Grocery demand steady after small hit from additional unemployment benefits expiration (ACI)
Grocery stores have seen a drop in demand after the expiration of the $600 in weekly additional unemployment benefits at the end of July. Sales are still elevated and should remain so with restaurants, food service, cafeteria, and other food away from home venues still depressed. In the week ended August 9 CPG demand was flat sequentially at +15, but down from +19 in the week ended July 26 as seen in the following chart. The frozen department of grocery stores remained the strongest at +20% in the latest week, down 1% sequentially. Beverage alcohol remained flat at +19% for the fifth week in a row, the only grocery department to not see a drop after the expiration of the additional unemployment benefits.
Beer import figures point to Mexican production stoppage (STZ)
Over the three months ended June, alcohol beverage imports in the U.S. have declined by 24% in value compared to a 2% decline over the last twelve months. 28% of all imported beverage alcohol by value came from Mexico during the previous twelve months. Imported beer declined 27% over the previous three months and declined 4% by value over the last twelve months. 71% of imported beer by value comes from Mexico. Assuming that imports from other countries were flat, the math would imply imports from Mexico were down 38%. The beer production stoppage in Mexico was responsible for the supply shortages that Constellation Brands and Heineken both experienced. Production and shipments resumed in June. Imported packaged wine imports fell 21% by value over the last three months and fell 3% for the last twelve months. 35% of imported packaged wine by value came from Italy.
Corona’s “La Vida Mas Fina” campaign launches (STZ)
Corona launched its “La Vida Mas Fina” (translated as the fine life) campaign this week with ads during the NBA playoffs featuring Snoop Dogg on the beach. The lack of sporting events caused many marketing campaigns (including food and alcohol) to be postponed or canceled (NCAA basketball tournament, Olympics, etc.). Corona’s “La Vida Mas Fina” campaign was originally planned for May. Corona’s latest campaign is fully integrated on social media, 15 and 30 second TV ads, and digital ads. Other celebrities, including Zoe Saldana and Rickie Fowler, will have their ads later. The ads will also unite Corona’s family of products, including hard seltzer. The timing of the campaign also benefits from Constellation Brands’ beer inventory levels at retail being close to returning to pre-pandemic levels. Constellation Brands is one of the few companies that saw an acceleration of sales during the pandemic (off-premise sales more than offsetting lost on-premise sales), but also has easier comparisons in 2021 (Mexican beer production shutdown). The acceleration in sales from here and the easier comparisons are not reflected in the current valuation (17x our F22 EPS estimates).
You can watch the ad here: https://www.youtube.com/watch?v=NPc1HUjbJiI
