UK grocery declines with eating out subsidy (NOMD)
For the week ended August 22 CPG, demand levels declined to +2% from +9% the prior week, as seen in the following chart. The sudden drop was driven by the growing popularity of the Eat Out to Help Out program. The initiative refunds restaurant goers a 50% discount up to £10 per person for meals consumed at participating restaurants on Monday through Wednesdays in August. A total of 64M meals were claimed in the first three weeks. There was also a calendar shift of a bank holiday weekend. The frozen category decelerated from +25% in the prior week to +6%. All of the edible grocery categories decelerated with the most significant drops seen in the categories that were previously the strongest, alcohol beverages and frozen. The UK is Nomad Food's largest country by sales, representing 31% of overall sales.
Grocery sales continue elevated trend (ACI)
Total grocery store sales grew 9.9% for the week ended August 16, up slightly from the prior week. The frozen food department led all departments up to 23% while alcohol beverages were up 20%. Edible sales continued to outpace non-edibles up 17% vs. 10%, respectively. Meat sales continued to be elevated up 17%, up 1% from the prior week. Dairy sales were up 13.4% for the week (continuing its double-digit streak during the pandemic), but milk sales were only up to single digits. Unit sales for yogurt remain down while volume gains improved to 2.7%, indicating consumers continue to purchase larger container sizes. The same pattern is also seen in cheese. This is likely due to more children attending school virtually while at home. The deli department has been the weakest department during the pandemic but had its second-best week down 7%. Americans continue to bake while at home with the baking aisle SKUs up 22% YOY.
Strawberry harvest delayed by fires (SKTL)
Strawberry demand has been strong this year during the pandemic. For the most recent week, berries led by strawberries saw the largest absolute dollar gain YOY of $20M, as reported by IRI, representing a 17% increase YOY. Since the pandemic began, berry sales have been above double digits in each month except July, which grew 8%. The Salinas area fires in California have limited some harvestable hours for strawberry producers. Shipping prices for eight 1-pound containers started with January between $10 and $15, climbed to $20 in February, fell to $15 in April, where it remained until July when it increased back to $18-20. In August, prices fell to $15, but the California fires could cause prices to increase if volumes and quality are affected. Most of the volume of strawberries comes from Central-California, as seen in the following chart.
The increased demand for fresh strawberries this year is leaving a smaller supply of inventory for frozen producers. Strawberries comprise about half of SunOpta's Fruit Based Food division. The division had begun to recover after last year's bad strawberry crop, but increased fresh demand is limiting the supply for frozen. The fires do not appear to be having a significant impact yet.
