Beer Distributors’ Index Remains Flat (STZ, SAM)
The National Beer Wholesalers Association’s (NBWA) Beer Purchasers’ Index for August remained flat at 46 for the third straight month. A reading over 50 denotes expansion, while below 50 denotes contraction. The imports category was the only beer segment expanding with a reading of 63, down from 67 in July. Most categories of beer fell from July. The craft index fell to 28 in August from 32 in July. The FMB/seltzer index improved slightly from July 28 to 31 in August. Premium lights was 38, falling from 45 in July. Premium regular was 33, falling from 36 in July. Below premium was 42, falling from 52 in July. The inventory at risk level was 54, up from 46 in July, indicating more inventory is aging and at risk of going out of code. Constellation Brands remains the sector’s growth story while the other categories remain under pressure. The off-premise channel ticked up in the most recent four weeks indicating on-premise appears to have weakened.
Plant-based beverages vs. meat alternatives (STKL, BYND)
Plant-based food sales have increased by over 50% over the past three years according to the Food Industry Association (FMI). The FMI conducted a survey sponsored by NielsenIQ of over 2,000 grocery shoppers. 43% of respondents said they regularly eat animal-product alternatives. 25% of Millennial respondents put “a lot” and 37% put “some” more effort into selecting plant-based foods and beverages than Gen X and Baby Boomers. Over the past year, plant-based foods have grown 8%. Sales of plant-based meat alternatives have grown 60% over the past three years, but in the past year have had no growth. Dairy alternative sales are more than twice the sales of meat alternatives. Plant-based milk sales have grown more than 33% over the past three years. In the past year, the category has grown 6%.
Some researchers estimate nearly half of all Americans are lactose intolerant, which provides a large base of additional customers that meat-alternative products do not have. All of SunOpta’s plant-based milk bases grew double-digits in Q2. Growth rates should accelerate with the addition of two capacity expansions.
Truck rates continue to fall (UTZ)
According to DAT’s RateView index, van spot trucking rates in August were 8% lower YOY. Spot rates fell 4.2% from June. Contract rates were up 13.4% YOY. Contract rates fell 2.2% from June. Spot rates peaked in January, but contract rates did not peak until June. Fuel prices were 64% higher YOY in July. Best Buy management said on their conference call yesterday, “Now we are experiencing some relief in international first and early signs of loosening markets domestically…. As it relates to inbound domestic transportation, while we are starting to see a more balanced capacity market, we continue to see inflationary pressures from higher fuel, labor costs, rail yard, and general supply chain network congestion.” A margin tailwind from lower truck rates may take until 2023 for some companies, it depends on their mix of contract and spot and diesel prices.
