Please join us for our Q4 Restaurant Themes call today at 12:30 PM ET.
CLICK HERE for event details (includes materials link & dial-in info). The event will be dial-in only, but we will have accompanying slides.
Participating Dialing Instructions - Toll-Free: Confirmation Number: 13710037
UNFI’s FQ4 shows deceleration in natural and organic grocery, but Q1 steady (GO & SFM)
United Natural Foods (UNFI), a large distributor of natural and organic foods, reported overall sales growth of 5.4% in the quarter ended July. (The sales contribution by channel can be seen in the slide below.) UNFI said sales to chains grew 6.9%, with a 2.7% negative impact from customer bankruptcies, decelerating from 15% sequentially. Sales to independent retailers grew 11.4%, benefiting from people moving from cities to suburbs where independents are more often located. Sales to independents accelerated sequentially from -3%. Sales to Whole Foods, United Natural Food’s largest customer, grew 3.6%, negatively impacted by the loss of prepared foods. UNFI’s other channel declined 2.1% due to declines in military and foodservice, only improving 1% sequentially. UNFI’s retail SSS grew 21%, driven by Cub. Sales to UNFI’s top 100 customers, representing 70% of sales, grew 12%. Management confirmed that retailers are looking to commit to inventory early to ensure their shelves are full for the holidays. On the FQ3 conference call, management said sales QTD was up ~11%. After reporting an expected deceleration in FQ4 management, said QTD trends in August and September have not been “materially different.” The read-through for sales growth at both Grocery Outlet and Sprouts Farmers Market is favorable due to industry growth, excluding bankruptcies of 12%, according to UNFI.
Topo Chico hard seltzer launch seems likely to underwhelm (TAP)
Coca-Cola acquired Topo Chico, the premium Mexican sparkling water brand, in 2017 for $220M. Topo Chico is differentiated from other seltzers and sparkling waters by being naturally sparkling (lower carbonation) and mineral water. Topo Chico is launching a new hard seltzer in Latin American markets this year. Coca-Coal announced yesterday that Molson Coors would distribute the hard seltzer in the US (as seen below) in a scaled national launch in the first half of 2021. Molson Coors will be responsible for marketing, sales, and distribution. Production and packaging will be handled by a third party initially. Coca-Cola appears to be taking a low risk, minimal investment approach to the hard seltzer launch in the US. Molson Coors likely has most of the economics and potential upside. With Molson Coors already owning Vizzy and Coors Seltzer, Topo Chico would appear to be targeted to areas with a higher Latino population, a demographic that indexes lower for hard seltzer. Texas accounts for 70% of Topo Chico sales in the US. The non-alcoholic brand that could potentially gain meaningful share in the hard seltzer category is Monster Energy, which has not announced a product yet.
Mike’s Hard Lemonade to launch a seltzer (SAM)
Mike’s Hard Lemonade Seltzer will launch on March 1. Mark Anthony Brands said the company’s largest marketing investment would support it. Truly Lemonade was launched in January and is the brand’s second-best-selling SKU. Jim Koch attributed Lemonade’s success to have more flavor than a traditional hard seltzer. Mike’s Hard Lemonade is the original alcoholic Lemonade with considerably more flavor than Truly Lemonade. However, Mike’s Lemonade has 220 calories and 30 grams of sugar compared to Truly’s hard seltzers with 100 calories and 1 gram of sugar. A Mike’s Hard Lemonade Seltzer can deliver on flavor while cutting the calories, and sugar could be a share gainer. For a replay of our hard seltzer webcast and materials: CLICK HERE
