Wine sales decrease YOY in March (BSPE)
In the four weeks ended April 3, wine sales decreased 13% in dollars and 20% by volume compared to the prior year. The comparisons are difficult to the stockpiling period a year ago, but demand is still up compared to two years ago, as seen in the chart below. Wine priced above $20 per bottle grew YOY, which is probably explained by the depressed on-premise trends. Beverage alcohol sales declined 1.3% in the week ended March 27 compared to the prior year. For that week, wine sales fell by 7%, spirits increased 4%, and core beer declined 4%. Compared to 2019, spirits were up 37%, wine was up 21%, and beer was up 8%. In March, Wine DTC shipments increased 16% by value while volumes increased 9.5%. The average bottle price for shipments in March was $44.71, up 6%.
The Dairy Pride Act (STKL)
Last week four members of Congress from dairy-producing states had again introduced The Dairy Pride Act, a bill to prevent products from nuts, seeds, and plants as milk. The bipartisan bill has 33 co-sponsors in the House. A bipartisan group of senators is introducing companion legislation in the Senate. The bill calls on the FDA to enforce its regulations that define milk and cream and stop the labeling of plant-based produces as milk, yogurt, or cheese. Current FDA regulations define dairy products as being from dairy animals, but the FDA has not enforced those labeling regulations. Similar legislation was introduced in 2017 and did not pass.
It was similar legislation passed in Sweden that gave Oatly publicity that it used itself in advertising. Oatly labels its product “oat drink” in its home market. Removing the “milk” from plant-based kinds of milk is unlikely to change the sales growth of dairy or plant-based milk meaningfully.
Visits beyond the conventional grocers (GO)
Conventional grocers were one of the biggest beneficiaries during the pandemic and the shift to at-home food consumption. Whole Foods (AMZN, covered by Hedgeye’s Brian McGough) lagged behind the growth of other grocers during the pandemic. Trader Joe’s struggled in the early months of the pandemic but has since recovered. Looking at the weekly traffic trends for both chains compared to 2019 shows divergent trends. Since the week beginning Feb. 22 Trader, Joe’s has seen traffic growth. On the other hand, traffic to Whole Foods is still down significantly, down 18% in the week beginning March 29th. As consumers are vaccinated and restrictions are lifted, consumers will likely return to more food retailers than the conventional grocers, which benefited from trip consolidation.
