Wine sales soar during March’s stockpiling (STZ)
The off-premise wine market grew 30% in March to $2.43B, calculated by combining the off-premise market scan data from Nielsen and winery direct to consumer shipments by Wines Vines Analytics and Sovos ShipCompliant. Wines priced between $11 and $14.99 grew 40% and had the highest growth rate, as seen in the table below. Wines priced over $20 account for a large part of the direct to consumer channel while lower than $20 dominates the retail channel. The only price range that decreased in sales was the >$100 tier. The complete halt in business meetings in March could explain the decrease. The average price paid at retail off-premise is up 2.3% for wine to $7.72. By volume wine sales grew 29% in March.
The wine brands that have led increases in volume and dollars in Nielsen tracked channels since early March include Barefoot, Black Box, Bota Box, Franzia, Josh, Stella Rosa, Woodbridge, and Yellow Tail. (Black Box and Woodbridge are owned by Constellation Brands.) Of the 25 brands that have grown the most in dollars YOY since the COVID-19 crisis began sixteen of them were not on the top 25 fastest growing list pre COVID-19 for the trailing 52 weeks. 14 of the 16 brands are in the top 25 in sales rankings. That would suggest a change in spending behavior by consumers when not drinking at gatherings to favor the larger, well known brands.
Utz coming public at the right time (CCH)
Utz Quality Foods is reportedly in talks to be acquired by Collier Creek Holdings, a SPAC, as soon as this month. An acquisition would value the snack maker at an enterprise value over $1B. Utz describes itself as the largest independently owned snack brand in the U.S. One of Collier Creek’s founders is Roger Deromedi, the former chairman of Pinnacle Foods and former CEO of Kraft Foods. Mr. Deromedi helped take both companies public. The timing is fortuitous as snacks are one of the more popular food categories since the pandemic. Potato chip sales have grown 24% YOY since March. The strength in the category has continued beyond the initial stockpiling period. Salty snacks grew 25% in the last week of April. In recent years the snack category has had a steady flow of transactions including Snyder’s-Lance, Amplify Snack Brands, and Pirate Brands. Utz has made three acquisitions over the past three years. In 2019 Utz acquired Conagra’s direct-store delivery snack business that was acquired from Pinnacle Foods in 2018.
Cannabis SAFE Banking Act makes the cut
The cannabis SAFE Banking Act was included in the House leadership’s coronavirus relief legislation. The House passed the SAFE Banking Act last fall but the Senate Banking Committee has not advanced the legislation. The language included in the CARES 2.0 package would allow legitimate cannabis-related businesses to access banking services and insurance. Despite being deemed essential in the majority of states the cannabis industry has been largely excluded from federal stimulus aid or small business loans. Language allowing the cannabis industry to have access to SBA loans was not included in the bill. Our Chief Political Strategist JT Taylor believes the SAFE Banking Act language has a chance to pass because there is bipartisan support. The House is expected to vote on the legislation on Friday. However, there is considerably more opposition to another relief package in its current form in the Senate. In addition, Senate Majority Leader Mitch McConnell is not expected to support the cannabis banking provision.
