Student loan repayment intentions
According to CivicScience’s latest survey, 25% of student loan borrowers do not plan to pay back their loans when payments resume in October. Another 23% of borrowers intend to postpone their payments. Among borrowers who earn less than $50,000 annually, 63% plan to postpone or not pay back their loans normally. Only 35% of borrowers plan to pay back their loans normally. 30% of borrowers will pursue an income-driven repayment plan, 18% will pursue extended plans, and 17% plan on something else. The resumption of student loan repayments is often cited as a headwind for consumer spending. With so many consumers accustomed to delays and the possibility of forgiveness, it seems like the percentage of borrowers paying back their loans will be a fraction of total borrowers.
Farm bill label (STKL, OTLY)
After the FDA released its draft policy earlier this year allowing plant-based companies to continue using the word “milk,” the Farm Bill may be the industry’s last chance to change the way plant-based milk is labeled. The FDA found in their own focus groups that consumers of plant-based milk do not believe they are consuming dairy milk, so barring the use of the word “milk” was unnecessary.
Legislators from dairy states are trying to introduce a portion of the Farm bill that would ban plant-based companies from using the word “milk” to describe their product. Legislators have been attempting to pass similar legislation since 2017 without success. Even if the bill did get signed, it would likely be challenged in court.
Plant-based milks are not the only challenge to the dairy industry. The industry has underinvested in marketing compared to the competition. Maybe the dairy industry should have been more focused on growing the demand for dairy milk rather than reducing the demand for competitive products.
Big wine behind the decline (NAPA, STZ)
According to the Gomberg Fredrikson report, wine sales in the U.S. have fallen more than 5% in the past six months. However, the report suggests the declines in wine are all being driven by the seven largest wine companies. The largest seven include E&J Gallo, The Wine Group, Constellation Brands, Trinchero, Delicato, Treasury Wine Estates, and Bronco. In 2012, the seven largest wine companies shipped 78% of the wine from California. That percentage has fallen to 66%. The amount of wine the seven largest shipped to grocery and drug stores has fallen from 74% to 60%. Nearly all of the big wine companies have been pushing to go upscale to $20 price points instead of below $10. When everyone has the same strategy, it quickly shrinks the opportunity.
