Not your typical flu season (PRGO)
2.4% of patient visits reported through ILINet were due to respiratory illness that included fever, plus a cough or sore throat, flat from the previous week. The percentage is just below the national baseline of 2.5% as seen in the chart below, but it has been steadily increasing for the past three months. This flu season is greater than last year’s nearly non-existent season and in the middle of the previous six years. The CDC estimates there have been at least 7.3 million flu illnesses, 74,000 hospitalizations, and 4,500 deaths this season. This year’s flu season would be a disappointment if it did not compare to last year. It pushes out the cough & cold upside to next year for PRGO, but we still have three other investment themes.
Food inflation holds steady (KR, ACI)
Food inflation in the grocery channel remained at +13% YOY for the week ended May 22, for the second week in a row. The +13% increase in the grocery channel is slightly more than the +12% seen in the multi-outlet retailers. The rate of inflation for the most recent four weeks was +12%, up from +10.5% in the preceding four weeks. In the edible category refrigerated items had the highest rate of inflation at +18%. Beverage alcohol continues to have the lowest rate of inflation at +3%. The rate of inflation in fresh meat decelerated to +11% from +13% in the previous week. Due to the base effects we are still expecting at least two more months of accelerating food inflation.
Domestic beer shipments resume decline (STZ)
Domestic brewers shipped 5.9% fewer barrels in April YOY. Shipments increased 2.9% in March, but decreased ~6% in January and February. YTD shipments have decreased 3.6%. The comparisons are difficult due to the stocking of hard seltzers last spring. Domestic shipments are being supplemented by imports. Constellation Brands continues to be the only growth story in beer once again (after the hard seltzer boom busted).
