🥫 Kraft cuts it out

Tuesday, February 21, 2023 by Snacks
Crafty price moves (Kevork Djansezian/Getty Images)

Crafty price moves (Kevork Djansezian/Getty Images)

Crafty price moves (Kevork Djansezian/Getty Images)

Crafty price moves (Kevork Djansezian/Getty Images)

Last Week’s Market Moves
Dow Jones
33,827 (-0.13%)
S&P 500
4,079 (-0.28%)
11,787 (+0.59%)
$24,564 (+13.57%)

Hey Snackers,

It’s not the destination, it’s the journey — but try telling that to these passengers who spent 16 hours on a plane, only to end up back at the same New Zealand airport.

US indexes were mixed last week as investors worried that new inflation data and strong labor #s could lead to prolonged rate hikes (prices aren’t cooling as fast as hoped). Meanwhile, oil prices fell while US Treasury bond yields soared.


1. Kraft Heinz puts the brakes on price hikes as grocers battle for inflation-weary shoppers

Done playing ketchup… Last week Kraft Heinz said it would pause its price hikes, noting that 90% of its planned increases were already in effect. The biz behind kitchen staples like Oscar Mayer wieners and Kraft Mac & Cheese grew its sales10% last quarter as it jacked prices by 15% last year. Price hikes have also helped big foodies like Pepsi, McDonald's, and Coke rake in higher profits. But as inflation starts to cool, some grocery giants are pushing back for fear of losing customers:

  • Smallstart: Walmart, America’s largest grocer, is reportedly telling some suppliers price hikes are a nonstarter (and is promoting its cheaper private labels). Its earnings today could shed more light on its pricing plans.
  • Bowl foods: Amazon-owned Whole Foods said it lowered prices on cereal and bread, and that it'll focus on discounts this year. It also reportedly asked big suppliers to lower their prices.

Two price roads diverged… in a Jell-O wood. While Kraft, Pepsi, and Slim Jim maker Conagra said they’d ease off on price increases, others are taking the hike road. Nestlé, the world’s largest food company, said last week that it's still on the hiking path. It raised prices 8% last year, but said that wasn't enough to offset surging costs. Meanwhile, Unilever (picture: Hellman's mayo, Ben & Jerry's), said earlier this month that it'd keep upping prices this year.


The little guy can win when giants fight… While inflation's slowing in the goods and services sector, food has been sticky. Last week's consumer-price report showed that food inflation actually accelerated from December to January. It’s early innings, but if grocers and food giants start battling for customers by lowering prices (or at least\ not hiking them) that could cool food inflation. Consumers want to see food prices fall, but they’re expected to jump another 7% this year.


2. Coming up this week

Chinese tech on deck… Alibaba (the Amazon of China) and Baidu (the Google of China) are set to report. Last year China’s economic growth sagged to one of its worst levels on record as its zero-Covid policy and lockdowns crushed production. After China reopened for business this year, its tech stocks have rallied in hopes of a rebound. While last year’s #s might not be stellar, earnings forecasts could be more upbeat (especially as regulatory crackdowns cool). Both Alibaba and Baidu are planning ChatGPT-style AI tools, which could also rev growth.

Bubbles & bench presses… Keurig Dr Pepper, the beverage icon behind K-Cups, Snapple, 7UP, and (of course) Dr Pepper reports Thursday, and analysts expect refreshing results. Last quarter, KDP's sales jumped 11% as people splurged on inflated bevvies. Rivals Pepsi and Coke untapped strong earnings this month. While the overall soda market has been flat, demand for Dr Pepper soda has spiked. And KDP might have another winner in its fridge: it recently took a 30% stake in energy-drink maker Nutrabolt, which expects record sales this year.

Zoom Out

3. Stories we’re watching

Green juice… The White House announced that Tesla would open up at least 7.5K of its US charging stations to non-Tesla EVs by the end of next year. Right now, Tesla’s US charging network — the country’s second largest — is compatible only with Teslas. Tesla might lose its exclusivity edge, but it would qualify for a share of billions in federal funding for building a national network. The Biden admin wants 500K+ EV chargers on US roads by 2030, and it also secured commitments from GM, Ford, ChargePoint, and others with charging networks.

Ballooning tensions… After the US shot down a Chinese surveillance balloon, relations between the world’s two largest economies have worsened. Last week China sanctioned US defense contractors Lockheed Martin and Raytheon over weapons sales to Taiwan. Earlier, the US barred Chinese companies that it said were tied to the balloon incident. China is one of the US’s largest trade partners, but relations are at the worst level in decades and could get worse. President Biden plans to talk with China’s President Xi to “get to the bottom” of things.


4. Last week's highlights

  • #ad: Uber and Lyft are seeing their ad businesses boom (think: an in-app Expedia ad en route to JFK). As companies like Uber, CVS, and Kroger capitalize on customer data to sell targeted ads, Google and Meta are losing market share.
  • Hasno: Hasbro, the toy titan behind Monopoly, Jenga, and Dungeons & Dragons, reported bummer earnings as holiday toy sales slumped. But fantasy card game “Magic: The Gathering” became its first billion-dollar brand.
  • Shaky: New York regulators ordered the third-largest stablecoin to wind down, which could spell trouble for its brand partner, Binance (aka: the world’s largest crypto exchange) as investors ditch the coin.

What else we’re Snackin’

  • Lit: As recreational-weed legalization spreads, some hotels are launching cannabis-infused amenities to get in on the buzz. Picture: on-call “budtenders” and smoker-friendly rooms with extra air filters.
  • To go: Remote work is costing Manhattan $12B+ a year as residents cut back on weekly happy hours and $25 salads. On the plus side: Manhattanites are saving an average $4.6K/year by kicking it at home.
  • Jet: The US is losing its luster for the rich as millionaires start to chase the American Dream in other countries. Last year the # of high-net-worth people entering the US tanked 86% from prepandemic highs.

Snack Fact of the Day

In 1870, Hiram Rhodes Revels became the first Black American to serve in Congress

This Week

  • Monday: US markets closed for Presidents’ Day
  • Tuesday: Existing-home sales. Earnings expected from Walmart, Home Depot, Coinbase, Molson Coors, and Palo Alto Networks
  • Wednesday: Earnings expected from Nvidia, Baidu, Wingstop, TJX, Garmin, Wix, eBay, and Etsy
  • Thursday: Initial jobless claims. Earnings expected from Alibaba, Booking, Domino’s, Papa John’s, Moderna, Planet Fitness, Wayfair, Bath & Body Works, Warner Bros. Discovery, and Keurig Dr Pepper
  • Friday: One year since Russia invaded Ukraine. Earnings expected from Cinemark

Authors of this Snacks own shares: of Amazon, CVS, Google, GM, Molson Coors, Tesla, Uber, and Walmart

ID: 2748030

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