Califia Farms change coming? (STKL)
Last week Greg Steltenpohl passed away. Greg, a serial entrepreneur, was the ex-CEO and Co-Founder of Califia Farms and also the founder of Odwalla. Greg had said he believes the specialty milk market, which he defined as non-conventional milk (including organic), will be more than 50% of the milk category. Currently, plant-based milk represents 13% of the entire milk category. Greg has also said, “Most people don’t have more than three burgers a week, but dairy though is not just in each meal, but it’s in all kinds of ingredients and is almost as pervasive as sugar is, so we think that the opportunities are actually much greater.”
Dave Rittenbush was appointed as Califia’s new CEO in September. Dave Rittenbush was previously the CEO of Quest Nutrition, which was acquired by Simply Good Foods in 2019. Califia Farms has not announced its IPO intentions, but it was once seen as the first plant-based milk company to go public. Now it appears Chobani will first follow Oatly. There is also the possibility that Danone, which is under pressure from activist investors, could look to monetize its Alpro and Silk plant-based milk brands. The success of Oatly’s IPO will be a deciding factor for many companies. Califia Farms raised $225M in January 2020, valuing the company at $800M. It has raised a total of $340M over the last five years. SunOpta is a supplier to Califia Farms.
Calling for grocery investigations (KR)
Earlier this week, the National Grocers Association released a 24-page report titled “Buyer Power and Economic Discrimination in the Grocery Aisle.” The Association is calling on Congress and federal regulators to begin investigations into illegal and anticompetitive business practices. Most of the criticism is targeted towards Walmart (our retail team covers WMT), but other non-unionized food retailers are also mentioned. The report says that big-box retailers force independent grocers to pay higher prices. The report demands that the FTC, DOJ, and state attorney generals investigate the retailer's and suppliers' arrangements to determine if the bargaining leverage is imposing discriminatory prices and terms on independent grocers.
Now that the Democratic administration is in power, lawmakers appear eager to take action on certain grocery sector matters. Forcing food retailers to pay higher wages in several municipalities is an example. However, that was intervening for the benefit of unionized employees directly. Grocery unions would likely have to get behind the National Grocers Association’s demands before it moved higher as a priority.
Diageo expands RTDs (DEO)
Diageo announced that it would spend $80M to install two new lines at a plant in Illinois to increase the production of ready-to-drink (RTD) beverages. RTDs were the fastest-growing category for Diageo during the pandemic. The two lines will make more than 25M cases of RTDs annually, including Smirnoff seltzer and spirits-based cocktails from Crown Royal and Ketel One Botanicals. Production should be ready by the summer. Diageo said RTD sales rose 26% in North America in the 2H of 2020. Last week Diageo announced the acquisition of Lone River Ranch Water hard seltzer.
We are hosting a call with a beer distributor today at 2 PM. We will discuss the hard seltzer category in-depth as they distribute Truly as well as White Claw. They also carry some RTDs.
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