Produce prices are higher (SFM)
ProduceIQ’s Index was 32% higher YOY for the 38th week of the year, as seen in the chart below. ProduceIQ’s Index aggregates the top 40 produce commodities prices at the packing location or port of entry. It has been higher YOY since the 30th week of the year as we anniversary low prices. Apple harvests have begun, bringing some relief to the fruit’s prices, which have been at ten-year highs all year. Lettuce, strawberries, blueberries, and mangoes are seeing the highest YOY price increases currently. The Fresh Produce Procurement Reform Act would order the USDA to partner with growers and distributors to provide more fresh produce grown in the U.S. to needy groups. The USDA spends $6B on U.S.-produced and processed foods, but only $5M is spent on fresh produce.
We have been calling for deflation in the grocery store this year to be led by the perimeter departments. Produce is no longer deflationary.
Online grocery spending increases (CART)
The share of grocery shopping done online decreased by 20bps to 13.9% in August. Online grocery sales increased 8.7% YOY to $9.3B, as seen in the following chart. Order volumes increased by nearly 5%, according to Brick Meets Click/Mercatus Shopping Survey. The average order value increased by 3%. Pickup and ship-to-home order volumes grew 9% and 10%, respectively. Delivery sales were flatish in dollars and down in order volume.
MAUs increased nearly 5%, with ship-to-home MAUs increasing by over 9% and pickup MAUs increasing by nearly 6%. Mass market retailers continued to gain share over the supermarkets, with mass MAUs increasing by nearly 20% while supermarket MAUs fell by more than 10%. Order frequency rose by LSD% for mass while supermarket order frequency fell by MSD%. Amazon’s ship-to-home volumes increased by more than 10%. Walmart continues to gain share digitally from the supermarkets. Did the Instacart IPO boost digital grocery spending in August? We recently presented our pre-IPO Black Book on Instacart. For the replay CLICK HERE.
Atmospheric River (NAPA)
An atmospheric river is accelerating the harvest of white wine grapes in California’s North Bay. The harvest was delayed by the cold, wet spring. Anderson Valley is expected to receive nearly an inch of rain, which would impact major producers in the area, including The Duckhorn Portfolio and Cakebread. Red grape varieties should hold up better to the storm, but the white wine grapes are more vulnerable right before the harvest. The storm is also expected to impact vineyards in Oregon and Washington. The Northern California wine industry appears it will avoid much of the storm during the critical harvest period.
