Interest resumes
Interest resumes accruing on unsubsidized student loans today. Stafford Loans, the federal loans that cover higher education based on financial need, do not accrue interest while students are in school or during deferment periods. 30.3 million borrowers have subsidized Stafford Loans with an average balance of $9,800. 30.7 million people have unsubsidized loans with an average balance of $19,000. Monthly payments will resume in October. Another headwind for the consumer is a month away. Analysts don’t need to look to GLP-1 drugs to explain volume declines, they are front and center for the consumer.
Alcohol consumption guideline (BUD, DEO, NAPA)
The National Institute on Alcohol Abuse and Alcoholism may be updating its guidance on alcohol consumption. The new guidelines that will be reviewed for 2025 could be a headwind for beverage alcohol. Canada instituted a two drink per week recommendation earlier this year. The two drink “standard” brings an “increased risk of harms to self and others, including injuries and violence.” Canada’s new guidance outlines a “continuum of risk” based on the number of drinks. No drinks lead to better health and sleep, two drinks means a person is “likely to avoid alcohol-related consequences,” three to six drinks equates to a higher cancer risk, and seven drinks or more leads to a higher risk of heart disease or stroke.
The current USDA guidelines in the U.S. which have been in place since the 1990s are that men can have two alcoholic servings per day while women can have one. According to a University of Michigan “Monitoring the Future panel study” binge drinking has generally declined for the past 10 years among younger adults. However, among 35 to 50 year olds the study recorded the highest prevalence of binge drinking ever recorded for the age group in 2022. The director of the National Institute on Alcohol Abuse and Alcoholism has said the agency may change its guidelines to more closely reflect Canada’s guidelines.
It is easy to dismiss government guidance as having an impact on alcohol consumption. However, there was clearly a correlation between Baby Boomers’ over-indexing in wine consumption and studies concluding red wine consumption lowered the risk of heart disease. There was also a correlation between the average American diet consuming more carbohydrates and the USDA’s food pyramid promoting carbohydrate consumption over other food groups.
More guac anyone? (AVO, CVGW)
Hass avocado sales are down 15.9% YTD. Units sales are up 10.1% with ASP down 23.6%. In the four-week period ended August 13, sales decreased 7.8% with ASP down 7% and units down 0.8%. In the preceding four-week period, sales decreased 13.6% with ASP down 20.8% and units up 9.1%. As avocados are showing, it will be difficult to grow sales by cutting prices. Producers will require a faster decline in costs for that to work.
