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Consumer Goods Industry Earnings Double Pre-COVID Levels in Strong April Performance and More

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Consumer Goods Industry Earnings Double Pre-COVID Levels in Strong April Performance and More

Seven Out of Eight Major Players Raise Sales Guidance Despite Stagnating Volume and the limits of corporate problem solving

Eric
Apr 30, 2023
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Consumer Goods Industry Earnings Double Pre-COVID Levels in Strong April Performance and More
  • Consumer Goods are still hot

  • Things I wrote

  • Private Label Updates

  • Walmart Sells Bonobos; Marks an End of an Era

  • New un-Cola War

  • Retailers Face Scrutiny Over Accounting Rules

  • Meta Jumps into the Retail Media Network Game

  • Amazon considers buying hundreds of grocery stores being divested by Kroger and Albertsons, says research firm, ignoring anti-trust trends.

  • Consumer Brands Association names a new CEO

Consumer Goods are still hot

  1. In April, the consumer goods industry saw a strong earnings season, with the average organic sales growth for eight major players reaching 10%, which is more than double pre-COVID levels. This growth was driven mostly by price, as the companies increased their prices by an average of 12%. Although seven of the eight companies raised their sales guidance for the year, they also acknowledged that volume was stagnating, which probably won't lead to list price changes, but could lead to promotions to boost sales.

Company Organic Revenue Price Increase Guidance Coca-Cola +12% 11% Neutral Church and Dwight +6% 6% Raised Colgate Palmolive +10% 12% Raised Conagra Brands +6% 16% Raised Hershey +12% 9% Raised Kimberly Clark +5% 10% Raised Mondelez +19% 16% Raised P&G +7% 10% Raised PepsiCo +14% 16% Raised

Things I wrote.

  1. Overcoming High Prices: General Mills Plans to Use Advertising to Boost Sagging Sales Volumes

Overcoming High Prices: General Mills Plans to Use Advertising to Boost Sagging Sales Volumes

After losing volumes for 8 straight quarters, General Mills is looking to boost marketing.
The Slotting FeeEric Gardner
  1. The 4 Ways CPG Companies Manage Retail Price Increases

The 4 Ways CPG Companies Manage Retail Price Increases

There’s more than meets the eye to consumer goods retail price increases. Management uses a combination of four levers to manage price increases.
The Slotting FeeEric Gardner
  1. Unlocking the Future of Retail: A Closer Look at Walmart's Omnichannel Strategy

Unlocking the Future of Retail: A Closer Look at Walmart’s Omnichannel Strategy

Exploring Walmart’s strategic plan to dominate the retail industry by bolstering its already impressive omnichannel capabilities.
The Slotting FeeEric Gardner
  1. How Conagra Brands is Using COVID-19 to its advantage

How Conagra Brands is Using COVID-19 to its advantage

Conagra Brands reports strong Q3 earnings, with COVID-19 serving as a catalyst for change.
The Slotting FeeEric Gardner

Private-label Updates.

  1. All the price increases mean that consumers are switching from branded products and it looks like it may stick. 73% of US consumers intend to continue purchasing private-label products across all categories. In 2022, private-label CPG products held an 18.2% dollar share of the US grocery market, which is expected to rise to 22.6% in the next two years, and CPG companies should be paying much more attention to the challenge.

Welcome to the new era of private-label brands in the US

Victor Martino argues the US grocery industry is at a seminal period in the development of private-label CPG brands.
Just FoodDean Best
  1. Target's private label brands generated more than $30 billion in sales last year and are growing faster than its overall sales, providing an opportunity to increase market share this year, according to retail consultants and analysts. The Star Tribune has a nice article on how that happened.

Target’s not-so-secret weapon for the past 40 years? Its private labels

The Minneapolis retailer has the opportunity to expand its customer base as it leans into its more than 45 brands, retail experts say.
Star TribuneNicole Norfleet

Walmart sells Bonobos; marks the end of an era.

  1. Walmart sold fashion brand Bonobos to WHP Global and Express Inc. for $75m, suffering a significant loss as it originally bought the brand for $310m in 2017. Although Bonobos achieved double-digit sales growth, Walmart's decision probably reflects the challenges faced by DTC brands in scaling their operations and justifying their valuations. Basically, everyone knew, but ignored, the fact that DTC brands face high customer acquisition costs and significant inventory challenges. The sale (combined with rising interest rates) signals an end to an era while highlighting the limitations of the DTC business model.

