Wine sales (NAPA)
U.S. wine sales grew 22% YOY in the month of May despite off-premise sales falling 2%. Sales in May decelerated from 31% in April, but were still robust. DTC shipments decreased by 1% YOY in May. Sales increased nearly 11% YOY in the twelve months that ended in May according to bw166. On-premise sales increased by 19% while off-premise sales decreased by 2% in the past year. Spending on table wines increased by 11% while sparkling wine sales decreased by 8%. Packaged import sales increased by 4%. Off-premise wine sales have been weak this year, but the on-premise channel has seen a continued recovery. NAPA is on our short list despite outperforming the category due to consumer spending concerns even at the luxury end.
Beer outpacing spirits? (BUD, DEO)
In the year ended May 20, beer sales increased 3.8% in off-premise channels, outpacing spirits growth of 2.4%, and wine sales which declined 1.7%. Trade-down in spirits is weighing on the category’s dollar sales growth. Beer saw healthy growth rates of 6.4% in the past year in the C-store channel, its largest channel. Meanwhile, spirits saw a 0.5% decrease in the liquor store channel, its largest channel.
In the on-premise channel, beer sales increased 13.6% in the year ended March 25, while spirits sales increased 10.8% according to CGA. Beer volumes have also begun to improve in the on-premise channel with a 0.9% increase in the 12-weeks ended March 25, while spirits volumes decreased 1.7%.
Spirits-based RTDs have been the fastest growing sub-category with sales growth of 62% in the year ended May 20, lifting the spirits category. In the year ended April, the sales-to-retailer volume trends performed best for spirits with a -0.5% decline. In comparison, beer volumes decreased 3% while wine volumes decreased 6.4%. However, removing spirits-based RTDs, spirits volumes declined 4%. The multi-year strength of the spirits category is running into weaker consumer spending, difficult comparisons, and customer adoption of RTDs, while beer may be benefiting from broader consumer trends. AB InBev is clearly not benefiting from anything, ceding market share and category growth to Constellation Brands and Molson Coors.
Canada’s grocers are off the hook? (LBLCF)
The Canadian government conducted an in-depth study on the elevated level of inflation in the food supply chain, soaring grocery prices, and possible profiteering by large supermarket chains. Canada’s Agriculture and Agri-Food committee held eight meetings on grocery pricing from December 2022 through April 2023. The leaders of the three largest supermarkets were brought in a parliamentary committee hearing to answer questions regarding potential price gouging in March. The study’s conclusion was that food inflation was caused by a variety of factors including global influences, supply chain relationships, consumer behavior, and other causes. Commenting on the results of the study, the Retail Council of Canada, the industry’s trade association, said the grocery sector has not engaged in “greedflation.” The association also said, “The committee declined to offer any evidence that grocers are profiting from food inflation.” In March, Mintel released the results of a survey that found 83% of Canadian consumers believed that grocery retailers and food manufacturers were using inflation as an excuse to price gouge. The parliamentary committee did recommend that evidence of excess profits on food items by large grocers might warrant the government to introduce a windfall profits tax on large price-setting corporations. With consumer sentiment still blaming Canada’s grocery sector, the pressure remains to limit price increases. Loblaw is on our short list.
