Oatly's $10B valuation (STKL)
Several media articles cited people close to the matter, saying Oatly is seeking a valuation up to $10B in an IPO. That represents a 5-fold increase from the July 2020 funding round. Oatly has not disclosed 2020 revenues, but it targeted sales growth of 100% above 2019's $200M. Assuming sales benefited from the pandemic like other grocery items (although Oatly's capacity is constrained, see the following slide from our Black Book), an estimated $450M in revenue would put the price to sales multiple at ~22x. A multiple that large would be strong encouragement for Oatly to secure more production capacity. SunOpta is the largest plant-based milk supplier and supplies all of the largest oat milk producers, except Oatly. Another way to think about the valuation gap is just the $100M in oat milk revenue that SunOpta is adding this year would be more than 1.5x SunOpta's entire market cap at Oatly's rumored valuation. Oatly will be a very exciting IPO, but the best way to invest in it now is SunOpta.
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Fresh produce prices, avocado bounce (AVO)
The ProduceIQ index is comprised of 40 high-volume produce commodities to represent the category. Prices YTD have been consistent with the past two years, as seen in the chart below. It is too early to know the freeze's impact in the central states, but a couple of items have already been impacted. Freight challenges have contributed to higher prices. Commodities reliant on foodservice demand continue to fall below production costs, while commodities that retail consumers favor are still increasing. Off a low, avocados have seen a 19% increase in prices in the week ended February 19. Limes have also increased 28% to reach new 52-week highs. Tomato prices have fallen 10% to a new 52 week low.
New product innovation headwinds present challenges for large CPG brands (PEP)
59% of shoppers use the search tool to find a specific item, 32% of shoppers access their previous purchases and reordered from that list, and only 12% looked for new items to try. 30% of consumers, up 5% from a survey in May, say they look to spend minimal time in supermarkets. The increase in online shopping and consumers looking to spend less time in the store will continue to be challenging for new product launches. In 2020, the number of new line extensions in the edible category declined 29% from the three-year average. At the CAGNY conference, PepsiCo outlined the importance of delivering big ideas through consumer-centric innovation. Mondelez said it would eliminate a quarter of SKUs at the same conference and focus on fewer, more impactful, and more incremental new products. The following table features examples of new brands and extensions launched in 2020 that we're able to breakthrough.
