Inflation at grocery stores is elevated and stable (ACI)
Inflation trends for Consumer Product Goods (CPG) and edible foods has been relatively stable over the past three months. CPG inflation has run between +7 to +9% over that time. The category that has seen the most change has been meat as seen in the chart below. Meat inflation has trended down from +20% at the end of June to +9% in the week ended Aug. 16. Consumers can take several steps to mitigate the inflationary pressures in the store by substituting for private label, an alternate good, a cheaper alternative, or simply not making the purchase so we do not start our sales estimates from +7%.
Online grocery popularity has soared (Instacart)
According to a survey by business news website The Manifest 62% of respondents said they preferred buying groceries in-store over the past three months. 22% of respondents said they used contactless services including delivery and curbside pickup. The survey said 47% reported similar spending on groceries while 38% reported spending more and 15% reported spending less. 12% of respondents said they have used grocery delivery services during the pandemic. 52% said time savings was the biggest appeal of grocery delivery while 11% cited safety. 22% cited fees as the top challenge for grocery delivery while 17% cited produce quality. 53% named Instacart as the most trusted grocery delivery service with AmazonFresh at 21%, Peapod at 5% and Walmart at 4%. Instacart partners with the majority of the largest grocery chains and (it lists more than 300 retailers). The District of Columbia announced a lawsuit against Instacart yesterday for allegedly charging customers with “deceptive” service fees and not paying sales tax on those fees. The lawsuit said that from Sept. 2016 until Apr. 2018 Instacart was charging a 10% service fee that appeared to be a tip because consumers could raise or lower the percentage or waive it and no tip option was visible at checkout. Instacart then used the fees for operating expenses. The allegations sound troubling so let’s see if a follow up survey still ranks Instacart as most trusted.
Fake meat giveaway (K)
Launching new products has been difficult during the pandemic with grocers focused more on COVID-19, safety, and keeping shelves stocked while manufacturers focused on increased production and manufacturing complications. Getting consumers to sample a new product has also been very challenging. Costco has suspended its free in-store samples for example (2020 has been a rough year). Incogmeato, Kellogg’s MorningStar Farms sub-brand launched last year, took a novel approach to giving out free samples yesterday. The brand launched a national giveaway on Twitter and partnered with Postmates. In the markets of Dallas and Denver residents could get a bite-sized and fully cooked Incogmeato burger brought to their door. Recipients also received a coupon to use at local retailers. Incogmeato (the brand names in plant based meat are so witty) has a line of plant based burgers, brats, sausage, and chicken nuggets. Kellogg said it will invest $43M to expand a manufacturing plant dedicated to MorningStar Farms by the end of 2021. The growth in the category, media attention, public curiosity, and stock market valuation of Beyond Meat will continue to attract more capital and competition to the category. Beyond Meat is a best idea short. For webcast and materials: CLICK HERE
