SNAP enrollment likely to grow, supporting grocery spend (ACI)
Since February, the Supplemental Nutrition Assistance Program (SNAP) program has increased by 17% in three months or more than six million people according to state data collected by the New York Times. Benefits normally vary with income, but Congress temporarily expanded the program in March by offering all recipients the maximum aid for their household size, which is $509 for three people, up more than a third from the pre-pandemic average. About one of every eight Americans or 43M currently receives SNAP benefits. The peak number was nearly 48M reached after the great recession. 20M Americans currently receive a $600 supplemental weekly unemployment insurance benefit that is scheduled to expire at the end of July. States include the $600 in household income when accounting for approval into SNAP, making those recipients ineligible from receiving SNAP payments. If the additional unemployment payments end, SNAP enrollment will likely increase above the prior peak. The increased SNAP payments would support food spending for those households while other expenditures would fall.
FLO pre-announces Q2
Flower Foods reported preliminary Q2 adjusted EPS of $.30-.33, above consensus expectations of $.27. Q2 sales are expected to be up 4.5-5% compared to consensus expectations of 3.7%. When the company reported Q1, management reaffirmed revenue and EPS guidance for the year despite the $.09 of upside. Management also calculated that COVID-19 drove all of the revenue growth in Q1. The upside to Q2 is not a big surprise, and we wrote that more beats were likely. However, shares are trading below where they were when it reported Q1 results. The company also announced organizational changes to focus on brand growth and product innovation as well as improving the cake business. As part of the alignment, the company has eliminated 250 positions. Raising the outlook for 2020 and providing more detail around how the organizational changes will improve revenue and costs would be better received by investors when Flower Foods reports the full results on August 6.
Craft beer survey points to market share fight for most frequent consumers (SAM)
According to Nielsen’s sixth annual Craft Beer Insights Poll, 44% of survey respondents said they drink craft beer several times a year, up 1% from last year. 55% of male respondents said they drank craft beer several times a year, up 9% from last year. The 21-34-year-old age group had the highest rate of craft drinkers at 60%, up 10% from last year. Older respondents age 65 and older had the lowest rate of craft drinkers at 21%. Of all respondents, 45% said they drank craft beer weekly. Those respondents tend to be younger men with higher incomes. Weekly craft drinkers also tend to drink other alcohol. On a weekly basis, they drink non-craft beer at 65%, wine at 68%, spirits at 61%, imports at 65%, FMBs at 48%, hard seltzers at 51%, and cider at 44%.
Most weekly craft beer drinkers said they are drinking the same amount at 43%, or more at 44% than last year. The less frequent craft beer drinkers said they are drinking the same amount at 50% or more at 29%. 20% of less frequent craft beer drinkers are drinking less, compared to 13% of weekly craft beer drinkers. Infrequent craft beer drinkers are mostly drinking the same amount as last year at 62%, while 30% are drinking less. Drinking more of other alcoholic beverages is the main reason given by weekly craft drinkers and less frequent craft drinkers for drinking less craft beer, as seen in the chart below. That speaks to the competitiveness of the largest spenders in the craft beer category.
