Texas on-premise alcohol beverage tax receipts (TAP, BUD)
Texas reports its alcoholic beverages sales tax receipts on a monthly basis. In November, alcoholic beverage receipts increased by 7.5% YOY. That represents a deceleration from 15.9% in October. Receipts were 27% higher than in pre-pandemic November 2019. In Texas, bars have been mostly open with limited restrictions since October 2020. BeerBoard reported weak sales results in the on-premise channel for Thanksgiving Wednesday. Texas tax receipts do not indicate that one of the busiest nights of the year was a dud.
Diesel drop (WMT)
The national weekly price for on-highway diesel fell $.17 per gallon for the week ended December 5 from the previous week. It was the largest weekly drop since the 2009 financial crisis. The price per gallon fell below $5 for the first time since the first week of October. The spread between retail and wholesale prices has widened beyond $1.90 per gallon, nearly double the typical spread. Diesel prices were still up 35% YOY for the week. If the spread normalizes truckers would see significant relief in their cost which is passed onto customers through fuel surcharges. Freight rates have been a significant COGS headwind for CPG companies. Trucking rates have fallen, but higher diesel prices led to higher surcharges.
The importance of the visit (VWE, NAPA)
Visits to the winery are very important for smaller wineries. It is how wineries build their email list and the start of the customer relationship. Getting consumers to sample the wines in person helps convert them to wine club members, generating direct to consumer revenue. Wine clubs account for 62% of revenue for hundreds of smaller wineries according to Community Benchmarks. Visits to West Coast tasting rooms fell 39% in 2020 due to pandemic restrictions. After recovering in 2021, tasting room visits were still down 7% from 2019. Through October 2022, visits were still 12% below pre-pandemic 2019.
WineDirect has been monitoring the sales metrics for 1,100 of WineDirect's 2,000+ winery customers. Tasting room revenue fell 20% in Q3 2020 for the wineries WineDirect has been monitoring. In Q3 2021 sales were 50% higher, above 2019 levels. However, towards the end of Q3 revenue was tracking down 11% YOY. YTD through October DTC sales for Community Benchmark’s winery index was up 7.4% with visitations down 2.7%, and wine club sales up 11% compared to September’s +6.4% for DTC sales, -1.2% for visitations, and +9.8% for tasting room sales.
Bankruptcy filing (WBEV)
Last week Winc filed for Chapter 11 bankruptcy, almost a year after it went public. Winc positioned itself as a data-driven wine club with its own production and distribution without vineyards. Winc’s DTC revenue decreased by 22% in Q3. Winc’s distribution model was unique in that it did not use automatic shipments to get around customers having to be home to sign for the shipment. Winc reduced the size of its IPO by 73%, lowering both the share price as well as the shares being offered.
