We are hosting our weekly Consumables Show today.
EVENT DETAILS:Date & Time: Monday, October 16, at 12 PM ET. Webcast & Slides: CLICK HERE (refresh shortly before the call). |
Every Monday at 12 PM ET, our Consumables Team will be hosting a live event where we will go through Timely and Topical events/data that have occurred in our respective industries and preview the week to come. We hope that you can grab your lunch and join us as we break down the Restaurant, Consumer Staples, and Cannabis space. We will summarize our key thesis points from the Consumer Staples 1H Themes call. We will also explore a number of topics, including recent position monitor changes, top questions from client meetings, most frequent inbounds, pushback on our most recent calls, and updates on some of our best ideas.
FREE FRIES FRIDAY (LW)
McDonald’s is offering free fries every Friday for the rest of the year with a minimum purchase of $1. The promotion is for customers who are part of the rewards program.
The promotion is a boon for Lamb Weston as the attachment rate should increase with free fries. To the extent the promotion is a traffic driver we may see competitors run a similar promotion. Lamb Weston is a Best Idea long.
SHELF REMOVAL (PRGO, KVUE)
CVS said it will voluntarily remove single-entity phenylephrine oral cough and cold products. A month ago the FDA Advisory Committee recommended that oral phenylephrine be removed from the market because they were ineffective. The FDA has not made a decision about phenylephrine. Phenylephrine is safe and has been used for decades, so it is not a matter of public safety. CVS is likely writing off the inventory itself. Single-entity phenylephrine is a low-selling item. Maybe because it does not work? Phenylephrine is much more common in combination products like Sudafed, Mucinex, Nyquil, Theraflu. The FDA will likely take several months to make its recommendation due to the complication of pulling medication off the shelves just as the cough/cold season begins. Retailers will want to sell through their current inventories and replace them with medicines containing pseudoephedrine, which would be the least disruptive. OTC manufacturers will need to reformulate their medications and ramp up production.
LOWER FREIGHT (UTZ)
DAT Freight & Analytics projects truck contract rates to fall over the next 12 months, but expects spot rates to increase. The truck brokerage firm said, “For dry van, we forecast contract rates to continue to fall for the remainder of 2023 but not to pre-pandemic rate levels. We see the market reverting (spot over contract) sometime in Q1 or Q2 of 2024. DAT said the percentage of freight moving via spot rose slightly but was within the historical 17 to 19% range. Spot rates have been below contract rates for 17 months and the difference is still more than 30 cents per mile. DAT believes it will take a surge in demand or a substantial drop in capacity to see a meaningful increase in trucking rates. Companies that have low-value shipments were the most impacted by higher freight rates.
