Flu Monitor (PRGO)
11,269 influenza patients were admitted to hospitals in the week ended November 19. The CDC estimates that there have been at least 6.2 million illnesses from the flu this season. There are multiple respiratory viruses co-circulating currently. The cumulative hospitalization rate is the highest it has been since 2010-11.
A much higher proportion of flu tests are turning up positive than in previous years. During large flu seasons in the past, the positivity rate peaked at ~3.6%, but last week 18.2% of flu tests were positive. New York City’s levels are “very high” according to the CDC along with more than a dozen states, mostly in the southeast, given the same designation. Most of the influenza viruses tested by the CDC are similar to the ones targeted by this year’s flu vaccine. More people who are feeling sick have the flu than in the recent past. According to the American Society of Health-Systems Pharmacists, there is a shortage of front-line antibiotics amoxicillin, and Augmentin. Tamiflu and albuterol are also in short supply. The children’s Tylenol shortage in Canada has carried over into the U.S. More than 100,000 Americans missed work in October, an all-time high, to take care of sick children.
Perrigo’s Q4 is mostly set for the cough & cold season as orders are already in and production is maximized, especially for liquid medicines. A larger or longer cough & cold season would be seen in Q1 results as retailers reorder more inventory.
Less Thanksgiving partying (BUD, TAP)
According to BeerBoard draft beer sales, the night before Thanksgiving decreased by 17.1% compared to the same day in 2021. The night before Thanksgiving (Black Wednesday for bars) is typically the highest volume night of the year for bars due to a surge in out-of-towners and the start of a four-day weekend. The Wednesday night before Thanksgiving in 2021 was up 79.1% compared to the same night in 2020. Wednesday, November 23, 2022, was even down compared to the previous Wednesday, November 16. In comparison in 2021, the Wednesday before Thanksgiving was up 69.2% to the previous Wednesday one week earlier. People were traveling, but apparently not drinking draft beer. AAA estimated 54.6 million people traveled 50 miles or more this Thanksgiving weekend, up 1.5% over the prior year and 98% of pre-pandemic levels. On Sunday TSA screened 2.56 million passengers at checkpoints, the highest volume since the pandemic began.
Alcohol profit sharing (KO)
Coca-Cola agreed to compensate U.S. bottlers for alcohol brand extensions. Coca-Cola has seen early success with the introduction of Topo Chico Hard Seltzer and Simply Spiked. Next year Brown-Forman will launch a Jack & Coke canned cocktail. The alcoholic products are distributed by beer distributors instead of Coca-Cola’s bottling network. Coca-Cola has established two methods of compensation to the bottlers. For brand extensions that are predominantly warehouse delivered not by the Coca-Cola system bottlers the compensation will be based on a percentage of profit. For brand extensions on products that are generally bottler distributed including Fresca and Coca-Cola a larger percentage of the profit will be shared. PepsiCo’s alcohol strategy differs from Coca-Cola. PepsiCo established a subsidiary called Blue Cloud to distribute alcohol products manufactured by beer companies. The agreement largely resembles what the companies were considering this summer. The questions about potential brand confusion from alcoholic beverages are in the rearview, but the size of the revenue opportunity remains uncertain.
