Q&A call today
We are hosting our monthly Restaurants and Consumer Staples Q&A call today at 10 AM ET. Send your questions ahead of time to .
Sub price increase (BRCC)
Black Rifle Coffee Company has implemented a new pricing structure for its coffee club subscriptions. The cost pressure is coming from green coffee bean prices as well as shipping costs. The standard monthly subscription increased $1 to $16 for one bag of coffee. The company highlighted a way to offset the price increases for the standard subscription by switching from 1 bag every month to two bags every two months. The less frequent shipments will save the coffee club members $4.80 per order.
BRCC reported Q1 revenue growth of 35%, but gross margins contracted 500bps. At the time of the conference call management had decided to raise prices in several areas, but not for the coffee club subscription. Management left that pricing lever for the future, but they also maintained guidance for achieving positive EBITDA for the year. The subscription price increase should better position the company to achieve its own goals for the year. I have not seen a company appear to take price as reluctantly this year as this step by BRCC which I expect should be well received by subscription members.
The flu down under (PRGO)
An early and severe outbreak of influenza has hit Australia in the last couple of weeks. The New South Wales Premier Dominic Perrottet said the state was currently experiencing “one of the worst flu seasons we’ve ever had.” The flu season in Australia typically peaks in September, but authorities are hoping they have seen this season’s peak. Australia has also reported high levels of Sars-CoV-2, RSV, rhinoviruses, and adenoviruses at the same time. Doctors believe the reduced exposure to viruses over the past two years have left people with less protection. Supermarkets and drugstores in parts of the country have limited purchases of medicines and tissues as supplies are running low.
Vaccine manufacturers chose the most active strains of influenza in the Southern hemisphere during the summer as a predictor of what will be the most prevalent when the Northern hemisphere enters the winter months. So far in Australia’s flu season the peak has been earlier and diagnosed cases have been higher. Australia’s larger flu season does not necessarily mean we will have a similar flu season, but the subtype of influenza has a good tendency to be similar in both hemispheres. H3N2 is the dominant subtype currently in Australia and vaccines are less effective against it. Perrigo would benefit from a typical flu and cough/cold season as retailers still had inventory from the 2020-2021 non-existent flu season.
