Limiting price hikes (WMT)
According to Dataweave, a distributed data aggregation platform, price increases at Walmart have significantly lagged behind other food retailers. Dataweave monitored 600 products from national brands across the grocery category between January 2022 and February 2023. Walmart’s prices only rose 3% while Amazon’s prices increased 7.5%. Target and Kroger both had prices up by 9%. In comparison, food at home CPI increased by 9.9% in Q1. Walmart reported Q1 transaction growth of 2.9% and ticket growth of 4.4%. With food at home CPI set to continue to disinflate, transaction growth will become even more important. Walmart is already focused on transaction growth, the competition will find it difficult after relying on price increases for sales growth.
Baby formula investigation (PRGO)
The FTC is investigating whether baby formula manufacturers colluded on bids for Women, Infants, and Children (WIC) state contracts. The FTC is also investigating whether the companies coordinated to impact sales outside of the WIC program. The infant formula shortage was brought on by the FDA’s decision to shut down Abbott’s plant without planning for a shortage of products. In addition to the FTC, the DOJ is also investigating Abbott.
Nestle retained the WIC contracts when it sold its Gateway infant formula plant to Perrigo. The WIC program ensures that retailers within the state carry the state-approved WIC brand. Perrigo does not participate in the WIC programs. It wins shelf space by being the low-cost manufacturer.
Domestic beer volumes decline in Q1 (BUD)
According to the TTB, the production of domestic beers decreased 5.2% YOY in March, falling from 2% growth in February. The inventory levels decreased 0.5% YOY at the end of March, similar to February. Production in kegs decreased by 7.3% in March while production in bottles and cans decreased by 5.2% YOY. Beer volume consumed at the brewery fell 14.7% YOY in March. March production was weak for draft as well as packaged beer reflecting unit demand destruction from higher prices. At the brewery consumption was also weak and still lower than 2019. Bud Light’s problems did not start until April.
