Online grocery increases in July (KR, WMT)
Online grocery sales increased 16% YOY in July. Sequentially sales in July grew 8% from June. Delivery sales grew 25% YOY accelerating from the 19% growth in June. Pickup sales grew 17% accelerating from the 6% growth in June. Ship-to-home sales were flat YOY, improving sequentially from June in sales and growth rate.
According to Brick Meets Click’s consumer survey there is a correlation between digital grocery and concern about COVID-19. During July 41% of all U.S. households shopped for groceries online during the month. One-fifth of households said they were not at all concerned about catching COVID-19 and 36% of those households had shopped digitally for groceries in the past month. As the level of concern rose so did the percentage of online grocery shopping. Shoppers who were somewhat concerned about COVID-19 had a 15% increase in digital shopping. Shoppers who were very concerned had a 20% higher percentage of digital grocery shopping. Shoppers who identified as extremely concerned had a 53% greater percentage of digital grocery shopping.
The average order size increased by 11% for all three order methods reflecting inflation, but the magnitude varied. Delivery tickets rose 13% while ship-to-home increased 11%, and pickup rose 5%. The intent to purchase online again within the next month was 68% for mass retailers compared to 58% for grocers, widening for mass retailers. 30% of customers who placed an online order from a grocery store also placed an order with a mass retailer, increasing 4% points YOY. Mass retailers are winning online grocery sales and are keeping the competitive pressure on the grocers.
A Wine Harvest On the Smaller Size (VWE, NAPA)
Ciatti, a global wine and grape broker, published its 2022 California harvest update. Ciatti forecasts a crop in the 3.7 to 3.9 million ton range, up from 3.61 million last year. A harvest below 4.0 million tons would be up from 2020 and 2021, but below 2016 through 2019. The bulk wine market was described as abnormally slow in a slow time of the year. According to NielsenIQ wine sales in the off-premise market were down 10% in the most recent 12 months while DTC sales were down 9% in the first half of 2022. There are ample inventories of Cabernet Sauvignon and Pinot Noir in the bulk market, two of the top varietals for The Duckhorn Portfolio, as seen in the chart below. Since the 2022 harvest is not projected to be large, the lingering inventories suggest that winery sales projections have been revised lower in the industry.
Alcohol imports Decelerate (STZ)
Total beverage alcohol imports grew 14% over the 12 months ended June. Over the last three months, imports grew 12% decelerating from +37% in the three months ended May.
- Imported beer grew 2% by volume and 4% by value over the last 12 months. Over the last three months, beer imports were flat by volume and 4% by value, decelerating from 6% growth by volume and 10% by value in the three months ended May. 79% of imported beer comes from Mexico. Constellation Brands represents a majority of Mexican beer imports and 60% of imported beer.
- Imported packaged wine for the last 12 months was flat by volume and up 16% by value. Over the last three months, volumes decreased by 14%, and the value was flat.
- Imported packaged spirits grew 23% by value over the last 12 months. Over the last three months, volumes grew 15% and value grew 28%. That compares to 18% volume growth and 31% value growth over the three months ended in May.
- Exported beer grew 30% by value over the last 12 months. Over the last three months, exported beer grew 15% by volume and 49% by value. Exported packaged wine grew 20% by volume and 18% by value over the last three months.
Constellation Brands’ shipments were up 17% in the quarter ended May, well above trend. Management attributed the strength to lapping supply challenges from weather impacts. Shipments appear to be normalizing in June.
