Paul Cerro's avatar
$18.2m follower assets
Power behind Costco’s private label brand, Kirkland Signature
$59 billion+: Total 2021 sales of Kirkland Signature brands, a 13.5% change from last year. Costco’s $COST total revenues for 2021 equaled $192 billion, a year-over-year increase of 18%. Kirkland is the biggest consumer packaged goods brand in the US by sales, larger than Hershey $HSY, Campbell Soup $CPB, or Kellogg $K, per CNN.

31%: Kirkland Signature’s percentage of Costco sales, per RetailWire. Online, Costco carries 125 private label SKUs, which represent 8.1% of total SKUs.

$75 billion: Kirkland Signature’s valuation in 2019, according to UBS, per Insider. According to the Private Label Manufacturing Association, private label sales have grown nearly 40% from 2019 to 2021, so that $75 billion valuation is likely more.

15% to 20%: How much less Kirkland Signature products cost than branded alternatives, according to Jim Sinegal, co-founder and former CEO at Costco. According to an EY survey from October 2021, 58% of respondents are more focused on value than they were pre-pandemic.

89.7%: The percentage of US adults who cited better value as the reason they switched from a national brand to a private label brand. Other reasons include better assortment/selection (52.0%), deal/membership rewards offered with purchase (47.9%), and national brand was not available (41.1%).
Amazing.

This is unfortunately one of those companies that I am fascinated by, and seems like an obvious buy -- but have never gotten around to making it a holding.

May change that soon after seeing this data laid out . 🙏🙏
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Conor's avatar
$2.5m follower assets
Started a 1% position in Kellogg's $K
Bought shares for an average price of $70.5 in $K. Kellogg's bought RX Bars back in 2017. This gives Kellogg a more diversifed portfolio. They crushed earnings this morning and the stock is still very cheap, IMO. Earnings yield over 6%.
Plant-based meat makers are more negatively impacted by the supply chain crisis than real meat producers
CNBC reported that experts predict that plant-based meat will remain more expensive than real meat for the next 5 to 20 years. It's because plant-based meat makers like $BYND and others require more time to reach economies of scale.

One of the biggest obstacles to creating huge interest in plant-based meat is to make the meat taste the same as real meat. The texture and flavor are hard to come by. The plant-based maker that is the closest to reaching that will dominate the space, and currently, that's Beyond Meat and Impossible Meat.

While they got the taste and texture down, getting there requires higher volumes of production and lower cost of ingredients. Currently, their production isn't high enough and their ingredient costs are very high.

The reason why they can't ramp up production fast enough is that the supply chain issues make it harder for firms to get manufacturing equipment. At the same time, it's taking longer to build new production facilities. As for the ingredients (like peas and other plants), they're hard to come by because they're only produced in a few countries.

The plant-based meat industry has a massive Catch-22 issue where you need the demand to be incentivized to produce more and at the same time, you need to produce more to be able to price them at a lower price and create more demand.

As $TSN $K and other big food manufacturers get into the plant-based meat industry, the immense capital and expertise coming in will play a major force in driving the cost of plant-based meat lower. But from observation, Big Food is struggling to make its plant-based meat products as attractive as Beyond Meat's and Impossible Foods's products mainly because many aren't aware that Big Food manufacturers make plant-based meat products. This makes Big Food manufacturers reluctant to pour more capital into the industry.

It will be interesting to see the price of plant-based meat be at par with the price of real meat in the future. However, it will be a long time before we see that happen.
Very interesting read. I bet the steep increase in fertilizers that we've seen since the Russia-Ukraine war started will add to this and make it even tougher for plant-based meats to hit good price levels.
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Luka 🦉's avatar
$88.4m follower assets
Apart from Mars that it is not listed in any stock exchange (the company is still the property of the Mars family), all others are amazing companies and dividend payers you can invest in:

$GIS 🔸
$JNJ 🔸
$KHC 🔸
$PG 🔸
$KO 🔸
$UL 🔸
$PEP 🔸

🔸 = in my dividend portfolio

With just ten holdings you own the whole international consumer staple industry 👍
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$BYND write-up (domination + providing halal meat to Westerners)
Despite Big Food's attempts at providing competition to Beyond Meat, they've failed. People looking for plant-based meats overlook Morningstar Farms (by $K) and Raised & Rooted (by $TSN) and only stick to Beyond meat or Impossible meat.

