June CPI (GIS, UTZ, LANC, PPC)
Consumer prices accelerated to 9.1% in June, the fastest annual pace since 1981. Food and fuel prices were contributors to the higher-than-expected increase in inflation. Excluding both food and fuel, core CPI increased 5.9%, a 10bps deceleration from May. CPI for food at home accelerated to 12.2% YOY in June from 11.9% in May. The CPI for food and beverages increased 10.0% from 9.7% in May. Most food categories accelerated from May, but meats, poultry, fish and eggs decelerated to 11.8% from 14.2% in May. Chicken prices accelerated 1.5% from May to 17.3% YOY. The meat category had the lowest rate of inflation since September.
The CPI for fats & oils accelerated to 19.5% from 16.9% in May. Fats and oils are a key component in many CPG categories from baked goods, dressings, chips, plant-based milks, etc.
The cereal and bakery goods CPI accelerated to 13.8% from 11.6% in May. The CPI for dairy accelerated to 13.5% from 11.8% in May. Breakfast cereal is said to be the least expensive source of calories in the grocery store. A bowl of cereal is much more expensive than it used to be.
The CPI for alcoholic beverages was flat sequentially at +4.0% YOY, the lowest rate of increase of the major food and beverage categories. The CPI for off-premise beer decelerated to 4.3% YOY from 4.5% in May. In the on-premise channel beer CPI remained flat at +6% YOY.
July’s food at home CPI will likely decelerate after 13 straight months of acceleration. The change in trend will be notable, but disinflation is not the same as deflation.
Off-premise beer sales fall for the 4th (STZ)
According to IRI off-premise, beer sales decreased 2% for the week ending July 3rd. It was the highest sales volume week of the year since the last 4th of July. Overall beverage alcohol sales decreased 1% YOY, with spirits growing 2% and wine decreasing 4%. Compared to the prior week, beverage alcohol sales grew 14.2%, driven by 14.3% growth in beer, 18.7% growth in spirits, and 9.6% growth in wine. Wine sales decreased 3.5% YOY.
Modelo led the beer brands with 19% YOY growth, driving the overall imports category to 5.2% growth. Constellation Brands overall grew 9.3% for the week. FMBs grew 11.5%, domestic super-premium grew 3.6%, and domestic sub-premium grew 2%. Craft beer sales fell 6.7%, while domestic premium fell 3.9%. The RTD segment decreased 3% YOY, with hard seltzer sales declining 13.3%, wine seltzer declining 40.5%, malt-based hard seltzers declining 18%, and spirits-based seltzers increasing 78.3%. E&J Gallo grew 45% in the spirits category, driven by High Noon’s 91% growth. Hard seltzer sales are the weakest category in the beer segment, with sales declines of 8% in the YTD period through June 12. Craft beer sales have declined 7.7% YTD through June 12 compared to the overall beer category’s 2.2% decline.
Constellation Brands continues to be the growth story in beer while RTDs continue to make inroads into hard seltzer.
New Chairman (BRCC)
Roland Smith has been appointed as Executive Chairman of Black Rifle Coffee Company’s Board. He was currently serving on the Board, but he will now be empowered to take on more responsibility within the company. Mr. Smith has been the CEO of several public companies, including Arby’s, Wendy’s, and Office Depot. He is a graduate of West Point and served in the Army. Roland’s extensive experience as CEO and board member of numerous public companies should provide invaluable advice for Evan Hafer and BRCC’s management team. He does have a reputation for turnarounds, but his experience in the public markets and Army background are more relevant here. Black Rifle Coffee Company is a young company that should not be pigeonholed as a restaurant company. Roland Smith brings retail sector experience as well.
