Ukraine, confidence, plastic, delivery, Yo!, OTB, Accor, Campari etc.:

A DAY IN THE LIFE:

Well, we’ve made it (nearly) to the end of another topsy-turvy week. We are perhaps somewhat distracted by the headlines, so let’s move straight on to the news:

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THE UKRAINE CRISIS:

Putting geopolitics to one side, uncertainty and, to be frank, anything that leads to consumers finding themselves glued to the TV and unwilling or unable to or fearful of going out, is negative news for most of the leisure industry.

Therefore, the fact that leisure shares dropped yesterday will not be a surprise. Particularly as the FTSE100 fell by 291pts or 3.7%. But, perhaps, the relatively modest to inline drops may have been less bad than expected:

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PUBS & RESTAURANTS:

Consumer confidence:

GfK has said this morning that its measure for February has returned the ‘lowest headline score for 13 months in [the] face of perfect storm of prices rises’. It says its ‘long-running Consumer Confidence Index decreased seven points to minus 26 in February. All measures were down in comparison to the January 21st announcement.’ Measures hit a recent ‘high’ of around minus 10 in August last year:

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Inflation

The situation in Ukraine could turn ‘an already uncomfortable inflationary situation into something far worse’, says Sky. It points to the oil and gas prices, both of which have risen as a result of the invasion. Fuel prices impact, unsurprisingly, the price of fuel but, as virtually everything has to be delivered, they impact other products as well.

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In a timely comment on inflation, Lumina reports that ‘Good value for money’ is now the top reason given by consumers when they choose a particular establishment to order food for delivery. Health and choice were also in the top three whilst the factors that had most diminished in relevance were familiarity, localness and the perceived quality of ingredients.

ESG, plastics etc:

UK Hospitality has said it ‘is urging the Government to support hospitality businesses as they move away from single-use plastics, ahead of a proposed ban next year.’ Single-use plastics will be banned from April 2023, but UKH says it ‘wants to see government support as the sector moves to alternative, sustainable materials for items such as forks, plates and bowls.’

Delivery:

Lumina Intelligence reports that the UK foodservice delivery market is expected to reach £13.3bn in value this year, up from £12.6bn in 2021. Lumina does not predict a dampening in demand for delivery in the coming years.

CGA On Premise Measurement data shows that energy drinks sales have grown faster than soft drink sales in the past two years. During the last quarter of 2021, the energy drinks category was worth just over £69m and grew 42% by value compared to the same period two years ago.

Boston Beer Co and PepsiCo have partnered for the launch of 5% ABV Hard Mountain Dew. Flavours include Baja Blast, watermelon and black cherry and original.

The National Pubwatch Conference heard that it was important for the sector to work closely with its trade organisations to get its message across to government. BBPA CEO Emma McClarkin told the conference ‘let’s keep working together to ensure that everybody feels safe when they go out, everybody can enjoy the pub and we can still have that wonderful pub that we can call home from home.’ She said ‘we want to be part of the reignition of the UK economy. We want to reconnect communities and we want to regenerate towns and city centres and high streets to bring them back to life.’

COMPANY & OTHER NEWS:

Sky reports that Barclays and Peel Hunt are working on a potential IPO for Snowfox Group, YO! Sushi’s parent company. Despite macro-factors creating negative markets, the company is rumoured to be targeting a £750m listing.

Campari Group reports strong performance in its full year results, with net sales of €2,173m, +25.6% organic growth vs. full year 2020. The pandemic’s fourth wave reportedly impacted consumption and logistics. Group net profit was €285m, up +51.6%.

The National Brewery Heritage Trust (NBHT) has announced the publication of a new digital newsletter, Brewery Heritage. The newsletter will continue as a quarterly publication. 

Krispy Kreme reported set to build delivery-only kitchens in the U.S. and Mexico this year. CEO Mike Tattersfield says ‘our dark shops will piggyback on existing spoke routes, which ensures a fresh doughnut distribution daily and opens up further access to more customers.’

LEISURE TRAVEL & HOTELS:

On the Beach has updated ahead of its AGM, which will be held later today. It says that ‘the Omicron variant heavily impacted Group sales in November, December and early January. However, Group sales returned to FY19 levels on 13 January 2022.’ It says ‘in the 4 weeks to 23 February 2022, Group sales were up 50% on FY19, as travel restrictions were eased.’ There may be a degree of catching up here, as bookings before that period could have been behind 2019.

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Accor reports revenues rose 34% year-on-year to €2.2bn for 2021, with €85m of net profit for the year. From April 2021 onwards, Accor saw revpar (revenue per available room) improving month after month. London, which is more dependent on international visitors, saw revpar decline by 63%. During 2021, Accor opened 288 hotels, resulting in a net growth of 3% over the 12-month period.

Paul Abbott, CEO of American Express Global Business Travel, has said that the corporate travel industry is facing a “defining moment” as travel restarts around the world. He says travellers are ‘coming back into an environment that’s a little more complex and uncertain.’ Mr Abbott says ‘we really have to rise to that challenge. It’s no good just claiming that travel is safe or enjoyable. We need to make sure we treat every trip as an event and we are those trusted travel advisors.’

eDreams, Europe’s largest online travel company, has reported Q3 numbers to end-December today, saying that ‘in 3Q FY22, Bookings [were] 26% above pre-COVID levels (in 9M FY22, Bookings already 7% above pre-COVID).’ It says that ‘despite softening of demand due to Omicron variant, trading continued to be in line or above Pre-COVID levels (October +44% vs 2019, November +33% vs 2019, December -2% vs 2019).’

FINANCE & MARKETS:

Various European leaders have said that Russia will be hit with the “harshest package of sanctions” ever introduced the invasion of Ukraine.

Sterling weaker at $1.3426 and €1.197. Oil price slightly lower at $101.10. UK 10yr gilt yield down 3bps at 1.44%. World markets sharply lower but the Far East is recovering in Friday trade & London is set to open up around 80pts as at 7am. 

RETAIL WITH NICK BUBB:

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