Private label vs. national brands (PRGO)
According to the Private Label Manufacturers Association utilizing IRI sales data, private brand sales grew 6.5% above the 5.2% sales growth for national brands in Q1. The gap between private label and national brands widened as the first quarter progressed. In January, private brands grew 4.9% in line with the 4.8% for national brands. In February, private brands grew 6.5%, slightly above the 6.3% growth for national brands. In March, private brand sales grew 8.3%, outpacing the 4.5% growth for national brands. Private brand sales grew in 15 of the 18 grocery departments during the quarter, leaving only deli cheese, home care, and tobacco sales down. In Q1, market share for private label expanded 50bps to 18.2% while unit share expanded 60bps to 20.2%. In March, unit sales of national brands decreased 4.1% while private brands decreased 1.4%. As inflationary headwinds increase for consumers, private label should benefit from consumers trading down.
Fresh vegetable Margin pressure (SFM)
Numerous fresh vegetable FOB prices were up 50% or more for the week ending April 2. Romaine and iceberg lettuce were up more than double. Advertised prices at retail were up, but in a much more narrow range than the wholesale costs as seen in the chart below. Lower shrink in the fresh produce department was the largest gross margin tailwind during the pandemic. The shift to at-home consumption led to higher sales velocity and lower spoilage. With the gradual return to away-from home consumption, volume growth has inflected. Retailers are not passing through all of their higher costs according to the USDA.
Another CA Reyes Beer Division Acquisition (STZ)
Reyes Beer Division is acquiring Columbia Distributing’s Northern California business. The acquisition will add four million cases to Reyes. Columbia Distributing carries beers from Constellation Brands, Molson Coors, Mark Anthony Brands, Boston Beer, Heineken, and Diageo among others. The acquisition will not include AB brands. Reyes Beer Division is the largest beer wholesalers in the U.S. The distributor has been an important partner in the growth of Constellation Brands as it recognized how to capitalize on Corona and Modelo’s higher sales velocity. It has been acquisitive in recent years, with most of the acquisitions in Northern California. The Columbia Distributing acquisition is Reyes Beer Division’s first acquisition in its home California market since the Biden Administration issued an executive order on promoting competition last summer.
