Beer distributor index improves (STZ, TAP, BUD)
The National Beer Wholesalers Association’s Beer Purchasers Index (BPI) improved by 13 points YOY to 51 in November. The BPI is a diffusion index where a reading above 50 denotes expansion and below 50 denotes contraction. After three consecutive months of contraction, the index returned to expansion.
Six of the seven segments of beer were in expanding ordering trends.
- Premium regular improved by 18 points YOY to 48, but was down one point from October.
- Premium lights rose to 53 from 41 last year and were flat sequentially.
- Imports improved by 10 points YOY to 69 and improved by 2 points from October.
- Below premium fell 8 points YOY to 39 and was lower than October’s 45.
- Craft beer was at 26, falling from October’s 31.
- FMB/seltzer improved to 25 from 16 last year.
- Cider improved 2 points YOY to 30.
The at-risk inventory measure was 42, indicating low inventory levels. November seemed to benefit from strong Thanksgiving sales trends in the off-premise channel. Constellation Brands has been one of the beneficiaries of Bud Light’s lost share. Molson Coors has been the other beneficiary, with Coors Light and Miller Lite offsetting the weakness of Bud Light to drive Premium Lights higher.
Texas on-premise alcohol beverage tax receipts (BUD)
Texas reports its alcoholic beverages sales tax receipts monthly. In November, alcoholic beverage receipts increased 0.5% YOY, decelerating from +2.4% in October. The CPI for alcoholic beverages away from home rose 5.3% YOY in October. Together, the tax receipts and CPI imply a significant decline in alcohol volumes in the on-premise channel in the past six months in Texas.
Food inflation projections (WMT)
The USDA is now projecting food inflation will slow to roughly 3% in 2024, about half the rate of 2023. The USDA’s Food Price Outlook forecasting methods are based entirely on statistical models. The USDA’s projection for food at home inflation in 2023 is 5.2%, with a range of 4.9%-5.4%. The agency’s projection for food away from home inflation is 7.1% in 2023, with a range of 7%-7.2%. The agency’s projection for food at home inflation in 2024 is 1.6%, ranging from -4% to 7.8%. The agency’s projection for food away from home inflation in 2024 is 4.3%, ranging from 2.3% to 6.3%. The USDA has a wide projection range for 2024 grocery inflation that is so large it’s not useful. Walmart recently said it expects food deflation in stores in the coming months. Walmart continues to gain share in groceries and likely welcomes food deflation, expecting consumers to increase their general merchandise purchases. For most other food retailers, deflation will bring margin pressure.
