Commodities, AB InBev, Molson Coors, BrewDog, Heathrow etc.

A DAY IN THE LIFE:

Affirmation bias is quite a powerful thing.

We talk about inflation quite a lot these days and, with a rise to over 7% baked in because of what will happen to the energy price cap in April, that’s not going to stop any day soon.

And then, as it’s front of mind, we see inflation everywhere.

This is going up by 15%, that by 20% and the other by 25% but, strangely, we never see, let alone comment, on the prices that have stayed the same or, heaven help us, might have actually gone down a little.

But for the maths to work – and assuming the stats boffins aren’t misleading us somehow – there must be lots of prices doing very little.

The problem is, we can’t see them. Anyway, we’re back up north now licking our financial wounds. On to the news:

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PUBS & RESTAURANTS:

The consumer

Oil prices have been flirting with the $100 per barrel level leading some commentators to suggest that UK petrol prices could hit a record 150p a litre later this week. There are also reports that the Ukraine conflict could impact grain and barley prices – and therefore impact the price of beer – as well as a number of other commodities.

Bank of England governor Andrew Bailey has told the Treasury committee of MPs that ‘second round effects of inflation’ can be avoided if workers do not ask for pay rises in order to compensate for their higher cost of living. This is a truism but, for those facing increased costs, it is more easily said than done. Mr Bailey said that inflation was ‘transitory’ but he seems to have changed his mind. He says that asking for pay rises will ‘embed’ inflation in the economy.

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Business rates:

The BBPA has commented on the Department for Levelling Up, Housing and Community and Treasury’s joint technical consultation on moving to a three-yearly business rates cycle, saying that ‘the brewing and pub industry in the UK makes a major contribution to the local and national economy. The sector generates £26 billion of economic value and supports 940,000 jobs, and 85% of pubs in the UK are run as SMEs.’

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Lumina Intelligence’s UK Restaurant Market Report 2021/22 indicates that the market grew 25.9% or £2.3bn in 2021 to a total value of £11.2bn. Outlet decline continued in the market in 2021, at a rate of -2.8%, seeing a net loss of 817 sites.

Marketing analysts Admirals’ research shows that an average pint could cost more than £10 by the end of the decade. Admiral market analyst Roberto Rivero said ‘Soaring energy prices, labour shortages and the rising cost of raw materials are pushing up input costs for businesses which, in turn, is putting upward pressure on prices.’

The ongoing Russia-Ukraine crisis is set to cause a steep price hike in barley, leading to higher costs and supply chain disruption for beer companies. Ukraine is among the top five global producers of barley. Ankur Jain, chief executive of Bira 91, told the Economic Times, the development would put further margin pressure on the sector.

FEVS figures show that French wine export sales  reached a record high of €15.5bn, up 28% YoY, with exports to China surging by 56% last year. 

COMPANY & OTHER NEWS:

Anheuser Busch InBev has reported Q4 & full year numbers saying that ‘continued momentum [has] delivered over 15% top-line growth in FY21.’ CEO Michel Doukeris says ‘this year was an important step in our journey to create a future with more cheers. Relentless execution of our strategy drove continued momentum to deliver over 15% top-line growth, EBITDA at the top-end of our outlook and another year of strong cash flow generation.’ The company says that total volume rose by 3.6% in Q4 and own beer volumes were up by 3.4%. it says that non-beer volumes were up by 3.8%. In FY21, total volumes grew by 9.6% with own beer volumes up by 9.7% and non-beer volumes up by 8.7%.

Early BrewDog investor Keith Greggor is reported to have resigned as a director of the company reports The Grocer. It says Mr Greggor is a ‘high-profile US investor, a drinks industry veteran and co-founder of investment firm The Griffin Group.’ He first bought into BrewDog in 2009. He has ‘now stepped down but remains a shareholder in the business.’

The Times reports that meal kit company Gousto has raised a further $230 million a month after sealing its unicorn status with a $100 million placing. The company ‘has completed a secondary placement led by SoftBank Vision Fund 2 and backed by Fidelity International, Grosvenor Food & AgTech and Railpen, formerly known as the Railway Pensions scheme.’

Molson Coors has reported Q4 & full year numbers saying that net sales increased 14.2% in Q4 on a reported basis and 13.7% in constant currency ‘primarily due to financial volume growth in both the Americas and EMEA & APAC segments, positive net pricing and favourable sales mix’ changes. Molson Coors says ‘net sales per hectoliter increased 3.8% on a brand volume basis in constant currency.’

