Inflation Across Grocery Store Shelves Has Heavy Impact on Volumes

Last Week’s Moves

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Welcome to your weekly food & beverage report, where we cover everything you’ll need to know for the week ahead. This week, inflation has had a sharp effect on volumes sold across food-at-home, climate change pushes corporations to look for new solutions, and a coffee chain works to innovate menu options with a sensible but limiting prerequisite. Let’s dig in. 

As inflation keeps pushing food-at-home prices up, many food and beverage categories are seeing volumes plummet

A new study published by IRI has found that most categories across the food and beverage space saw declines in volume as prices increased by 13.4% in August compared to last year. As prices of frozen dinners jumped by 20.7%, their volumes fell by 11.1%. Cookies in the center store sold 8.9% less by volume than last year, when their prices were also 18% lower. As food manufacturers pass on higher costs for ingredients, packaging, labor, and transportation, food inflation continues to persist. 

• Not very groovy… According to the US Bureau of Labor Statistics’ Consumer Price Index for August, food-at-home prices have seen the largest 12-month increase since March of 1979, with prices increasing by 13.5%. 
• Energized and unaffected…  Higher prices have had a negative impact on demand for food and beverage, however some CPGs have seen volumes remain persistent. The energy drinks category has held strong with Monster (MNST) reporting record breaking sales in Q2, jumping 13.2% for $1.66 billion. 
   

With climate change top of mind, companies within the food and beverage industry are looking for ways to progress towards their sustainability goals 

More for less… Beam Suntory announced a new effort in producing more Jim Beam bourbon while cutting back on greenhouse gas emissions. The company pledged to invest $400 million into renewable energy systems while ramping up production volume by 50% at its largest distillery in Kentucky. The company also plans to cut the same distillery’s greenhouse gas emissions by 50%.

• Doubling down… The plan is to power the facility with renewable natural gas, an upgraded, methane-heavy biogas. There is also an agreement with 3 Rivers Energy Partners to build a waste processing plant that uses high-quality low-cost fertilizer. Beam Suntory expects the project to be completed by 2024, when the distillery will get 65% of its power from renewable natural gas, and 35% by fossil-based natural gas. 

Powerhouse partners… PepsiCo (PEP) and Archer Daniels Midland (ADM) have announced their partnership in sweeping regenerative agriculture projects that could impact 2 million acres of farmland by 2030, marking a notable step in both companies’ carbon reduction efforts. Corn, soy, and wheat producers across the Midwest will receive financial incentives as well as agronomic and technical support for greener practices on their farms. 

• The age old question: how do you count gas?… Many US companies are looking to regenerative agriculture to help achieve their climate goals, however critics say it’s hard to track companies’ progress as “regenerative agriculture” and “sustainability” can be hard to define and difficult to measure. 

Other stories…

• The kids are fighting… Pizza Hut (YUM) has announced its “new” product, the “Italian Taco”-- fold your slice of pizza down the middle and voila, you have an Italian Taco to rival Taco Bell’s (also YUM) Mexican Pizza. 
• Need a hand?... Starbucks’ (SBUX) chief marketing officer said the company is focusing on menu options that can be eaten with one hand, but noted that Starbucks is “still in the early days of food, whether in the US or around the world”. 
• Not so sweet… A new study led by the American Cancer Society found that people who drink two or more servings of sugar-sweetened beverages per day have a 5% increased risk of death from obesity-related cancer. 

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input. 

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