Q&A call today
We are hosting a Q&A call on the Consumer Staples, Restaurants, and Cannabis sectors today at 2 PM ET. We hope you can join us. Email with your questions, and we will answer them live.
CLICK HERE for event details, video, and materials link.
Grocery demand remains elevated (ACI)
For the week ended September 13, demand for food remained elevated at grocery stores. CPG demand was up 8% YOY, 1% less than the prior week, as seen in the following chart. Demand for the edible categories increased 11%, even with the prior week, outpacing non-edible categories up 3% for the week. The frozen department led the edible categories up 18% while beverage alcohol was up 16%. Fresh foods were led by seafood up 34% for the week while the meat was up 19%, up 1% from the prior week. There was a slowdown after the expiration of additional unemployment benefits at the end of July. The new bonus relief benefits have been uneven by state, with all but one state receiving funds from FEMA’s allotted $44B. At least 21 states have begun processing the payments, many have not begun, and some have already completed the six $300 weekly payments.
Falling meat prices (TSN)
The Wall Street Journal had an article about the falling prices of meat at grocery stores yesterday. Prices for ground beef and pork loins have returned to pre-pandemic levels, as seen in the left-hand chart below. Increased production and falling demand were cited as the reasons behind the lower prices. The backlog in production due to staffing challenges at slaughterhouses has led to cattle spending more time on feedlots and gaining more weight. The additional time in feedlots has driven the supply of prime-rated beef to twice the five-year average. We wrote about the drivers behind falling prices of beef and pork at retail two weeks ago. Before the pandemic, more than half of beef consumption took place at foodservice locations. During the pandemic, meat department sales at retail were up more than 20% until August, as seen in the right-hand chart below. It will be interesting to see what the impact of increased inventory of fresh meat, as well as lower prices will have on plant-based meat sales.
Hungry Harvest finds financing (GO)
Hungry Harvest raised $13.7M in a Series A round of funding from venture capital. The company was featured on Shark Tank in 2015. Hungry Harvest is a food and beverage company that delivers surplus fruits and vegetables to subscribers’ homes every week. According to Hungry Harvest, more than one in five fruits and veggies goes to waste. Much of the products the company distributes does not mean visual specifications rather than for taste, spoilage, or safety reasons. The company’s mission is more environmental rather than money-saving for the consumer. A small weekly box of produce costs $15 for conventional or $28 for organic. It is undoubtedly a worthy goal that will have to overcome entrenched industry practices. Based on the problem the company is working to solve, we would expect to hear more about the company in the future, especially if the cash burn is modest. A partnership with Grocery Outlet or Sprouts Farmers Market makes a lot of sense to us. Both companies could assist in sourcing and would stand to learn a lot about home delivery.
