ICR Conference
The ICR Conference is one of the largest consumer investment conferences of the year. Numerous companies in Restaurants and Consumer Staples are scheduled to present at the ICR Conference on January 9 and 10. We have published a Primer to provide a reference guide for many of the presenting companies in our Restaurants and Consumer Staples sectors. The Primer provides an investment summary for our focus companies presenting at the conference. Each company section provides an investment overview, brief company synopsis, and questions/discussion points for the management teams. Make sure to bring our Primer with you to the conference.
Webcast Replay: CLICK HEREConference Primer Download: CLICK HERE |
No more pancakes (SOVO)
Sovos Brands announced the sale of Birch Benders to Hometown Food Company. The terms of the transaction were not disclosed. Hometown Food Company is a portfolio company owned by Brynwood Partners. It owns several breakfast and baking brands. Sovos Brands took a full impairment of $42M for Birch Benders’ goodwill in Q2.
We recently added Sovos Brands to our Long Bias list. Birch Benders has been the fly in the ointment for Sovos Brands. Birch Benders has been the acquisition that detracted from the portfolio of brands growth formula. Without Birch Benders, management can focus on Rao’s and Noosa. The future success of Rao’s in extending beyond sauce is a better use of management’s attention than the pandemic hangover of pancakes. Missing out on Kodiak for $110M might have influenced management into projecting too much for Birch Benders.
Alcohol Imports (STZ)
Total beverage alcohol imports grew 11% over the 12 months that ended in November. Over the last three months, imports grew 5% decelerating from +13% in the three months that ended in October.
- Imported beer grew 2% by volume and 5% by value over the last 12 months. Over the last three months, beer imports were flat by volume and +2% by value decelerating from +4% and 6% respectively for the three months that ended in October. Mexican beer volumes in November fell 11%. 80% of imported beer comes from Mexico. Constellation Brands represents a majority of Mexican beer imports and 60% of imported beer.
- Imported packaged wine for the last 12 months decreased by 13% by volume and was flat by value. Over the last three months, volumes decreased by 14%, and by value decreased 2%.
- Imported packaged spirits grew 22% by value over the last 12 months. Over the last three months, volumes grew 2% and value grew 10%. That compares to 12% volume growth and 23% value growth over the three months that ended in October.
- Exported beer grew 30% by value over the last 12 months. Over the last three months, exported beer decreased by 20% by volume and 11% by value. Exported packaged wine fell 10% by volume and fell 6% by value over the last three months, negatively impacted by the stronger dollar.
Constellation Brands’ shipments decelerated from 12% for the quarter that ended June to 2.7% the following quarter. We are hosting a Black Book on Constellation Brands on Friday at 12:30 PM.
Greater velocity (BRCC)
Black Rifle pre-announced FQ4 revenues yesterday ahead of its presentation at the ICR conference. Revenue for 2022 on a preliminary basis was $301M, in line with consensus expectations. Management reiterated their long term goals of 30% annual revenue growth, gross margins of ~45%, and EBITDA margins of 20%. Management expects to report a profit on an adjusted EBITDA basis, a deferred goal from 2022 due to the spike in coffee bean price, pricing lag, and costs from accelerating the rollout of RTDs and bagged coffee at Walmart. The slide from the investor presentation that resonated was:
With sales of $77,000 per door with only four SKUs, retailers will be giving Black Rifle Coffee more shelf space over the next year. The company’s market capitalization vs. its top line opportunity stands out among the companies in my coverage universe and speaks to the investment opportunity.
