Shelf Talk: Changes in milk, meat, water, and alcohol

The past month(s?) of holiday-focused shopping places such an emphasis on retailers, so this digest focuses instead on products, namely beverages and meat. That being said, I do hope you've had success finding gifts for your loved ones, if that's how you celebrate, and wish you a very happy, healthy, successful 2020.

And thank you for reading. It's an honor to have your attention.

 Beverages

Milk continues to be disrupted. Swedish maker of oat milk, Oatly, is expected to hit $230M in U.S. sales in 2019. They opened a $15M plant in NJ this year. (Bloomberg)

Banana milk: Mooala expects to be in 3,000 stores by the end of the year. (Quartz)

Plant-based milks are being blamed in part on dairy producer Dean Foods' recent Chapter 11 bankruptcy filing. But much of their issues come from a history of mixed M&A results. Andrew Novakovic, professor of agricultural economics at Cornell University, pointed to 2001, when Suiza Foods acquired Dean Foods for $1.5B and kept the Dean name. "This might well end up being judged as an example of a company that grew too big, too fast, and perhaps didn't pay as close attention to operating fundamentals as they should have." Food Dive has a great history on how Dean came to be and some of the issues that led to its problems today. (Food Dive)

Recommendations from a consortium of scientific organizations are likely to drive further declines in juice and dairy consumption: Children should drink mostly water and milk, with limits on the amount of milk -- avoiding flavored milk, plant-based milk, and sweetened drinks. Similar, less restrictive recommendations from a decade ago had a noticeable negative impact on juice sales when I was working with several brands in that category. (NYT)

Alkaline water has become trendy. The market leader, Essentia, hit $181M in sales in 2018 and selling at a price premium of 25% over traditional bottled water. Competitor Alkaline88 hit $30M in its latest fiscal year. Though it's a small blip in the $17B U.S. bottled water category, alkaline water does demand a healthy premium for a product that's essentially bottled water with added salt, and without benefits backed by scientific evidence. (Bloomberg)

Analysis of an idea: AB InBev expands beyond alcohol by buying Coke or Pepsi with backing from 3G/Berkshire Hathaway. (CB Insights)

CB Insights summarizes the brands that are "disrupting happy hour." (CB Insights)

Alcoholic seltzer has been hot this year, seemingly showing up everywhere. UBS estimates the category at $550M and forecasts it to hit $2.5B by 2021. (BI)

White Claw has been so popular it had shortages earlier this year. Nielsen data shows White Claw at $328M for the year ending July 2019 (possibly meaning the category is bigger than UBS estimated above). (CNN)

Speaking of alcohol… research shows people swap alcohol for legalized recreational marijuana (but not tobacco). "'It appears the alcohol industry has valid reason to be concerned about legal marijuana and may need creative strategies to avoid market decline if it passes,' said Pengyuan Wang, an assistant professor in the Terry College of Business at the University of Georgia." (Also, now that there are legal ways to get cannabis, it's less interesting to teenagers. "'Contrary to widely held public concern after recreational cannabis is legalized, teenagers appear to lose interest, rather than gain interest,' added Wang.") (INFORMS)

 Meat

"Veggie burgers were living an idyllic little existence. Then they got caught in a war over the future of meat." "In 2019, officials in nearly 30 states have proposed bills to prohibit companies from using words such as meat, burger, sausage, jerky or hot dog unless the product came from an animal that was born, raised and slaughtered in a traditional way." (WaPo)

In reaction, the Plant Based Foods Association released voluntary labeling standards "to promote consistency in labeling across the plant-based meat category..." (PBFA)

And courts have recently overturned the ban of "meat-like words on meat alternatives" in Mississippi and federally. (Forbes)

Dave Pell from NextDraft asks: "By this logic, doesn't the product name animal crackers cause too much confusion?" (NextDraft)

Meanwhile, Kellogg's MorningStar Farms has been in this game for a long time. Though Beyond Meat and Impossible Foods are getting all the talk lately, MorningStar's sales are estimated at $210M, with a spin-off potentially valued at $5-10B. Kellogg's has some incentive to fight back and will be introducing its own subbrand to compete more directly with Beyond and Impossible: Incogmeato. (Food Dive, Bloomberg)

Freakonomics covered the future of meat in a podcast earlier this year. "Global demand for beef, chicken, and pork continues to rise. So do concerns about environmental and other costs. Will reconciling these two forces be possible — or, even better, Impossible™?" (Freakonomics)

Then we have Costco's $4.99 rotisserie chickens, which it likely sells at a loss. They sold 91M of them last year. To supply the demand, Costco opened its own $450M poultry plant in Nebraska this year. (CNN)

One reaction: "Big retailer sells chickens as a loss leader. EVIL! Oh, wait, it's not Amazon" (Ben Evans)

🎲 Unrelated and fun  

Two men just released their first album. They are 102 and 88. (WaPo)

How to make your own Die Hard Christmas tree ornament, with instructions from Aaron Cohen, owner of Somerville's Gracie's Ice Cream. (Unlikely Words)
 

Until next year,
Scott Sanders