Oat milk/coffee recall (OTLY, STKL, RVAC)
Lyons Magnus announced a product recall for oat milk and coffee beverage products on July 28. Lyons Magnus manufactures a wide range of products for the global food service and food ingredient channels. The concern is potential microbial contamination from Cronobacter sakazakii. 53 products were part of the product recall. Oatly’s Barista Edition was part of the recall along with a variety of other brands, including Stumptown and Intelligentsia. Sometimes product recalls can result in a significant shift in market share.
Private label picking up (PRGO)
Catalina reported that private label sales are picking up as food inflation continues to accelerate. Catalina stated that private brand baking mix sales are up 40% YTD, while soup sales are up 17%, prepared foods are up 12%, dried vegetables are up 11%, and cereal and baby food are up 6%. According to The Power of Private Brands report from the Food Marketing Institute, more than 40% of consumers say they have been buying more private brands now than before the pandemic. The report also said more than three-quarters of shoppers anticipate continuing to purchase more private labels in the future.
The WSJ reported that Amazon is cutting by half the 243,000 private label products it carries due to antitrust regulatory concerns. However, Amazon executives have disputed the report and a spokesperson said Amazon has not “seriously considered” shuttering the private label business and continues “to invest in this area, just as our many retail competitors have done for decades and continue to do today.” Perrigo is the leading private label supplier in the consumer healthcare sector. The current inflationary environment is a tailwind for the company.
Beer Wholesalers index stays flat (STZ)
The National Beer Wholesalers Association (NBWA) Beer Purchasers’ Index stayed flat at 46 in July compared to June. A reading over 50 denotes expansion, while below 50 denotes contraction. There were only two subcategories of beer with expansionary readings: imports at 67 (improving from 61 in June) and below premium at 52 (which improved for the second consecutive month from 42). The FMB and hard seltzer category fell to 28 from 36 in June. Craft beer fell to 32 in July from 33 in June, as on-premise establishments are not adding as many tap handles as there were pre-pandemic. Premium lights hit 45, up one point from June, and premium regular hit 36. The beer category’s at-risk reading for inventory was 46, a positive signal for the industry. Constellation Brands remains the sector’s growth story while other categories remain under pressure. Below premium is benefiting from consumers trading down to more affordable price points. Hard seltzer continues to be worse despite easier comparisons.
