ICR Preview
We are hosting an ICR Conference preview for companies in the Consumer Staples & Restaurants sector on Jan. 4 at 12:30 PM ET.
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Flu monitor (PRGO)
The CDC estimates that there have been at least 20 million illnesses from the flu this season through the week ended December 24, up two million from the previous week. The flu test positivity rate is now 19.8% compared to 3% a year ago. The flu had surged since Thanksgiving but is declining in most areas. The cumulative hospitalization rate was more than 4.6 times higher than the highest cumulative in-season hospitalization rate observed for this week since 2010-11. 12.1% of deaths that occurred during the week were attributed to pneumonia, influenza, of COVID-19, above the 6.8% threshold for an epidemic.
Perrigo’s Q4 is mostly set for the cough & cold season as orders are already in and production is maximized, especially for liquid medicines. Most retailers are short of cough & cold medicine. A larger or longer cough & cold season would be seen in Q1 results as retailers reorder more inventory.
California storms (KR)
A second atmospheric river brought heavy rains and mountain snows in California this past weekend. With rainfall continuing the forecasts are calling for 4-8 inches of total rainfall from the multiple storms through the end of next week. The intensity of the storms is an early signal that La Nina is weakening.
There are still four to five months left of California’s snow season, but the wet start is a good sign. However, last year’s winter season started off well with a record-breaking December for snowfall only to see little precipitation from January through March. Before the storms began 81% of the state was still under severe, extreme, or exceptional drought, but it is an improvement from 94% three months ago. California needs about an extra winter’s worth of precipitation to get out of the drought. Over a third of our vegetables and three-quarters of our fruits and nuts are grown in California. Better rainfall would be deflationary for a variety of agricultural products.
Domestic Wine Sales (NAPA, VWE)
Domestic wine sales including bulk imports increased by 4.7% in November, accelerating slightly from 4% in October. In the 12 months ended in November industry sales grew 8%. Off-premise sales decreased by 1% in November, improving from the 4% decrease in October. DTC shipments decreased by 8% in November after growing by 1% in October. Wine sales are being driven by the on-premise channel and price increases.
