Hard Seltzer Report Card (SAM)
Spirits-based hard seltzers are gaining share within the hard seltzer category, which is itself seeing decreasing sales. For the 52 weeks ended July 16, malt and spirits-based hard seltzers decreased 9.4% YOY to $4.3B. YTD through July 16, the category has decreased 6%. In the most recent four-week period, malt and sugar-based seltzers accounted for 91% of the category, while spirits-based seltzers represented 9%. Over that time frame, malt and sugar-based hard seltzers have decreased by 13.7%. At the same time, spirits-based hard seltzers have gained 143bps of market share with growth of 79%.
- High Noon has led the category with sales growth of 103% in the most recent four weeks and now comprises 8% of the hard seltzer category.
- Truly has been the largest share donor, with its market share ceding 85bps in the most recent four weeks. Truly is seeing larger declines in its newer products with its core products ceding 34bps, followed by Punch ceding 26bps with sales falling 42%. Truly lemonade sales have decreased 41.5% in the most recent four weeks.
- White Claw sales fell 2.7% in the most recent four weeks, with most of the declines coming from its base products ceding 30bps of share.
- AB InBev hard seltzer sales fell 38% in the most recent four weeks. Michelob Ultra Organic Seltzer sales fell 39% in the most recent four weeks. Bud Light Seltzer core offerings fell 32% in the most recent four weeks with the core product ceding 50bps.
- Topo Chico was the largest share gainer in the hard seltzer category gaining 20bps with sales growth of 153%. Molson Coors’ hard seltzer portfolio sales increased 35% in the most recent four weeks gaining 20bps of share.
Hard seltzer is in decline. The growth is in spirits-based seltzers, but the higher prices from the tax disadvantage limits its upside and its ability to reverse the category’s direction.
Sales or margins (IMKTA, SFM)
Ingles Markets reported grocery SSS ex. gasoline of 5.7% while overall revenue grew 14%. Gross margins contracted 230bps. Retail grocery gross margins ex. gasoline contracted 44bps. Operating expenses increased 7.5% Net income decreased 5.8%. In contrast to Sprouts Farmers Market, both Ingles and Publix (-130bps) gross margins contracted with the continued surge in food inflation. With household budgets under significant pressure, consumers are paying more attention to grocery prices. Only time will tell what the longer term impact of passing on all the price increases will do for customer loyalty.
All price, no units (AVO, CMG)
Hass avocado sales increased 10.7% in Q2, decelerating from 16.2% in Q1. Avocado sales outperformed total produce sales of 4.0% in Q2 and 4.7% in Q1. Avocado dollar sales in Q2 increased 10.7%, while units decreased 13.2%, and ASP increased 27.7%. YTD (through seven four-week periods) avocado sales are up 12.8%, with units down 13.7% and ASP up 30.7%.
For the past 25 years, the Michoacan region was the only region the U.S. imported avocados from Mexico. Last week the Jalisco region received final certification from the USDA Animal and Plant Health Inspection Service. The USDA certified 8,000 hectares in the Jalisco region, equating to 3,000-5,000 tons of Haas avocados weekly. Last year the Michoacan region’s production was 200,000 tons lower, leading to higher and more volatile prices. Mission Produce seeks a more consistent supply and prices for avocados. Importing from Jalisco will extend the growing season in Mexico by ~6-8 additional weeks. Consistent supply and prices are building blocks to growing demand for a product. Mission Produce, a global leader in the sourcing and distribution of avocados, was one of the first to import the fruit into the U.S. from Jalisco.
