October CPI (BUD)
October food at home CPI decelerated to 2.1% YOY in October from 2.4% in September. The two-year average decelerated from 7.7% to 7.3%. Many center-of-store food and beverage categories saw disinflationary trends, while several perimeter store categories saw a sequential uptick in October.
Meats, poultry, fish & eggs had a 0.4% increase in October, accelerating from 0.2% in September. Fruits & vegetables had a 1.1% increase in October, accelerating from 0.8% in September. Cereals & bakery products had a 4.2% increase in October, decelerating from 4.8% in September. Beer at home CPI was flat sequentially at 4.7%. The Circana scanner data shows beer prices up a much more modest ~2% in the most recent report.
Food away from home decelerated from 6.0% YOY in September to 5.4% in October. The differential between food at home and food away from home narrowed to 3.2% in October, the second straight month of narrowing spread.
Flu pickup (PRGO, HLN, KVUE)
Seasonal influenza activity started slowly but has picked up. 2.9% of visits to a health care provider in the last week were for respiratory illness. Patient visits are now at the national baseline, as seen in the chart below. The most frequently reported influenza viruses this week were influenza A(H1N1).
Reckitt and Perrigo recently acknowledged the difficult comparisons in the U.S. from last year’s cough and cold season. They both expressed confidence in reaching their targets and that it was still early in the season. Last year’s cough and cold season started off strong but tailed off. We are more likely to hear about difficult comparisons in the first half of the season, but there is potential for Q1 to have higher illness incidences. Cough/cold is between 15-20% of Perrigo’s revenues, roughly 15% of Haleon’s revenues, and 2% of Kenvue’s global revenues.
Nacho Fries Lover’s Pass (LW)
Taco Bell introduced its first-ever Nacho Fries Lover’s Pass yesterday. Customers can access 30 consecutive days of nacho fries for 10 in the Taco Bell app. Taco Bell first introduced Nacho Fries in 2018. It has been brought back for a limited time with different flavor iterations. Taco Bell’s CEO has said the company is considering keeping fries as a permanent offering. “If you were to look at how we compete against McDonald’s in dinner and late night, we’re absolutely even. When you look at breakfast and lunch, we’re significantly behind. So why is that? Well, it’s product. So let me talk about lunch. We don’t offer fries half the time. People that go to lunch want to have French Fries. We know that. So we’re looking at and testing bringing fries permanently onto the menu, which would increase our lunch business dramatically.” – YUM analyst day 12/13/22
Taco Bell first launched a Taco Lover’s Pas in 2022. The deal allowed rewards members to redeem one taco a day for 30 consecutive days. Lamb Weston is not the French Fry supplier for Taco Bell, but industry growth in French Fries is a net benefit. 47% of restaurant traffic is at non-traditional French Fry customers, representing future TAM potential. Seasoned fries are growing at twice the rate of non-coated French Fries. There was no indication if Wegovy or Ozempic was a sponsor of the promotion.
