STZ finds a new buyer for Nobilo, nearing completion of wine brands sale
Constellation Brands announced that it signed an agreement to sell the Paul Masson Grande Amber Brandy Brand to Sazerac for $255M. Constellation also signed a separate agreement to sell its Nobilo Wine brand to E & J Gallo for $130M, which was announced in December. Both are expected to close in FQ2 along with the $1B wine brands sale that has been held up by a lengthy FTC review. Paul Masson was originally part of the below $11 wine brands sale to E & J Gallo, but was removed along with other sparkling wine brands due to FTC concerns. The sale price was reduced by ~$700M, not including part of the price being a $250M earnout after the exclusion of Paul Masson, the sparkling wine brands, and some production facilities. Nobilo had sales of nearly $40M in the most recent fiscal year. The announcement suggests Constellation Brands believes it has good visibility into the timing of the deal closing.
Sweet corn prices rising, inflation is the rule (ACI)
Sweet corn is a common menu item in the summer and a staple of BBQs and 4th of July celebrations. Sweet corn prices are elevated, and volumes are well below last year. Since the middle of May, shipping point prices are 130% higher, as seen in the following chart. US corn prices, on the other hand, have been flat over the same period. (Sweet corn eaten on the cob is a different type than the corn used in corn flakes, animal feed, and ethanol. The former is harvested in the summer and is juicy while the latter is harvested in the fall and is dry like the colorful corn seen in Thanksgiving decorations. Popcorn corn is another type, but now I digress.) The produce markets have seen rising shipping point prices in recent weeks, which has to be in part related to the USDA Farmers to Families Food Box program. The program was authorized to spend up to $3B to address pandemic related food insecurity while also providing markets for American grown food. The USDA has awarded $2.4B so far for food boxes consisting of produce, dairy, and meat. More than 20M food boxes have been distributed so far.
In our grocery black book this week, we detailed the inflationary trends throughout the grocery store.
British grocery sales accelerate month over month (NOMD)
Supermarket sales increased 13.7% in the 12 weeks ended June 14, according to Kantar, covering the pandemic. In the most recent four weeks ended June 14 sales accelerated to 18.9% from 17.2% sequentially. Online grocery sales continued to be strong up 91% for the four week period. Nearly 20% of British households purchased over the Internet over the same period. Ocado market share reached 1.7% over the 12 week period. Despite the increase in grocery sales, food and drink bought “on the go” were down by a third at grocers. Unlike in the US, convenience stores have gained share during the pandemic. In the UK convenience stores (which includes the small formats of Tesco and Sainsbury) grew 69.3%, reaching 14.7% share over the four week period. The convenience store share declined from 16.3% in April. British consumers are still making fewer shopping trips, but frequency has increased since May. Consumers are even spending 42% more per trip in June. With pubs and restaurants still closed, alcohol sales are up 43% at grocers while soft drinks were up 28%. Nomad’s business mix by country can be seen in the slide below, with the UK at 31%.
