Westrock Coffee analyst day (RVAC)
Westrock Coffee is hosting a sell-side analyst day on Tuesday, June 28. Westrock Coffee sits in the nexus between coffee growers and end consumers. It offers a number of services to coffee sellers from sourcing, roasting, brewing, blending, packaging, and formulation. It supplies more than half the largest retailers, QSRs, and C-stores. Westrock Coffee is the largest store label coffee and tea provider to U.S. restaurants. Consumers drink 20 million cups of its coffee daily. The ongoing shift in the consumers' coffee consumption to cold brew, pods, and RTDs underpins the company's investments for expansion.
Coffee consumption is one of the few consumer habits that accelerated during the pandemic and continued to grow as COVID-19's impact ebbed. 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. Management is taking the company public to finance the capacity build-out to pursue the growth opportunities it has in front of the company. The SPAC price offers a compelling value for an essential player in the coffee channel.
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We presented a Black Book on Westrock Coffee last month. For the replay and materials CLICK HERE. |
Infant formula shortage continues (PRGO)
The FDA awarded a $70,000 contract to NielsenIQ for four months of retail tracking data. An incomplete picture of infant formula inventory levels was a factor in the agency’s slow response to the shortage. Data the White House tracks shows that in-stock rates have fallen further since early May. According to IRI, the in-stock rate for baby formula was 76.5% for the week ended June 12, down from 79% in early May. Datasembly reported that 43% of baby formula was out of stock in May before increasing to 74% by the end of May. Before the contract began the FDA had been piecing data from various government agencies, manufacturers, and retailers. The additional media attention led to more stocking up by concerned parents. The Administration has turned to imports to alleviate the shortage. On Sunday a cargo plane carrying enough formula for 1.5 million bottles arrived from Nestle. The flooding at Abbott’s Michigan plant has delayed by several weeks the return to prior levels of domestic production.
Grocery taxes being cut (KR)
Illinois’ grocery tax will be suspended for one year beginning on July 1. The 1% sales tax on groceries will save taxpayers up to $400M. The tax suspension includes food for off-premise consumption, but will not include alcoholic beverages, soft drinks, and candy. Last week, Virginia eliminated the state’s portion of the grocery tax, 1.5%, beginning in 2023. Tennessee will suspend its grocery sales tax during the month of August. Other states are considering suspending their grocery taxes as well including Oklahoma, and Kansas. Before the recent changes, there were only 13 states that tax groceries. With flush budgets, an upcoming election, and high inflation rates state governments have looked for ways to be seen helping consumers. Food and gasoline are two high profile cost increases for consumers. Food at home prices were up 12% in May, but the grocery sales tax rate being cut is only 1%.
