Online orders decelerate in Feb. (ACI)
In February, online grocery sales fell from January due to fewer households and fewer orders, according to the latest Brick Meets Click/Mercatus Grocery Shopping survey. Online grocery sales in the U.S. fell 14% in February to $8B than the $9.3B in January, as seen in the chart below. The biggest decrease came in the ship-to-home category. February online sales were at roughly the same level as in the November and August surveys at $8.1B and $8.2B respectively. Delivery and pickup sales were higher in February at $6.1B than $5.9B in November and $5.7B in August. The delivery and pickup segment remained at 76% of the online grocery market in February. The monthly active users fell 12% to 60.1M in February, down from 69.7M in January. More than 40% of the decrease came from the over 60 age group, likely reflecting a change in behavior as vaccines have become more available for them. Online grocery shoppers also placed 6% fewer orders. In the January survey, shopper sentiment for completing an online order in the next month fell 32 percentage points to 56%, presaging the drop seen in February. In February, the likelihood to use online ordering stabilized at 58%.
Last week, Albertsons believed it is better to use third-party delivery services for the last mile delivery. Albertsons believes the third parties can get better utilization out of a driver. All of the grocers expect online ordering to increase in 2021 even as overall sales decline.
Feb. retail sales drop (KR)
Retail sales in February fell more than expected, but additional government stimulus and easier comparisons point to a stronger March. Retail sales fell by 3.0% in February, but January was revised up to 7.6% from 5.3% as previously reported. February was expected to decline by 0.5%. Sales at restaurants and bars were 17.0% lower than the prior-year and 2.5% lower than January. Sales at grocery stores increased 11.1% YOY, accelerating 40bps from January.
Wine returns to the public markets (NAPA)
Duckhorn is seeking to raise $300M at the mid-point of its IPO range tomorrow. The enterprise value would be $2.1B, with the float consisting of ~17% of the shares. $100M of the proceeds will be used to pay down the revolver that was used to pay a dividend to existing shareholders. Duckhorn has an admirable track record of 11 years of organic growth of at least HSD%. The company grew organically through recessions and a pandemic and has EBITDA margins approaching 40%. Those results are more like Monster Energy than the results of publicly reported wine businesses.
Wine companies have not had a storied history in the public markets. It has been nearly two decades since Robert Mondavi and Ravenswood, the latest winery IPOs, was acquired by Constellation Brands. Constellation Brands has been selling off its wine brands for several years trying to find visible organic growth in the category. Duckhorn and Vintage Wine Estates are looking to change the sector’s track record by focusing on the higher price points. Above the $10 per bottle price points, there is enough margin to make investments and command channel power.
The mid-point of the IPO price range for Duckhorn represents a 50% premium to the valuation of Vintage Wine Estates. On Tuesday, March 23rd, we are hosting a fireside chat with Bespoke Capital Acquisition and Vintage Wine Estates' management team ahead of their merger closing. We will discuss the future prospects of the wine industry, its strategy, what they look for in acquisitions, how that complements the company’s growth, what to expect as we lap the pandemic, and the importance of brands in a consolidating sector. We hope you can join us.
