January CPI (WMT)

The overall inflation rate for consumer items was 6.4% in January compared to a year ago. Food at home CPI increased by 11.3% YOY in January, decelerating 50bps from December. The two-year average accelerated 20bps from December to 9.4%. With the comparison stepping up by even more than it did in January for the next two months, Q1 should see further disinflation.

Staples Insights | January CPI (WMT), Spirits growth (DEO), Lemon Stand (KO) - staples insights 21423

The meat, poultry, fish & eggs category saw an acceleration from 7.6% YOY in December to 8.0% in January. Egg prices up 70% YOY and 8.5% MOM were the driver of the acceleration. The meat category CPI led the broader food categories' acceleration and deceleration during the pandemic and has reaccelerated for the past two months.

Staples Insights | January CPI (WMT), Spirits growth (DEO), Lemon Stand (KO) - staples insights 21423 2

Salad dressing prices accelerated to +19.0% YOY in January from 18.3% in December. Lancaster Colony did not suggest price increases were over in its last conference call.

Further disinflation is ahead, but the consumer is still seeing prices at retail up double digits in Q1, outpacing household income. The following chart highlights the absolute level of food prices while the rate of change is falling. With the emergency COVID payments ending there will be more strain on food budgets while prices remain elevated. 

Staples Insights | January CPI (WMT), Spirits growth (DEO), Lemon Stand (KO) - staples insights 21423 3

Growth in spirits (DEO)

According to the Distilled Spirits Council of the United States (DISCUS), sales of spirits exceeded beer for the first time. Spirit supplier sales grew 5.1% in 2022 to $37.6B with volume growth of 4.8%. Driving the growth of spirits in 2022 was the recovery of on-premise as well as RTD cocktails, premium whisky, and tequila. Tequila sales drove nearly half the revenue growth for spirits overall in 2022, followed by RTDs which had the fastest growth rate of 36%. To boost future sales DISCUS is focused on pushing to lower the tax rate of RTDs to be similar to beer. 

lemon stand (KO)

Lemon Perfect, a hydration beverage startup, raised $36.8M in a funding round one year after raising $31M in a Series A round that featured several investors in the sports and entertainment industries. The latest round values the company at $150M, up 50% from the prior year. The beverage is a sugar-free hydrating lemon water that has reached the seventh largest share in the enhanced water category. Beyonce Knowles-Carter was an investor in the first round. The beverage sector has seen numerous startups in recent years, many sharing the goal of being acquired.

Staples Insights | January CPI (WMT), Spirits growth (DEO), Lemon Stand (KO) - a4 delete