Hurricane Ian May Mean Bad News for Food Inflation

Kristyn Tarpey - Barchart - Mon Oct 3, 2022

Last Week’s Moves

BLS Cash Index 559.45 (-0.16%) BLS Industrials Index 567.79 (-0.52%)

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Welcome to your weekly food & beverage report, where we cover everything you’ll need to know for the week ahead.This week, Hurricane Ian leaves farmers and ranchers unsure of the damages, ready-to-drink cocktails are all the rage, and one fast-food chain revamps its kid’s meals for adults. Let’s dig in.

As the scope of damage remains uncertain, one thing is for sure: Hurricane Ian likely caused severe damage to Florida’s citrus harvest

Hurricane Ian is the latest natural disaster to hit the US, sweeping across the Florida peninsula leaving millions in the state without power. While the start to the main agricultural season in Florida is still a month out, many farmers and ranchers still don’t have access to their lands, meaning they haven’t been able to assess the damage. Nikki Fried, Florida’s Agriculture Commissioner, has reported that Hurricane Ian went through between 400,000-450,000 acres of citrus fields.

Orange? More like gold… Florida is the leading provider of citrus in the US, with agriculture serving as the state’s second largest industry (behind tourism).
Ripple effect… John Boatright, Director of National Affairs for the Florida Farm Bureau, noted that “Damage to citrus trees is a concern and could have a multi-year effect on production, driving down numbers even further below (a 55-year low).”

Consumers are changing their drinking habits, turning from hard seltzer to RTD Cocktails - and beverage companies want in

Studies say seltzers are out… Ready-to-drink (RTD) cocktails were the fastest-growing spirits category last year, generating revenue of $1.6 billion, a 42% increase in revenue from the year before, according to the Distilled Spirits Council of the United States. Hard seltzer, on the other hand, saw revenues drop by 5.5% over the past year according to data from NeilsenIQ.

A crossover episode?... Beer companies are looking to capitalize on the trends, with many popular brands launching premixed versions of classic cocktails. As beer companies like Molson Coors (TAP) and Heineken (HEINY) enter the space, the category is expected to see continued growth.

Coke wants to capitalize… Speaking of, Coca-Cola (KO) and Molson Coors are continuing to lean into their fast-growing partnership as they launch a new RTD cocktail, Topo Chico Spirited. This will be the third drink to be introduced by the companies since their partnership started in 2020. The launch will cover over 20 markets across the US in 2023.

Traveling tequila… Topo Chico Spirited will focus on familiar cocktail flavors, spiked with 100% authentic spirits, including premium tequila sourced from Mexico.
Getting in on it… Coca-Cola has been aggressive with its foray into the RTD space, launching RTD spiked lemonades based on the brand’s juice brand Simply, outlining plans for an RTD Jack-and-Coke cocktail with Brown-Forman (BF.B), and soon its launch of its Fresca Mixed cocktail with Constellation Brands (STZ).

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Hurricane Ian May Mean Bad News for Food Inflation

As the scope of damage remains uncertain, one thing is for sure: Hurricane Ian likely caused severe damage to Florida’s citrus harvest

Consumers are changing their drinking habits, turning from hard seltzer to RTD Cocktails - and beverage companies want in

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