Dear Client:
At this point, Big Soda’s big entry into the bev alc world is a few years old: The Molson Coors/Coca-Cola partnering on Topo Chico Hard Seltzer was announced in summer of ’20, followed in the next year by Boston/Pepsi’s news of Hard MTN Dew and Blue Cloud. Much more has happened since.
But soda companies are still trying to convince people on their earnings calls they intend to stay the course in bev alc.
For example, on yesterday’s Q4/full year earnings call, Coca-Cola chief James Quincey brought up their budding bev alc biz when asked about recent “significant” changes to the business.
Analyst Robert Ottenstein posited that James and his team “have made significant cultural changes, organizational changes, changes to the product portfolio” in the last few years.
“As you look at 2023,” Robert asked, “what are the key initiatives that you’re looking to drive to set up for continued strong growth” over the next decade or so?
“…We have an aspiration of being a total beverage company — everywhere,” said James. “That’s not going to happen overnight. So we need to make progress in a disciplined way in different category/country combinations,” and “establish leadership positions, preferably quality leadership positions, in the next set of country/category combinations on our journey to the total aspiration.”
“VERY INTERESTED IN ALCOHOL EXPERIMENTS.” But then, James brought up alcohol on his own:
“Other initiatives” where they’re “very interested in the degree of traction” is with “some of the alcohol experiments — particularly, [we’re] looking to see Jack and Coke do well,” he said, referencing “early data in Mexico, launched at the end of last year,” which was “encouraging, ahead of expectations. The U.S. launch will be very interesting … at the end of March.” (Recall, Reyes will start distributing the product in Cali right around then.)
Of all the new initiatives, James said, “I think it’s a question of seeing through the things we’ve launched to really up our game in the coming years.”
’22/Q4 RESULTS. As for how the total business fared last year and in Q4: For the total company, in Q4, the company delivered 15% organic revenue growth with “strong growth across operating segments” driven by “pricing actions” and “revenue growth management initiatives to retain and add consumers.”
They saw “robust volume growth” in many markets, but that was “more than offset” by suspended business in Russia and pandemic restrictions in China.
For full year, “we have maintained consistent volume growth relative to 2019,” said James. “We’ve gained both volume and value share for the consolidated business for both the quarter and the year. So far in 2023, the volume growth trends versus 2019 are in line with last year, and we are laser-focused on executing on our growth priorities.”
JANUARY BEER CPI JUMPS 9% (BUT SPIRITS MOVING AS WELL)
January CPI is in, and beer (at home) hit a new high: up 9% vs. the prior year. That outpaced “all items,” which were up 6.3% — but it didn’t outpace many other consumables. Food at home was up 11.3% (chicken eggs up a whopping 70.1%), while non-alcoholic beverages were up 13.1% year over year for the month.
But certainly, beer’s CPI number is head and shoulders above other bev alc.
The total alcoholic beverages at home CPI was up 5.3%, while distilled spirits at home were up 2.4%, and wine at home was up 3.3%.
We should point out, though, that other bev alc is making bigger moves from a month over month perspective. From December to January, beer at home CPI was up only 0.2%, while spirits at home jumped 0.9%, and wine was up 0.5%. We’ll see how the year wears on.
OUR INITIAL FEBRUARY READ SHOWS SCANS SLOWING THEIR ROLL
After a solid set of scans in January, trends are off to a flatter start in February.
Recall total bev alc dollars were up nearly 5% for the four weeks ending January 29 in IRI multi-outlet and convenience scans. But the latest weekly read from IRI shows that dollar growth moderated to just 0.4% for the week ending February 5.
SLOWER START EXPECTED, ANTICIPATE SUPER BOWL LIFT NEXT WEEK. The slower start to February, however, does not necessarily indicate that we’re in for a slow month, as IRI’s Scott Scanlon highlighted in issuing this latest update.
“Flat sales following a relatively ‘Wet Jan’ coupled with strong sales during NFL playoffs is not unexpected,” Scott wrote. Adding that one “would anticipate many of the growth brands to outperform with next week’s results building to the Super Bowl, especially within beer and spirits.”
RUNDOWN OF BEV ALC PERFORMANCE IN LATEST WEEK. Indeed, we’ll be back this time next week recapping results leading up to Super Bowl, but as far as this initial week of February goes…
We see that spirits led the way in total bev alc growth with dollars and volume up 3.5% and 3%, respectively.
Beer, meanwhile, managed dollar growth over the week, up 1.6%, but experienced a decent dip in volume, down 4.4%.
And wine continues to hang in the red, down 5% in dollars and down 8.6% in volume over the week.
TAKING A CLOSER LOOK AT BEER, this latest set of IRI weekly scans showed that most segments were still growing dollars versus year ago, with non-alcoholic beer (+29.3%) and FMBs (+17.1%) leading the way. However, we would call out that while most beer segments saw an increase in dollar growth compared to the prior week, non-alc did not – down 4.4% vs. the week ending January 29, suggesting a drop-off from the end of “Dry January.”
As for suppliers/brand fams, we continue to see only a handful at the top growing both dollars and volume over the week.
When it comes to suppliers, there are three in IRI’s top ten growing dollars and volume during the week vs. YA with the trio being made up of:
- Constellation up 10% in dollars and up 4.6% in volume.
- Mark Anthony Brands up 6.5% in dollars and up 1.3% in volume
- And New Belgium/Bell’s with dollars up 12.8% and volume up 7.5%
As for brand fams, there are a quartet growing in IRI’s top ten, including:
- Modelo with dollars up 13% and volume up 6.7%
- Michelob growing dollars by 7.6% and volume by 2.5%
- Corona up 6.5% in dollars and volume up 1.6%
- And Twisted Tea up 32% in dollars and volume up 23.2%
ALBERTSONS AND KROGER LOOKING TO SELL UP TO 300 STORES AMID ANTITRUST CONCERNS
Albertsons and Kroger are reportedly working on a plan to offload several hundred stores amid antitrust concerns over the grocers’ proposed merger.
People familiar with the plan told Reuters the two grocery chains plan to sell between 250 and 300 stores. The divestitures could help alleviate pressure on the Federal Trade Commission (FTC), which is reviewing Kroger’s proposed $24.6 billion acquisition of Albertsons.
Among those putting pressure on the FTC are “some U.S. lawmakers and consumer advocacy groups” who want the FTC to block the merger “over concerns it could lead to grocery price hikes when inflation has already been raging.”
The potential worth of the stores up for sale could exceed $1 billion, the sources told Reuters. They are reportedly located in the Pacific Northwest, Southern California, Phoenix and Chicago. Potential buyers are already being vetted by Albertsons and Kroger, who “have been discussing their plans with the FTC to get its blessing,” per Reuters.
Netherlands-based Ahold Delhaize (which operates Stop & Shop, Giant, Food Lion and Hannaford chains in the US) is apparently among prospective buyers.
If the grocers are unable to find a buyer, they may divest several hundred stores (up to 650 according to a regulatory filing by Kroger) and place them in a new company Albertsons shareholders would own.
Reuters’ sources requested anonymity to discuss the confidential deliberations. Kroger, Albertsons and the FTC declined Reuters’ request for comment.
Kroger and Albertsons operate a total of 4,996 stores, combined.
Until tomorrow,
Harry, Jenn, Jordan, Bianca
“Outside of a dog, a book is man’s best friend. Inside of a dog it’s too dark to read.” – Groucho Marx
———- Sell Day Calendar ———-
Today’s Sell Day: 11
Sell days this month: 20
Sell days this month last year: 20
This month ends on a: Tues.
This month last year ended on a: Mon.
YTD sell days Over/Under: +1
