End of the emergency (GO)

As part of the 2023 Omnibus, 32 states are losing federal funding for emergency SNAP payments. Since January 2021 eligible families have received a 15% boost or ~$95 per month in SNAP benefits. 30 million currently receive emergency allotments as part of COVID-19 support. 18 states have already reduced their emergency payments in recent months. A family of four would see benefits reduced by $328 per month while elderly Americans who receive the minimum monthly benefit could see their benefits fall from $281 to $23 per month. SNAP payments surged from $60.3B in 2019 to $119.5B in 2022 covering 42 million people. The annual COLA increase for SNAP payments increased by 12.5% beginning in October. However, the emergency allotments are larger than the COLA increase.

Staples Insights | End of the emergency (GO), 2022 Grape crush (NAPA), Whole Foods Go Big (SFM) - staples insights 21323

Grape Crush Report (NAPA)

According to the California Grape Crush Report, the size of the California crop came in less than expected at 3.35 million tons compared to expectations between 3.5 to 3.6 million tons and down 7% from 2021. 2022 was the third consecutive year of a below-average crush. Red wine grapes were down 7.2% while white wine varieties were down 8.6%. Total pricing for all wine grapes was up 3.4%. The average price of red wine grapes was up 7.2% while white wine grape prices were up 1%.

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Tonnage in Napa increased 5.4% YOY but was down 8.1% from the five-year average. In Sonoma, the tonnage decreased by 9.3% YOY and was down 10.6% from the average. The average price in Sonoma County was up 6.9% while in Napa County the average price was up 12.5%.

Before the pandemic wine grapes were in an oversupply situation. Now after three successive smaller crops, inventories are said to be in balance. However, anecdotal conversations suggest inventories in Napa and Sonoma appear tighter than reported especially at the higher end and pricing has been reflecting the smaller supply. The takeaway for the higher end of the industry is to expect higher prices.

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Whole Foods to “go big” (SFM, KR, ACI)

Amazon CEO Andy Jassy told the Financial Times that the company was ready to “go big” on brick-and-mortar stores. Jassy said, “We’re experimenting with selection, checkout formats, assortment, and price points. I’m encouraged we have several that I think are promising.” He also said, “We’re hopeful that in 2023, we have a format that we want to go big on, on the physical side.” Amazon recently outlined plans to eventually open 30 or more stores a year, tripling its current pace of openings. Regarding online grocery, Jassy said he was “optimistic,” but acknowledged that “people want to actually touch and feel” food before buying. Amazon recently closed some Amazon Fresh grocery locations, paused new opening plans, took an impairment charge, and raised its free delivery minimum purchase size. Amazon is no closer now than it was before purchasing Whole Foods five years ago to figuring out how to win in food retail.