Molson Coors points to the higher prices that it has managed to charge. It says that it generated net income of $80.0 million, $0.37 per share on a diluted basis in Q4. For the full year, ‘net sales increased 6.5% reported and 4.7% in constant currency, primarily due to positive net pricing, favourable sales mix, primarily due to portfolio premiumization and the reopening of the on-premise channel, and increased financial volumes in the EMEA & APAC segment, partially offset by lower financial volumes in the Americas segment.’

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The MCA reports that State of Play Hospitality is experiencing a strong level of bookings from both corporate and social groups of guests returning. CEO Toby Harris said ‘We had a very strong autumn leading into Christmas. The rebound trend had been very much established. Then we had the ‘Omicron pause’ […] and now we are seeing a really strong comeback’.

A new digital platform, Krowd, has launched in the UK ‘to aid the growth of the hospitality sector by targeting new and lapsed customers.’

In the US, Texas Roadhouse has said that it will introduce a 3% menu increase from April.

LEISURE TRAVEL & HOTELS:

Camping and Caravanning Club reports bookings are up 33% on Easter 2019, despite the easing of international travel restrictions.

Heathrow reports 2021 passenger numbers fell to the lowest level since 1972, at 19.4 million. The airport reports losses of £3.8bn over the two years of pandemic, but added that its £4bn liquidity remains sufficient to support recovery.

Atlas Hotels has acquired a portfolio of six further hotels, located across Scotland, for an undisclosed sum. The purchase of Chardon Group sees the Atlas portfolio increase to 60 UK sites with over 7,400 bedrooms.

The Daily Telegraph reports that issues with courier TNT has led to a delay in passports being issued to holidaymakers. The newspaper said some travellers are waiting for up to 10 weeks for applications to be processed – it typically takes three weeks for a new adult passport to be issued and costs £75.

TfL has confirmed that from today face masks will no longer be mandatory across the network. However, TfL said it ‘strongly encourages customers to wear face coverings on its services to drive down transmission of the virus and keep each other as safe as possible’.

ABTA has confirmed that cruise holiday specialist travel agency Northumbria Travel has ceased trading.

Parkdean Resorts, the UK’s largest holiday park operator, is launching a campaign to create a caravan emoji, which will see the company submit an official application to Unicode Consortium.

Costar points out that extended stay hotels have performed well over the pandemic. Pitched, as they are, as something between an apartment rental and a room hire, they have seen guests stick with them to a greater degree than has been true at traditional hotels. STR says ‘last year, extended stay chains ran at an average occupancy of 73%, as other business-oriented hotels recovered much slower.’

STR says that the US hotel industry was sluggish in January. It says occupancy was 47.8% (down 12.6% on 2019) with average daily rate almost in line (down 0.3%) at $123.51. The resultant REVPAR is down 12.8%.

OTHER LEISURE:

Netflix has unveiled a £1.5m war-chest to search for new UK film-makers, allowing the directors to make anything from crime thrillers and sci-fi to romance and comedy, driven by the principle that ‘daring’ film-making can ‘drive commercial as well as critical success and can emerge from all backgrounds’.

Take-Two Interactive Software has issued Q4 revenue guidance of  $808 million-$858 million, compared to the consensus revenue estimate of $918.47 million.  The company provided earnings per share guidance of $0.780-$0.880 for the period, compared to the Thomson Reuters consensus earnings per share estimate of $1.150.

FINANCE & MARKETS:

City AM reports that UK customs duties paid by business in the year to end-Jan 2022 rose by 64% on the prior year as red-tape and friction became a feature of trade with the EU after the UK’s official exit. The amounts paid are rising sequentially with the last five months prior to 31 Jan being the five highest months on record.

Oil prices have shot through $100 a barrel after explosions were heard near to Kiev. An invasion from ‘Russia, Belarus and Crimea’ has been reported.

Sterling mixed at $1.3497 and €1.2009. Oil through $100 at $102.01 per barrel. UK 10yr gilt yield up 1bp at 1.47%. World markets down yesterday & London set to open down around 200pts as at 7am.

Despite the tax rises to come in April, Chancellor Rishi Sunak is to further pledge to “deliver a low tax, higher growth economy.” Labour says he has ‘hit households and business with 15 tax rises in two years in post – with an unfair National Insurance rise down the line – and he has raised the most tax on average per budget than any chancellor in the last 50 years.’

The IMF has suggested that Rishi Sunak should consider introducing a wealth tax to raise money from those “who have benefited most from the pandemic.” It says ‘windfall or wealth taxes’ could be one way to deal with “demand-supply imbalances.”

RETAIL WITH NICK BUBB:

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