Research Calls
- Downgrades:
- Loop Industries (LOOP) downgraded to Neutral from Buy at H.C. Wainwright
- Others:
- Shift4 Payments (FOUR) assumed with an Overweight at Piper Sandler; tgt $69
- Skechers USA (SKX) initiated with a Neutral at Piper Sandler; tgt $42
Gapping down
In reaction to earnings/guidance:
- CALM -4.3%,
Other news:
- GOTU -10.6% (China will increase oversight of online education tech according to Bloomberg),
- TAL -6.8% (China will increase oversight of online education tech according to Bloomberg),
- JYNT -5.6% (to be removed from S&P SmallCap 600),
- EDU -5% (China will increase oversight of online education tech according to Bloomberg),
- IMGN -2.7% (CFO to step down after medical leave),
- TTM -2% (Delhi Transport Corporation signs a definitive agreement with Tata Motors' subsidiary for operating 1500 electric buses),
- KRUS -1.7% (files for $125 mln mixed securities shelf offering)
Gapping up
Other news:
- GLBL +7.1% (will operate as Alvarium Tiedemann Holdings, listed on NASDAQ under the ticker symbol ALTI on January 4)
- HYZN +5% (enters into Equity Capital Contribution Agreement with CVX)
- TSLA +4.4% (CEO Musk tells workers not to be 'bothered by stock market craziness')
- RXO +2.9% (will move to S&P SmallCap 600 from S&P MidCap 400)
- TSM +1.1% (holds 3nm volume production and capacity expansion ceremony, marking a key milestone for advanced manufacturing),
Economy Has Drinkers Choosing Prosecco Over Champagne
Sales of higher-priced liquor and wine are slowing after years of growth
Shoppers are reaching less for the top shelf.
For more than a decade, high-price drinks have driven sales growth in the wine and spirits industries as people traded up for fancier brands. That is now changing: Sales growth of costlier spirits and wine is slowing, and even reversing, as shoppers seek out more value.
The shift is another sign that behavior is changing among some of the least price-sensitive shoppers as economists forecast a recession. While demand for luxury goods has largely held up in the face of inflation and other economic headwinds, makers of pricey handbags and clothing this fall warned of a slowdown, saying customers were becoming more cautious.
The belt-tightening is spreading as well-off consumers feel the effects of stock-market losses and softening real-estate prices, said Rabobank strategist Stephen Rannekleiv. He likened the trend to the spending choices wealthy shoppers made during the 2008 global financial crisis.
“Call it a psychological effect,” Mr. Rannekleiv said. “How set am I for retirement? How much can I spend today without affecting my future?”
U.S. retail-store sales of superpremium spirits—which include American whiskey priced at $24 to $39.99 for 750 milliliters—dropped 3.7% in the 48 weeks ended Dec. 3, after growing 4% in 2021, according to an analysis of Nielsen data by the Bump Williams Consulting Co., a beverage-industry consulting firm. Sales growth of ultrapremium spirits, which include tequila priced at more than $50 and American whiskey at more than $40, has slowed to 2% from 24% in 2021.
Joe Berne and his wife recently bought a new house, and their finances are stretched with three children in college. So he has stopped buying his favorite tequila brand, which sells for as much as $200 a bottle, and switched to one that costs about $40.
He spotted a bottle of Teremana Añejo tequila a couple of months ago in a liquor store near his new home in Wappingers Falls, N.Y. Mr. Berne, a software developer who drinks tequila several times a week, had heard about the brand, backed by actor Dwayne “The Rock” Johnson. He asked the store clerk if the price on the tag—just under $40–was a mistake. It wasn’t. He took home a bottle and liked it so much that he returned and bought two more.
“This one really hit for me,” said Mr. Berne, 51 years old. He said his favorite Don Julio 1942 tequila, which he used to buy about four times a year, “is better but not that much better.” He said he might now splurge on it once a year.
This holiday season, prosecco sales are booming as people choose the more affordable Italian bubbly over French Champagne, according to Liz Paquette, head of insights for online alcohol retailer Drizly. The average bottle of prosecco on Drizly’s website sells for $16, while the average bottle of Champagne sells for $57, she said.
Wine club membership sign-ups, an important driver of high-end wine sales, have also flattened in 2022, according to an analysis by WineDirect and Enolytics, which provide e-commerce platforms and other services for winemakers.
In November, Diageo DEO -0.80% PLC, which makes Don Julio tequila and Cîroc vodka, said sales of smaller packages such as 375-milliter bottles were picking up in the U.S. because of their more-affordable price points, but shoppers weren’t trading down to cheaper brands.
Retail-store sales rose more than 18% in 2021 for wine priced from $50 to $99.99, according to Bump Williams Consulting. In 2022, they are down 4.5%. Sales are also lower for wine priced from $25 to $50. What’s selling well? Bottles priced around $18 or $19.
Consumers instead were seeking out deals from large-format retailers and club stores, Debra Crew, Diageo’s chief operating officer, said at an analyst conference in November. She added that the higher-income consumer appeared strong, and categories such as high-end tequila were selling well.
Constellation Brands Inc., STZ -0.22% which sells Casa Noble tequila and Robert Mondavi wine, has unloaded its cheap wine brands over the past several years and shifted its portfolio toward more premium offerings. In early December, its finance chief, Garth Hankinson, said at an analyst conference that growth in high-end drinks might be slowing but that it will bounce back.
“You’re not necessarily seeing broad trade-down,” he said. “The consumer remains resilient.”