from flat volumes and a 15% increase in value for the three-month period ended January.
- Imported packaged spirits grew 16% by volume and grew 26% by value over the last 12 months. Over the last three months, volumes grew 14% by volume and 34% by value. That represents an uptick from the 8% growth in volumes and 21% by value for the three-month period ended January. 37% of imported packaged spirits come from Mexico.
Total beverage alcohol exports grew 22% by value over the last 12 months ended February. Over the last three months exports grew 33%. Beer exports decreased 16% by value over the last three months. Packaged spirits exports grew 48% by value and 44% by volume over the last three months. Packaged wine exports increased 6% by value and fell 3% by volume over the last three months. Constellation Brands has been the principal share gainer this year. YTD through March 12, imported beer has gained 1.6% points of market share in the off-premise channel compared to the prior year. Nearly all of those gains are from Mexican beer imports.
Grocery visitations (GO)
Consumers are visiting the grocery store more frequently, but spending less time per trip. The median of the visit duration decreased 5.4%, 2.4%, and 3.6% YOY in Q2, Q3, and Q4 of 2021 as seen in the chart below. At the same time, the number of visits increased by 11%, 7%, and 6.8% respectively. Grocery chains would prefer more frequent visits, especially with shoppers purchasing from the departments on the walls. The challenge for the supermarkets is losing grocery trips to other retailers. Supermarkets that were the weekly destination for all food spending will see the food basket share being divided as shoppers visit other destinations. Grocery Outlet will be a beneficiary of traffic patterns returning to pre-pandemic habits as well as a tailwind from looking to offset inflationary pressures.
Westrock SPAC (RVAC, WEST, BRCC)
Riverview Acquisition Corp. (RVAC), a SPAC, announced on Monday that it will merge with Westrock Coffee Holdings. As part of the deal there will be a $250M PIPE from Southeastern Asset Management and the family office for the Haslams (Pilot Co. & Cleveland Browns). The transaction values Westrock at an enterprise value of $1.086B. Without any redemptions, it would inject $500 million into the company.
Westrock, which calls itself a beverage solutions provider, is in the middle of the supply chain for coffee, tea, and other beverage ingredients. Westrock is the largest coffee and tea supplier to restaurants in the U.S. and the #2 coffee extract supplier in RTDs. It is the sole coffee provider to more than 80% of its top 20 customers. The company cites two secular tailwinds for its growth: 1) the shift from hot coffee to cold brew, and 2) the shift from coffee counter to single-serve. At the same time, more retailers are adding RTDs while the industry has a capacity shortage.
The company projects sales to grow 30% this year to $960M. EBITDA is projected to be $75M. At $10 the projected valuation would be 14.5x 2022 EBITDA. Riverview Acquisition Corp. is led by R. Brad Martin, former CEO of Saks. Two of the best-performing IPOs in our consumables coverage have been Dutch Bros (BROS) and Black Rifle Coffee Company (BRCC), so we are not surprised to see another coffee IPO. However, we are a little surprised by the timing given the volatility in the markets. We do plan on doing more research on Westrock in the future.
