Thanksgiving dinner (WMT)
The average cost of Thanksgiving dinner for ten people increased by 20% this year according to the Farm Bureau’s 37th annual survey. Last year’s meal was up 13.7% over 2020. Turkey, the centerpiece for most Thanksgiving tables, is up 21% per pound this year. The turkey prices were surveyed in late October before most retailers began discounting. According to the USDA Agricultural Marketing Service data, turkey prices fell 39% during the week of November 3-9 and an additional 14% during the following week. The number of grocers discounting turkeys rose from 29% to 60% in the latest week. The steepest price increase this year was seen in stuffing, up 69%. Pie crusts and whipping cream were up 26%. The only item surveyed that was lower YOY was a bag of fresh cranberries, down 14%.
BJ’s Wholesale Club offered a free turkey bounceback offer this year for members who spent $150 or more during the first ten days of November. Walmart cut the prices of traditional Thanksgiving food items to 2021 prices to remove the impact of inflation. Aldi discounted the prices back to 2019 levels with discounts of up to 30% on some items. A number of grocers including Kroger and Southeastern Grocers (Winn-Dixie) are offering Thanksgiving meal baskets for prices as low as $25 or $30. The promotional environment on the margins has begun to pick up in food retail.
A2 Milk (STKL)
A2 Milk has seen its revenue in North America grow 30% to $83M in the year that ended June 30. A2 Milk markets itself as easier to digest than conventional dairy milk due to the absence of the A1 milk protein. The company says large numbers of consumers purchase its milk not because they have difficulty digesting regular dairy milk, but because they view a2 Milk as better. In Australia, where the company was founded, over two-thirds of the company’s customers report having no milk intolerance issues. In the U.S. the company has begun the process to introduce an infant formula. A2 Milk recently raised prices by 11% due to the higher cost of dairy milk and freight costs but noted it has not seen an impact from the end consumer. How many people know what the A1 milk protein is? There is a similar connection for plant-based milk consumers’ perception of better for you despite not being lactose intolerant. The dairy milk category continues to be vulnerable to share loss by not being able to respond to the competition’s marketing and innovation.
Wine’s long-term challenge (NAPA, VWE)
Core wine drinkers are defined as those who drink at least a glass of wine a week. They are estimated to account for 18% of the 240 million legal drinking-age adults in the U.S. Marginal wine drinkers are defined as those who drink a glass once a quarter and account for 15% of 21 years or older adults. Core drinkers have increased from 15% pre-pandemic while marginal drinkers have fallen from 25% pre-pandemic. Non-wine drinkers who drink other alcohol except wine account for 29% of 21 years or older adults according to the Wine Market Council’s survey. Infrequent alcohol consumers represent 10% of adults while abstainers represent 28%.
Only 16% of the younger generation identifies as a core wine drinkers while 35-36% of them identify as non-wine drinkers. Wine’s share of all alcohol sales to the 21-34 year old demographic accounted for 19.2% while spirits accounted for 28.7%, and beer accounted for 29.4%. Wine’s long-term challenge is to replace the baby boomer generation.
