Private label growth (PRGO)
According to the Private Label Manufacturers Association store brand sales grew 11.3% to $228.6B in 2022, a new record. The inflationary environment was behind the growth with higher prices and more consumers trading down. The gap in sales growth between store brands and national brands widened beginning in March as seen in the chart below. Store brand sales accounted for 29% of all new dollar sales from U.S. retailers in 2022. Store brand growth was strongest in beverages with 19.1% growth in 2022, followed by deli-prepared items and refrigerated items. The largest category for store brands was refrigerated which grew 17.1%, followed by general food which grew 14.0%. Categories with large inflationary price increases saw significant gains in store label sales like eggs which saw store brands grow 49.6% in 2022. Perrigo is the largest manufacturer of OTC store label products.
Milk comparison (STKL, OTLY)
Yesterday, the FDA announced draft recommendations for the naming of plant-based foods. The draft guidance recommends voluntary nutrient statements for the labeling of some plant-based milk alternatives. The label would include a comparison to dairy milk, for example, the label could say, “Contains lower amounts of Vitamin D and calcium than milk.” The FDA is accepting comments on the draft guidance. The draft guidance does not apply to other plant-based dairy alternatives such as cheese or yogurt. The FDA is in the process of developing draft guidance for other plant-based alternative products.
Importantly, the guidance lets plant-based milk continue to use “milk” in its name. The National Milk Producers Federation applauded the guidance for extra nutrition information, but rejected the FDA’s conclusion that plant-based drinks can be called milk because it’s a “common and usual name.” The Good Food Institute, a plant-based advocate, said “the guidance misguidedly admonishes companies to make a direct comparison” with cow’s milk even though key nutrients are already required to be listed. In the year that ended January 28, refrigerated dairy milk sales were $12.3B compared to $2.5B for dairy alternatives.
Fortified soymilk is the closest nutritionally to dairy milk, but it has seen its share fall for years due to perceived health concerns. There are fat-free and zero-sugar versions of oat milk just like there are whole and skim versions of dairy milk. Consumers choose the option according to their needs and tastes before the guidance was released.
The moose is loose (WMT)
Walmart announced it is selling Moosejaw, an online outdoor retailer, to Dick’s Sporting Goods for an undisclosed amount. Walmart acquired Moosejaw in 2017 for ~$51M. Walmart acquired several companies at that time building up an online presence with Bonobos ($310M), Modcloth (~$60M), ShoeBuy ($70M), and Jet ($3.3B).
Walmart shut down Jet.com in 2020 and Marc Lore left on January 31, 2021. All of the online empire building pieces are gone except Bonobos. E-commerce represents 13% of global revenue now and grew 17% in Q4. Digital is a growth engine for Walmart, but we’ll probably never know how much of that is due to the pandemic and the company’s response.
