Idea Hunt Invite (SOVO, CELH, HLN)
On Thursday, September 22 at 2 PM ET, we will host an Idea Hunt call for Restaurants and Consumer Staples. We are on the hunt for longs and shorts where our estimates differ materially from consensus expectations and where the multiple could be re-rated. We will present our analysis after a further round of vetting on a handful of companies. Our best ideas often are sourced from vetted Idea Hunt companies.
The topics we will cover include:
- How to be positioned in Restaurants and Consumer Staples in Quad 4.
- Is Celsius Energy (CELH) a disrupter in the $60B energy drinks category? How long can it continue to add $300M in revenue annually?
- Haleon's (HLN) shares have stumbled out of the gate, does that represent an opportunity to invest in the spin-off?
- Can Sovos Brands (SOVO) continue to create value by plugging acquisitions into its playbook or should the strategy adjust?
Oat milk gaining share (STKL, OTLY)
Oat milk has been gaining share of the plant-based milk category. In the year ended June 12, total plant-based milk sales grew 6.4% to $2.3B according to SPINS data. Almond milk sales decreased 1% to $1.277B while oat milk sales grew 50.5% to $527M. Soy milk came in third with sales declining 0.1% to $165M. Coconut milk sales decreased 8.2% to $82M whole pea milk sales grew 27.4% to $60.1M.
In the year ended September 4, Planet Oat had retail sales of $234M, up 60% YOY according to IRI. Planet Oat’s category volume share was 38%, ahead of Oatly’s 20% and Chobani’s 17%. Planet Oat is owned by HP Hood and supplied by SunOpta. According to HP Hood, Planet Oat has the broadest customer base at 9.4 million followed by Chobani’s five million. Planet Oat’s SVP of marketing told FoodNavigator that the brand will soon announce new food service contracts with some high profile QSR brands. Planet Oat has supplied Dunkin’ Brands since 2020.
Planet Oat believes its low-sugar beverage which contains only 4 grams of sugar for its original oat milk compared to 7 grams for Chobani Oat and Oatly has been an important selling point. The brand also sees room to grow through new accounts and adding SKUs to existing accounts, particularly in larger pack sizes. Oat milk will overtake almond milk in the future and SunOpta is supplying the share gainers in the category.
Halloween spending intentions (KR, WMT, HSY)
More than one-third of survey respondents said they planned to reduce spending on Halloween this year. However, one-fifth plan to spend more as seen in the chart below. Last year, 18% of respondents said they planned to spend more while 26% said they planned to spend less. Sales of candy and chocolate grew 11% in 2021 on top of a 15% increase in 2020.
Hershey warned on its Q2 call that supply chain issues have been a headwind for the production of more seasonal items. Halloween sales represent about 10% of the company’s annual revenue. Seasonal candy sales grew 13.5% in 2021, but the Halloween season was the strongest. Halloween chocolates grew nearly 50% in 2021 while non-chocolate candies grew by 25.8%.
