Alcohol imports Pickup (STZ)
Total beverage alcohol imports grew 12% over the 12 months that ended in September. Over the last three months, imports grew 7%, accelerating slightly from +6% in the three months that ended in August.
- Imported beer grew 3% by volume and 5% by value over the last 12 months. Over the last three months, beer imports grew 5% by volume and 7% by value accelerating from flat and 2% respectively for the three months that ended in August. 80% 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 decreased by 11% by volume and increased by 4% by value. Over the last three months, volumes decreased by 20%, and by value decreased 6%.
- Imported packaged spirits grew 24% by value over the last 12 months. Over the last three months, volumes grew 7% and value grew 18%. That compares to 8% volume growth and 18% value growth over the three months that ended in August.
- Exported beer grew 33% by value over the last 12 months. Over the last three months, exported beer grew 16% by volume and 31% by value. Exported packaged wine fell 8% by volume and fell 9% by value over the last three months, negatively impacted by the stronger dollar.
Constellation Brands’ shipments grew 12% for the quarter that ended June, outperforming other imported beer. Management expects shipments to match depletions for the remainder of the year.
Snack performance (UTZ, PEP)
The growth in snacking is one of our secular investment themes in Consumer Staples. Through the first three quarters of 2022 snack sales grew by 11.4% in IRI’s multi-outlet plus convenience store (MULO) channel. Since 2019, the category has grown by 26%. Total snack unit sales fell 2.2% through the first three quarters while volume was down 1.1% indicating a shift to larger pack sizes. Price was a major contributor to the growth in the snack category with salty snack prices up 16% through the first three quarters. Prices for the other categories increased: +14.9% for cookies, +13.5% for crackers, +15.7% for granola bars, +3.9% for nuts/seeds, +9.9% for meat snacks, +22.6% for fruit snacks, +16.6% for popcorn, and +12.7% for rice cakes. Volumes since 2019 for many of the subcategories are flattish.
Six of the nine subcategories of snacks grew by double digits during the first three quarters of 2022. The largest subcategory, salty snacks, grew by an impressive 15.8% YOY. Potato chips have the largest share within salty snacks growing 14.7% to $7.5B. Pretzels grew the fastest within salty snacks with sales up 17.6% and volume up 3.8%. One of the attributes of snacking is the pricing power in the category as well as the limited share of private label. Several of our long investment ideas are benefiting from the secular growth in snacking including UTZ Brands, PepsiCo, and General Mills.
Cement feet (STKL)
PETA protestors encased their feet in cement and blocked the entrances at Starbucks cafes in Detroit, Chicago, New York City, Nashville, and Seattle. They were protesting the surcharge for nondairy milk. PETA members have used other forms of protest in the past including supergluing their hands to the counter. PETA cites the ethical and environmental implications of the dairy industry as a reason for their protest. Starbucks in the U.K. removed the surcharge for nondairy milk after some protests at the start of the year, but protestors have not had the same success here. The average surcharge is about $.70. In the U.S. it is free to add a splash of nondairy milk. SunOpta is the supplier of all the plant-based milks for Starbucks except for oat milk, which it is the secondary supplier. Many people try oat milk and other plant-based milks for the first time in their coffee.
