RTD consumer study (SAM)
Ready-to-drink (RTD) beverage alcohol consumption has grown 104% over the past two years according to NIQ’s. NIQ conducted a 300-person survey to better understand the category’s consumers. There were five main takeaways:
- RTDs are impulse purchases. 63% of RTD purchases were planned compared to beer and spirits at 80%.
- RTDs are consumed at home. 82% of RTD drinking occasions are at home, similar to spirits, beer, and wine. Portability is not a differentiating purchase decision.
- RTDs are for watching TV. 59% of RTD consumers are women. 29% of RTD consumption was during at home activities like watching TV.
- Seltzers dominate RTDs. 65% of RTD drinking occasions were RTDs. White Claw was #1 at 11%, Truly was #2 at 7%, and Jack Daniel’s was #3 at 6%. In the off-premise channel hard seltzer sales comprise 43% of RTD sales last year.
- Daypart & motivation. Opportunities include earlier in the day and the motivation of “feeling energized” rather than “unwind and loosen up” compared to other beverage alcohol options.
Boston Beer is the most leveraged of the public companies to the RTD opportunity. The company is making the most of Twisted Tea, the catalyst for the shares is a turnaround in craft beer which seems lost for the time being.
Vegetable Prices reversing? (KR)
Average annual prices paid for fertilizer, pesticides, fuel, and other farm inputs were inflationary in 2022. Average nitrogen prices increased by 67%, pesticides increased by 39%, and diesel increased by 54% as seen in the following table. On average vegetable growers in the U.S. paid 14% more for production inputs in 2022 compared to 2021. Many of the inputs were higher YOY in the first quarter of 2023, but are lower than the average paid in 2022. The higher costs for farmers were reflected in a 3% decrease in the total national supply of fresh-market vegetables in 2022. Compared with the average of the past five years, per capita availability was 6% lower in 2023. U.S. farmers are expected to harvest fewer acres of fresh-market vegetables during the first half of 2023 due to excessive rains in California. Lower input costs and much improved water should result in more supply and lower produce prices in the 2H.
Value food retailers gaining traffic (COST, WMT)
Traffic growth at Costco has been consistently between +3.1% to +4% between February and April. According to Placer.ai the traffic has decreased between 6.4% to 6.8% over the same period. The difference is due to the decrease in the number of cell phone carriers in the shopping party. For Walmart, Placer.ai has shown decelerating store traffic trends as seen below. Similar to Costco, Walmart’s actual traffic has been positive and above the Placer.ai reported trends. Both companies are continuing to see consumers direct more share of wallet to value food retailers.
