On-premise recovery ends (SAM)
The percentage of check-ins on Untappd’s app shows a stabilizing trend for beer consumption at home. Untappd is the largest social networking platform for craft beer fans with over ten million users. In April 2021, almost 38% of check-ins that specified the consumption location showed it was at home. A year later at-home consumption fell to 26.8% of check-ins. The percentage of at-home check-ins has decreased slightly in 2023, but the trend has stabilized. In April 2023, the percentage of at-home check-ins was 26.2%. Price increases have discouraged some on-premise visits and limited the full recovery to pre-pandemic levels. The on-premise industry should probably not count on any further recovery tailwind. Craft beer has a higher percentage of on-premise consumption compared to the larger brewers due to taproom sales and distribution.
Warning label (DEO)
Ireland has become the first country to require cancer warning labels on alcoholic beverages. Ireland’s Health Minister signed the Public Health Alcohol Labeling Regulations yesterday. Labels must show caloric content, grams of alcohol, risks of cancer and liver disease, and the dangers of drinking while pregnant. There will be a three year phase-in to give businesses time to prepare for the changes. The labeling plan was approved by the European Union and the World Trade Organization despite opposition from the beverage alcohol industry and other countries.
Advocates for the new rules point to a precedent in Canada that reported alcohol sales declined in liquor stores that sold alcohol with warning labels compared with those that did not. Advocates expect the warning labels to help consumers make an informed choice, slow down drinking, lessen drinking events, and decrease purchase occasions. Alcohol is included in California’s Proposition 65 warnings, but all alcoholic beverage labels must be approved by the Alcohol & Tobacco Tax and Trade Bureau and must contain the federal government warning. Ireland will likely be joined by other countries. Gen Z consumes less alcohol than previous generations which will be a headwind for the overall beverage alcohol industry.
SpinCo Head (KR, ACI)
Albertsons has appointed Jim Perkins to lead the planning for SpinCo, the possible stores to be divested as part of the merger with Kroger. Kroger has said it expects to divest between 100-375 stores to appease FTC competition concerns with a ceiling of 650. Jim Perkins was the Mid-Atlantic division president. A sale of the stores to an established competitor would appease the FTC the most. A spinoff will bring new questions about the viability of the stores. The FTC has an institutional memory of the bankruptcy of Haggen, six months after acquiring 146 stores divested from the merger between Safeway and Albertsons. One of the challenges for the spinoff is competing in separate geographic markets. The appointment of a leader for SpinCo may indicate a decreasing probability of finding a buyer for the divested stores. However, Kroger has stated recently that it is in the process of talking to numerous potential buyers.