One reason for Big Food's slow start in entering the plant-based meat market is that they haven't ramped up their marketing for those brands. Many of them continue to emphasize their meat products and other products that they've been selling for a long time. Marketing managers in those companies seem hesitant to go head to head against Beyond Meat and Impossible Foods.

As time goes on, Beyond Meat continues to maintain its pricing power and dominance in the industry. I myself continue to consume their products and I see many others consuming their products in the future.

Compared to real beef patties, Beyond Meat's products are much more expensive. However, compared to halal meat, Beyond Meat goes head to head with the meat sold by halal butchers. In the West, halal meat is hard to come by. You have to find a halal butcher (and they're not many in America despite the growing Muslim population). Thankfully, the Islamic Services of America certified Beyond Meat's products as halal. This makes Beyond Meat a great alternative for many Muslim families that want to be able to have meat while following the Islamic tradition of only eating halal.

And as the price of halal meat grows due to inflation, I have a good feeling that Beyond Meat will choose to keep their prices the same or even continue their push to make plant-based meats as cheap (if not, cheaper) than regular meat. The economics of plant-based meats can be improved. Assuming that $BYND and other plant-based meat makers have favorable economies of scale, more demand will mean higher margins for the company.

What are your thoughts on Beyond Meat? Do you see more Muslims warming up to plant-based meats? Do you see Beyond Meat continuing to dominate the plant-based meat industry, or do you see Big Food companies dominating the industry in the future?
Erick Mokaya's avatar
$87.7m follower assets
The Transcript this week:
In our newsletter this week:

🛒 E-comm still growing rapidly
💰 Signs of slowing in private capital markets
🍽 People are eating less at home again


Observation about plant-based meat industry
My observation from shopping at Costco:

The only reason why $BYND will beat Impossible Foods in the plant-based meat industry is because their meat is the cheapest in the industry.

Other than that, Impossible thrives in the form of appealing to budget-tight consumers.

Examples:

For $21, I get 10 Beyond Meat burger patty.
Meanwhile, I can pay $17 for 8 Impossible Meat burger patty.

Budget conscious consumers prefer the Impossible Meat because it’s cheaper in price, but if they had more money, they would’ve saved more with Beyond Meat.

Both meats taste fairly similar and because of that, there’s no moat in the industry. Beyond Meat is most willing to provide more savings to customers.

Many of the other Big Food producers like $K and $GIS have their own plant-based food brands, but because those aren’t fairly well-known compared to the main startups, they rarely get picked off the shelves.

That’s my $0.02 on the plant-based meat industry. Any questions?
Big believer in Beyond Meat and like that'd they are partnered with $PEP and are now in the market with $MCD... they take up the majority of my portfolio (mostly because it was my first real investment) but I think it's going to perform well.
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Bought K $65 Puts
BEARISH
03/18/22 Exp, Opening
When I realized $K , Kellogg is on a lot of 401k portfolio’s even tho they had a PR nightmare , has no product on the shelves and is getting boycotted, stock price still going up
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Wage pressures are not just inflationary
The Great Resignation of Workers has resulted in 4.3million workers quitting their jobs. Employees who remain are demanding higher wages, which translates into "wage inflation" ultimately hitting gross margins and the bottom line.

Some have it worse like Deere ($DE) and Kelllogs ($K), where workers have gone on an outright strike.

Workers are noticing the returns the company is making during this time and is demanding a larger share of the pie.

This comes at a time when supply chain disruptions are already hitting companies like Deere and farmers are not able to get parts and equipment on time. A double whammy for the companies that need to get through this.

What's interesting is that Deere actually offered their workers a deal with approximately 20% in wage hikes over the coming 6 years. The union workers turned it down.

Both DE and K stocks have been suffering. DE remains firmly below it's 200-SMA , down almost 15% from it's 52-week high. Kellogg on the other is crossing it's 200D-SMA and is down 9.45% from it's 52-week high.

While I'm long DE and the company has great potential, I don't recommend buying into any of these right now until this plight is resolved. It's a firm Hold for anyone who's long.
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