Nomad talks up online grocery and Green Cuisine launch
Nomad Foods presented at an investor conference yesterday. The 14% organic growth the company has seen so far in Q2 is being driven by more consumption of frozen foods across all dayparts, as seen in the following slide from the company’s presentation.
Online sales continued to accelerate this year with April up 80% YOY. The frozen category over-indexes online. E-commerce now represents 7% of the company’s sales, up from 5% for 2019. Nomad Foods’ share is 40% higher online than in-store with a more significant share sold at full price. Management was notably enthusiastic about the launch of Green Cuisine across eight additional markets this year. After the COVID-19 outbreak management dialed back expectations of a new product launch given the challenges grocery stores were having with keeping their shelves stocked. However, due to strong consumer demand for plant-based meats, management expects Green Cuisine to be in ten countries by month-end. The branding will be the same across markets, but the taste will be tailored to each market.
Local grocery benefiting from COVID-19, but closings pick up
Local grocers, as well as dollar stores, have benefited from COVID-19’s impact on grocery shopping. The larger grocery chains have implemented shorter operating hours, often have lines to enter the store, and public transportation is less frequent. This has boosted the sales at food and beverage stores in closer proximity to customers. Grocery spend at local grocery stores declined 4% YOY on June 6, according to Womply (CRM provider). Sales growth broke trend since the last week of May, as seen in the chart below.
However, daily grocery sales remain elevated at local grocers that are open. On June 6, sales were up 31.6% YOY, as seen in the chart below. Sales growth has generally been better than +30% since the end of March when the stockpiling/depletion occurred.
Looking at the number of food and beverage stores that have been closed ties the two previous charts together. The percentage closed has been quite stable during April and much of May, hovering between 11% to 14%, as seen in the following chart. The percentage of stores closed has gone up dramatically since 11% closed on May 26, to 17% on June 6. This could be related to ongoing protests in several cities.
BREW will divest Kona Brewing’s Hawaii operations to close merger
To clear regulatory hurdles for the acquisition by AB InBev, Craft Beer Alliance agreed to divest its two brewpubs and brewery in Hawaii. PV Brewing Partners will acquire the Kona Brewing operations in Hawaii, including the rights to the brand in the state, while AB InBev will own the Kona Brewing rights outside of the country. PV Brewing Partners is an investment firm that has investments in 260 quick-service restaurants and the Kansas City Royals. AB InBev’s acquisition is expected to close this year. Craft Brew Alliance will bring additional craft beers brands to AB InBev’s stable, including Redhook, Cisco Brewers, and Omission Brewing. COVID-19 should mark the end of acquiring craft beer brands for the large brewers (SAM-Dogfish Head, STZ-Ballast Point, Four Corners, Fat Buddha, TAP-Atwater Brewery). However, there are several independent craft beer brands with strong growth prospects that navigated the closure of taprooms that are attractive targets. The contribution to growth for the big brewers is generally immaterial, so maybe we’ll see the multiples come down if we haven’t seen the end of the deals. The deal is reminiscent of Constellation Brands’ acquisition of Grupo Modelo, only the rights are for just one state, and the brand is just Kona Brewing… so just vaguely reminiscent.
