Avian flu waning (PPC)
More than 40 million birds in U.S. domestic flocks, mostly chicken and turkeys, have died due to the avian flu. It is the worst outbreak of bird flu since 2014-15 according to the USDA. The virus has killed 6% of the egg-laying hens in the U.S. The outbreak appears to be waning in the U.S. with the recent heatwave as the virus does not survive hot weather. The outbreak has had some varied impact on poultry and egg prices. Wholesale chicken breast meat prices rose 69% from the beginning of the year to a peak in late May, before a slight pullback recently. Chicken leg and quarter prices have continued to surge while chicken wing prices have decreased to the lowest level in two years. From 2017 to 2021 wing prices averaged 1.65 times breast meat prices. In 2022, wing prices have averaged about half of breast meat prices. Chicken prices have also increased relative to beef prices. The ratio of retail beef prices to retail broiler prices dropped to lowest level since early 2019. Pork prices have also risen relative to beef prices with the ratio at the lowest level in a year.
Cold brew acquisition (RVAC)
SYSTM Foods announced that it has acquired Chameleon Organic Coffee from Nestle. SYSTM Foods is a partnership between SYSTM Brands, a private equity firm, and PowerPlant Partners, a venture capital firm. Chameleon’s products include RTD cold brew varieties, cold brew concentrates, cold brew kits, whole bean and ground coffee, and cold brew lattes. Nestle acquired Chameleon Organic Coffee five years ago when its revenues were roughly $20M. RTD coffee is one of the fastest growing categories in beverages with dollar sales growth of 20.1% in 2021.
At the end of 2021 there were 326 active coffee brands in the MULO and C-store channels in the market. Westrock Coffee is the largest store label coffee and tea provider to U.S. restaurants. The ongoing shift in the consumers' coffee consumption to cold brew, pods, and RTDs underpins the company's investments for expansion. Not only is Westrock Coffee profitable, but the company's growth drivers in the next few years are highly visible. The company's 20% revenue CAGR and margin expansion are best in class for top and bottom-line growth. Westrock Coffee is expected to de-SPAC in Q3.
Organic tomato interest (AAPH)
Interest in purchasing organic tomatoes was flat YOY at 32%. 13% of survey respondents said they always purchase organic tomatoes. Sales of organic tomatoes grew 17% to $291M and 75.4 million pounds in 2020. The average price at retail was $3.85 per pound. Organic tomatoes were 3.6% of total organic produce sales and 7.2% of all tomatoes sold at retail. Interest in purchasing organics is highest among people in their 30s followed by those between 18 and 29 years old. Of respondents in their 50s only 2% expressed buying interest. The market for organics consists of only a portion of consumers and with retail prices much higher inflationary price increases will be a headwind for the category.
