Flash grocery (ACI, CART)
Albertsons has launched its new Flash grocery service, which enables customers to receive their delivery or curbside orders in as little as 30 minutes. The service is available at more than 2,000 stores across its banners. Pricing for the orders will “mirror in-store pricing.” Flash pickup orders carry a $3.95 fee, while Flash delivery fee is $11.95. Members of Albertsons’ FreshPass subscription program will receive free Flash pickup and a discounted fee of $2 for flash delivery. The FreshPass program costs $99 annually and provides free delivery for orders over $30. Having similar pricing to the stores is a notable savings compared to Instacart. Food retailers reward customer loyalty online, but Instacart’s digital proposition appeals to customers who spend at different chains.
We hosted an Instacart pre-IPO Black Book last week; for the webcast replay CLICK HERE.
Drought’s beef impact (TSN)
Nearly half of the corn and 37% of the hay crops are in areas of the country currently experiencing drought. Drought conditions have worsened this summer in parts of the Midwest and Texas. According to the USDA, the overall yield per acre for hay is expected to be slightly higher this year, but in some states, including Iowa, Minnesota, and Missouri, the hay production will be down significantly. The tight supplies could lead to further herd culling in those states. 44% of cattle inventory is in the areas of drought. The overall pasture and range conditions have improved slightly compared to last year.
Grocery taxes (L.CN, WMT, COST)
Canadian Prime Minister Justin Trudeau invited the leaders of the country’s five largest grocery chains (including Loblaw, Walmart, and Costco) to discuss how they planned to control food inflation today. He has threatened new taxes on the grocers if they did not provide relief for consumers. Grocery prices rose 8.5% YOY in July.
France’s Finance Minister threatened to impose special taxes on food companies to claw back “undue” profits in June. The Canadian grocery is not nearly as competitive as in the U.S., but further margin expansion this year seems like a mistake. Food retailers and manufacturers in the U.S. have mostly avoided political pressure for food inflation. Government transfer payments may have been the biggest reason the food industry has avoided becoming a political target in the U.S. Still, the pandemic EBT payments ended in all states in March. U.S. food retailers are also not enjoying record profit margins.
