Beer distributor channel check call (STZ)
We discussed the beer industry's most pressing topics with an executive from the largest beer distributor in the U.S., Reyes Beer Division. We asked for more insight into Reyes' partnership with Constellation Brands. Reyes' base of operations is in California, where it sells 1.6x as much beer as Anheuser-Busch affiliated distributors. Constellation Brands forced the sale of rights to distribute its brands in many California markets to Reyes in the last few years. Reyes has been a strong partner to Constellation Brands as well. Through the first half of 2020, Modelo Especial has sold nearly twice the amount that Bud Light has in California (~$340M v 160M). In April, Constellation Brands said Modelo was the #1 beer in Chicago, which happens to be Reyes’ oldest distributor's territory with over 10M cases in the metro area.
We also asked for his viewpoints on hard seltzer (Reyes is a Mark Anthony distributor) - which brands benefited during the pandemic, which brands benefited from inventory shortages, what product launches to look for, Constellation Brands' inventory issues, the magnitude of impact from cannabis legalization at the state level, and more. His answers are an invaluable channel check to consider, along with the statements from the manufacturers and POS data. We were surprised by some of the answers, while others gave us more conviction in our projections.
Click Here to watch a replay.
Food at home prices slow in November CPI (KR)
The consumer price index increased 0.2% in November on a seasonally adjusted basis. The food index declined in November as a 0.3% decrease in food at home more than offset a small 0.1% increase in food away from home. Over the past 12 months, the food at home increased by 3.6%, with the largest increase in meat. 3.6% slowed 40bps from October and is the lowest growth rate since March. Over the past 12 months, food away from home increased by 3.8%, with limited service meals rising 5.9% and full-service meals rising 2.9%. As seen in the chart below, the three-month average differential has turned negative for the first time since March. On an unadjusted 12-month basis, food at home rose 3.6% while food away from home increased by 3.8%. Alcoholic beverages had a 3.0% YOY increase in November, up significantly from 2.3% in October. The inflation rate for alcoholic beverages has risen steadily during 2020.
Another grocery last-mile provider (DASH)
DoorDash’s successful IPO will accelerate its entry into grocery delivery. Initially, the platform was created to provide delivery for local businesses, not just restaurants. Over the past year, the company has been expanding the platform to include delivery of convenience store items and from a limited number of grocery stores.
“This type of fundraising allows us to accelerate our efforts and serve not just restaurants, but also to broaden that to serve Tony’s original vision, which was all local businesses.” Said COO Christopher Payne. He said DoorDash has been working hard over the last several months addressing the convenience economy where consumers are demanding all types of basic needs delivered to their doorstep. In recent months DoorDash has added been adding last-mile delivery for grocers such as Walmart, Albertsons, and Hy-Vee.
Click Here for the DoorDash IPO implications for the industry.
