November CPI (GIS)
The headline CPI decelerated 60bps sequentially to 7.1% YOY in November. The CPI for Food At Home decelerated for the third straight month to 12.0% in November from 12.4% in October. The two-year average accelerated by 30bps month over month.
The subcategories were mixed with meats slowing while dairy and cereal were still accelerating. Our macro team's projection is for disinflation, not deflation. Inflation in the food category has been above the headline CPI due to several factors like labor, supply chain shortages, soft commodity price increases, and freight costs that are all showing signs of easing.
CEO Change (HNST)
The Honest Company announced that Carla Vernon will become the company's CEO on January 9th. She was previously the VP of Consumables at Amazon, leading the babycare, household products, food, beverages, health and wellness, and beauty categories. At General Mills, she spent over 20 years in different roles. Nick Vlahos, the current CEO, will step down from day-to-day operations after six years at the helm and remain on the board. Recruiting one of your key customers to run your company is one way to boost sales and improve the relationship. Achieving positive EBITDA next year would go a long way to improving the relationship with investors.
NotCo Fast (KHC, STKL, BYND)
NotCo, a food company that utilizes technology to formulate meat and dairy alternatives, raised $70M in a series D1 round valuing the company at $1.5B. The company has raised $420M since it was founded in Chile. NotCo entered the U.S. market in 2020 with NotMilk, a plant-based milk. The company has since launched NotBurger and NotChicken. NotCo is targeting profitability in 2024 followed by an IPO in 2025.
The company recently formed a JV with Kraft Heinz to develop a range of co-branded products starting with NotCheese. NotCo has a proprietary AI platform it believes other CPG brands and suppliers can utilize for their own innovation purposes in the plant-based category. The plant-based food category continues to attract investment despite a difficult performance in the public markets. NotCo’s emphasis on AI technology to generate its innovation is differentiated, but the days when food companies were innovating with numerous cooks in the kitchen like the Swedish Chef from the Muppets is in the past. At SunOpta’s analyst day management displayed the impressive role of technology in its plant-based innovation lab.
