GLP-1 SPENDING CHANGES (HSY)
Numerator conducted a survey of over 100,000 U.S. households. 11.8% had at least one GLP-1 user in their household. An additional 6.4% of households had a former user. 63% of the GLP-1 users said they are using GLP-1 for diabetes management, 47% said they are using it for weight loss, and 14% said they are using it for both. GLP-1 households decreased their food spending by 1.6% YOY in the first nine months compared to a 0.5% decrease for non-GLP-1 households. Households with a GLP-1 user for weight loss saw food spending decreased by 3%. GLP-1 usage did not impact spending on non-alcoholic beverages, but it did impact alcoholic beverage spending, as seen in the table below. GLP-1 users for weight loss spent 14.5% less on alcoholic beverages compared to a 5% decrease for GLP-1 diabetes users. The threat from GLP-1 caused spending declines on food may not be the top headwind for food companies’ share performance this year, but it is the most discussed. A study published in the New England Journal of Medicine Saturday found that Wegovy can reduce the risk of severe heart problems by 20%, which helps bolster GLP-1 applications beyond weight loss. It is our contention that there will be more studies in the future encouraging GLP-1 usage that will lead to more insurance coverage. We updated our thoughts on GLP-1 drugs in our 2024 Consumer Staples themes presentation, CLICK HERE for the webcast replay.
BEER SHIPMENTS DECLINE AGAIN (BUD, STZ, TAP)
Shipments of beer from domestic breweries declined 7.4% YOY in September, according to the Beer Institute. September was the seventh consecutive decline. Year to date, domestic beer shipments have declined 6.5%, a decline of more than eight million barrels compared to the prior year. Import shipments declined for the second consecutive month, with September’s 13.6% decline. Year to date, imports were down 1.8%. Shipments of Mexican imports declined 12.8% YOY in September and are now up 0.7% year to date. Imports from Canada and Ireland increased 23.6% and 5.1%, respectively, two of the few countries to see growth.
Two of the largest beneficiaries from AB InBev’s declines have been Constellation Brands’ and Molson Coors. Production problems for Constellation Brands’ kegs have impacted the Mexican beer import shipments. In the quarter ended August, Constellation beer shipments increased 8.7%, accelerating from 7.5% sequentially.
POTATO HARVEST (LW)
Frozen processors will have more than ample supplies to run their factories at capacity this year in Idaho, the Columbia Basin, and the Midwest. Favorable growing conditions boosted yields for this year’s potato crop to 452 cwt per acre, up 3.2%, but below the 460 cwt/acre 20-year trend yield. The USDA estimates that the potato crop is 8.9% larger than last year’s and the largest since 2000. Idaho’s production estimate is 17.5% larger, while Washington’s production estimate is 6% larger. Idaho’s planted acres are estimated to be up 11.9% YOY, and its yield is estimated to be 4.9% larger. Washington’s acres are estimated to be flat YOY, and its yield is 8% larger.
Surplus frozen processing Russet potatoes are being diverted to the table potato market. Through November 4, U.S. Russet table potato shipments are up 3.7% YOY. Prices for open-market potatoes have fallen due to the larger harvests. Prices in the Columbia Basin have been relatively flat for the past four weeks. Chip potatoes are also in ample supply conditions. Lower open-market prices are not going to move the needle for the processors. However, we may see fewer acres under contract next year with inventory availability up.
