U.K. Grocery price increases (BUD, TAP)
Food retailers often take price increases in the new year with resets to planograms in the U.S. and the U.K. According to Assosia the number of price increases among U.K. food retailers was double the normal run rate for the second year in a row. According to Assosia’s product survey 6.2% of items at U.K. food retailers had an increase in price between Dec. 26 and Jan. 6. Tesco had the least number of products with price increases at 3% while Asda had the largest number at 11%. The grocery category that had the highest number of products with price increases was drinks, followed by center aisle food products. 23% of beer and cider products had price increases compared to 15% of spirits products and 7% of wine. Food inflation is global. Brewers have been aggressive with price increases on both sides of the pond.
DTC wine declines (NAPA)
In 2022 DTC wine decreased in both volume and dollars for the first time in 13 years. Sales fell 1.6% while volumes fell 10.3%. The upper end did not see the weakness below with wines priced above $100 per bottle growing 15.2% in dollars and 7.8% in volumes in 2022. Wine priced above $200 performed even stronger with growth of 20%. Wines priced above $200 only represent 2% of DTC volumes but are more than 16% of dollars. Wines priced below $30 fell 17.5% in volume. Napa and Sonoma County wines saw a decrease in volumes in 2022. The average price per bottle shipped increased by 9.7% to $45.16. The higher end of wine experienced vastly different trends in 2022 with inflationary pressures having a much larger impact on middle to lower-income consumers. Due to the cost of shipping, DTC wine works better at higher price points.
Nutrition expansion (STKL)
Nestle Health Science announced a $43M expansion project at its Eau Claire, Wisconsin manufacturing plant. The capital investment will add two production lines for RTD manufacturing. The facility produces a variety of nutrition products including baby formula and drinks including Boost and Carnation Breakfast Essentials in Tetra Pak cartons. This is Nestle’s second expansion at the facility after spending $50M in 2020 for an addition. There is strong demand for RTD, nutrition drinks, and products. SunOpta recently opened a much larger new facility in Texas to expand the production of plant based milk and protein drinks. The lead time for equipment, materials, and construction has grown beyond 18 months.
