Kevin’s valuation (RGF)
Mars Inc announced an agreement to purchase Kevin’s Natural Foods this week. Kevin’s, which was founded in 2019, is known for sous-vide meals that are paleo, keto, and gluten-free diet friendly. The products are currently sold in 17,000 doors. In 2022, the company grew over 40% to $140M in revenue. The acquisition price is listed as $800M, valuing the company at more than 4x projected 2023 revenue (or 1.6x 2025 projected revenue). The valuation is a significant premium to where Real Good Foods is trading even adjusting for a reduction in leverage. Real Good Foods has a wider distribution base, and a wider product portfolio, and is growing at a faster rate. If part of Kevin’s premium valuation was due to being EBITDA positive, it demonstrates potentially a significant milestone for Real Good Foods this year.
Chair retirement (STZ)
Constellation Brands announced that Rob Sands will retire from his role as Chairman. He will remain on the board. Rob Sands reduced his role at the company with the sale of his family’s voting control last year. Shareholders agreed to a steep premium for the collapse of the share classes to prevent further capital destroying acquisitions. A new chairperson cements the change.
Grocery rebates (LBLCF)
The Canadian government has begun delivery of C$2.5B in its Grocery Rebate relief program to 11 million lower-income Canadians. On average eligible couples with two children will receive up to $467 and individuals without children will receive C$234. Seniors will receive C$225 on average. Eligible recipients do not need to apply as long as they have filed their 2021 tax return. The payment will be delivered with the July GST credit payment that low to modest income Canadians receive quarterly to offset taxes paid on goods and services purchases.
Grocery inflation has been a much more controversial topic in Canadian media than in the U.S. Canada’s Competition Bureau recently published a study that concluded that the grocery retail industry is too concentrated in Canada. The CEOs of the largest three supermarket chains were questioned in a parliamentary committee hearing about whether they were profiteering during a period of elevated food prices. One-time rebates and stimulus are generally spent quickly by consumers.
