Lidl announces more openings (AD.AS)
Lidl announced yesterday that it plans to open 50 new stores by the end of 2021. The German hard discounter said it would spend more than $500M to open the stores. The new stores are planned for Delaware, Georgia, Maryland, New York, New Jersey, North Carolina, South Carolina, Pennsylvania, and Virginia. New Jersey and Maryland will see ten new stores while Delaware and South Carolina will only see one new store each. Lidl currently operates 103 stores since the first store opened in 2017. Lidl stores range in size between 14,000 and 21,000 square feet, so they are not a full weekly grocery destination for most consumers. At the end of March, Lidl opened a distribution center in Perryville, Maryland, that can supply stores in Maryland, Delaware, New Jersey, New York, and Pennsylvania. The company plans to open an additional D.C. in Covington, Georgia over the next two years. The Food Lion banner appears to have the most overlap with the current opening plans, but that is more geographic than market-based. Lidl has revised its store opening plans in the past. When Lidl first came to the U.S. it said it would have 100 stores in a year. It also had planned earlier to be open in non-adjacent states like Texas, but now its current plans are to open on the East coast. Lidl has also shifted to smaller stores in more urban markets. Lidl brings a sharp focus on price to an already competitive industry.
Cattle prices rally (TSN)
The seven-week rally in cattle prices (as seen in the following chart) has finally pulled cattle feeding margins into the black. Cattle prices have been depressed for most of the year, while beef prices that surged earlier in the pandemic have settled down in July. Last week’s average feedyard profit was $40 per head, according to Sterling Beef Profit Tracker. Just a month ago, losses averaged nearly $142 per head. Packer margins increased $75 per head to $372. The USDA’s cattle on feed report on August 1 counted 11.3M heads, up 2% YOY. The herd size is the largest inventory since the series began in 1996. The feedyard placement is 11% higher YOY due in part to hot, dry weather. The strong margins for packers will continue to pull cattle prices up. Pork producers saw their margins improve $6 per head to a loss of $31. Pork packer's average profits are $60 per head. Beef costs are over 25% of Shake Shack’s COGS and about 15-20% of most hamburger QSR chains.
Beer sales grow at the fastest pace in nearly two months (SAM)
Off-premise beer category sales grew 15.7% in the week ended August 15, YOY, as seen in the following chart. Hard seltzers continued to lead the beer category with sales up 123% YOY. Slim can sales, the type of can hard seltzers are generally packaged in, are up 107% during the pandemic, and comprise 20% of beer category can sales. Sales of Truly in the multi-outlet chain and convenience store channel YTD have surpassed Heineken sales for tenth in U.S. brand families. White Claw has surpassed Busch for seventh. For the week premium light beer grew 6.5% (Bud Light, Miller Lite, Coors Light), hard tea grew 38%, super premiums grew 22% (Michelob Ultra), cider grew 11.9%, non-alcoholic beer grew 40%, and Mexican imports grew 11.2%, craft beer grew 14.4%, while below premium beer decreased 0.3%.