Scaling the DTC Jungle: Walmart’s Amazon Envy and the Bonobos-sized Misadventure

Last week, Walmart announced their decision to divest from the fashionable men’s clothing label Bonobos, selling it to WHP Global and Express Inc. for $75 million. Walmart, which initially bought the brand in 2017 for $310 million, is suffering a significant loss from this sale.
Gad’s NewsletterGad Allon

New un-cola War

  1. PepsiCo launched Starry, a lemon-lime soda, in a fourth attempt to rival Coca-Cola's Sprite. Despite the an overall decline in soda consumption, Pepsi is hoping to gain 5% to 10% of Sprite's customers, with a particular focus on multicultural consumers.

Sprite Is So Popular That Pepsi Launched a New Lemon-Lime War

PepsiCo is hoping Starry will do what the just-retired Sierra Mist couldn’t: unseat Coca-Cola’s dominant citrus brand.
BloombergBrett Pulley

Retailers face scrutiny over accounting rules.

  1. The US Securities and Exchange Commission (SEC) is scrutinizing non-standard accounting measures and telling companies to justify their use or quit showcasing them. Academy Sports & Outdoors Inc., Dave & Buster’s Entertainment Inc., and Petco Health & Wellness Company Inc. were among those who received letters from the government. Some use of non-GAAP measures is obviously fine—especially when stripping out FX flucutations and M/A through organic sales. However, the SEC is pointing out that some are retailers are stripping out material expenses—similar to WeWork.

Retailers’ ‘Borderline Misleading’ Accounting Targeted by SEC

Public companies that tout overly rosy earnings numbers that don’t comply with US accounting rules, watch out.
Bloomberg TaxNicola M. White

Meta Jumps into the Retail Media Network Game

  1. Facebook's parent company, Meta, has launched Managed Partner Ads (MPA) in response to the fallout of iOS 14’s privacy changes. Generally, Facebook has been clunky about integrating commerce into the ecosystem, but the announced pilots look very promising. Walgreens claims that it partnered with Meta to optimize local sales across 75 SKUS—boosting volume by 2-4% in the process.

Meta tests new ad offering in partnership with retail media networks

With its most recent ad offering, Facebook-owner Meta has now entered the increasingly popular retail media landscape.
Modern RetailVidhi Choudhary

Corporations Can’t Solve Public Problems

  1. Walmart is closing four of its eight stores in Chicago due to growing financial losses, and three of these stores are in predominantly Black and low-income neighborhoods. The Obama Administration looked to large retailers like Walmart to solve “food deserts”, at the expense of local partners. This news showcases the shortcomings of relying on large corporations to provide key public services. As always, retail is 100% political.

What Walmart’s pullback from Chicago says about Corporate America’s limits | CNN Business

A line of Chicago mayors heavily courted Walmart over the last two decades, brushing aside community protests. And Walmart welcomed the opportunity to show cities it could be a strong corporate partner.
CNNNathaniel Meyersohn

Whole Foods Market mulls building in-house kitchens

  1. Whole Foods Market is considering building commercial kitchens to produce prepared meals for its food bars and refrigerated cases. The move would help the grocer better control the quality of its multibillion-dollar prepared-foods business.

WSJ News Exclusive | Whole Foods Market Explores Building Off-Site Kitchens to Supply Food Bars

The move would be a shift for the Amazon-owned supermarket, which has outsourced much of its food production.
The Wall Street JournalJaewon Kang

Amazon considers buying hundreds of grocery stores being divested by Kroger and Albertsons, says research firm, ignoring anti-trust trends.

  1. According to research firm Bernstein, Amazon may purchase hundreds of grocery stores that Kroger and Albertsons are divesting, potentially giving the e-commerce giant's physical retail endeavors a significant boost. Obviously, it’s just a third party, but it’s shockingly unaware of the current regulatory environment.

Amazon could buy 100s of grocery stores being divested by Kroger and Albertsons, according to a top research firm

Amazon’s expansion into physical grocery retailing has not gone well. CEO Andy Jassy is not giving up, though.
InsiderGloria Dawson

Consumer Brands Association names a new CEO

  1. The Consumer Brands Association (CBA) is an industry trade group that represents 70 consumer packaged goods (CPG) companies across food and beverage, and personal care. Retail Brew sat down with its new CEO, David Chavern, to talk about the organization’s future. “If you talk to members of the public or you talk to members of Congress, I think there’s very little conception of the scale and scope of the industry,” he said. “And one of my primary goals is going to be telling a more cohesive, compelling story about just how big and impactful and meaningful the consumer products industry is to the United States.” (Retail Brew)

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