Shopping Trolleys Show Pent-Up Party Spirits -- Heard on the Street
08 Aprile 2021 - 1:12PM
Dow Jones News
By Carol Ryan
A year into the worst health crisis in modern history, French
Champagne, chocolate novelties and tequila have all shot up
consumers' grocery lists. Current trends bode well for liquor
stocks, less so for some of the early winners of the pandemic.
This time last year, shoppers were panic buying after the World
Health Organization declared a global pandemic on March 11.
Supermarket shelves were stripped of essentials such as toilet
paper, dried pasta, hand sanitizer and canned soup. Staples
companies such as Lysol-maker Reckitt and paper-products giant
Kimberly-Clark initially struggled to meet demand.
Today, Americans and Europeans are buying less at the grocery
store overall. Data from Nielsen show that sales of fast-moving
consumer products over the four weeks through March 21 -- the
latest figures available -- were down 10% in Europe's five biggest
markets compared with the same period of 2020. In the U.S., where
so-called pantry loading was more intense, sales were down 16%.
The contents of shopping trolleys have also changed. The
fastest-growing consumer products in Europe over the four weeks
through March 21 were chocolate novelties -- perhaps partly due to
the earlier Easter holiday -- Champagne, tequila, premixed alcohol
and ready-to-drink coffee. In the U.S., sales of Champagne and
prepared cocktails were up 78% and 69% respectively.
It has been tough for more mundane categories to maintain the
blistering growth they saw in the early days of the pandemic. Sales
of goods such as dried pasta and hand sanitizer must now be
compared against last year's unprecedented sharp increase. For the
four weeks in question, sales of toilet roll dropped 54% year over
year in the U.S., while hand-sanitizer sales fell 27%. Bleach and
soap sales are also off in Europe. Although demand for hygiene
products is higher than before the pandemic, cleaning brands
belonging to the likes of Reckitt and Domestos-owner Unilever will
start to look like underperformers.
The indulgent contents of shopping baskets add to a picture of
improving sentiment. Europe's consumer confidence index ticked up
in March and is almost back to its long-term average. America's
equivalent measure is at its highest level since the pandemic
began.
Alcohol's strong showing in supermarket sales partly reflects
the continuing closures of bars and restaurants in many markets.
Social-distancing restrictions tightened in March in countries such
as France and Italy.
Still, the shopping data should reassure investors who have
piled into liquor stocks. Shares in Diageo, which makes Johnnie
Walker whiskey, and its Paris-based rival Pernod Ricard are trading
at close to decade-high multiples of projected earnings. Rémy
Cointreau, which has higher exposure to the booming U.S. and
Chinese cognac markets, now fetches 50 times profits.
If 2020 will be remembered for toilet-paper hoarding, 2021 is
shaping up to be a good year for alcohol.
Write to Carol Ryan at carol.ryan@wsj.com
(END) Dow Jones Newswires
April 08, 2021 06:57 ET (10:57 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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