SAM continues to be a seltzer story
Boston Beer reported revenue and EPS ($1.49A vs. $2.02E) below consensus expectations last night. Revenue was impacted by keg returns, while other costs were $4.2M higher for COVID-19 related costs. Depletions were up 36% or +30%, excluding the Dogfish acquisition, and shipments were up 32.2% or +27.5%, excluding the acquisition. In the nine weeks ended February 29, depletions increased 26%, with trends accelerating in the second half of March after the initial pantry loading. Through the 15 weeks ended April 11, depletions grew 32% (ex-Dogfish +27%). Depletion for the first two weeks of April is implied to be up 7-8%. Truly Hard Seltzer continues to grow at a fast 200%+ pace and actually gained share since January. Having enough capacity for Truly is a concern. The company has postponed its marketing campaign in the current environment. The scanner data continue to report robust growth in the seltzer category, which helps confirm the share gains are not a fad. Keg returns from retailers, and distributors totaled $5.8M. The restaurant industry is also looking for help from the brewers as their kegs age past code, which SAM reimburses at 50%. Management is not expecting a snapback recovery in the on-premise business.
Revenues, costs, and concern remain elevated at grocers (KR)
C+R conducted a survey of 2,012 consumers in late March to measure how their shopping behavior and budgets have changed. 73% said they were making fewer trips to the grocery store down from an average of 2.3 visits per week to 1. Kroger recently said consumers rarely visit anymore to pick up the night’s dinner. At the same time, the average weekly grocery spends increased from $159 pre-COVID-19 to $184. 44% of the respondents said they were using more restaurant delivery, meal kits, or grocery delivery. 60% said they had anxiety or were fearful when shopping at brick & mortar grocery stores. A survey conducted by the International Food Information Council in early April found that the #1 concern from food shoppers was the health of other shoppers (42%). The majority of consumers are clearly not looking to visit grocery stores unnecessarily. Yet CNN published an article on Sunday titled “Experts say it may be time for grocery stores to ban customers from coming inside because of COVID-19.” The experts cited turn out to be union officials, some worker experts, and some small grocery owners. I would note that it would be near impossible for grocers to pick all the items for shoppers at current staffing levels, grocery delivery is already maxed out, and many stores do not have the digital capabilities to offer curbside pickup. The grocery store has become the most essential of stores in the current COVID-19 environment. It would seem that the grocers need to do more to make their customers feel safer. Food retailers, including Kroger, have cited the increased costs in the current environment to stock the shelves and keep employees and customers safe.
Europeans’ meal consumption change
A survey of European consumers conducted by Nielsen in late March shows the change in calorie consumption from away from home to home varies by country. Some countries were more accustomed to eating at home, like the U.K., Germany, Greece, and the Netherlands. For consumers in Italy, Spain, Portugal, and Turkey, where a greater proportion of meals were eaten away from home, the current environment has led to a greater change in dining routines. The majority of survey respondents said they intend to continue their current increase in-home meal preparation. Most prominently in the U.K., Germany, Netherlands, Poland, and Russia, less than half of shoppers believe they will resume their same shopping habits as before. The following chart shows the percentage of consumers eating at home before COVID-19 and since. Nomad Foods, as the leading frozen food manufacturer in Western Europe, is well-positioned to benefit from the shift in meal consumption. For our NOMD Black Book replay and materials CLICK HERE
