02. August 2021 | 11:26 CET
The Very Good Food Company, Amazon, Anheuser-Busch Inbev - Change in shopping behavior due to the pandemic
The Corona Crisis has changed the shopping behavior of people worldwide. On the one hand, there is a trend towards more online shopping; on the other hand, people are spending more money on higher-quality food, which in most cases is still bought locally. In Germany, this can be seen very clearly in a study by the Gfk market research institute. Discounters in Germany saw a 1.4% drop in sales in the first half of 2021, while supermarkets showed a 6.3% increase. Due to the pandemic, practically all special expenses such as restaurant visits, vacations, etc., fell away, and the money saved is invested in higher-quality products in the supermarket, among other things.
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ISIN: THE VERY GOOD FOOD CO.INC | CA88340B1094 , AMAZON.COM INC. DL-_01 | US0231351067 , ANHEUSER-BUSCH INBEV | BE0974293251
The Very Good Food Company - Growing very fast
The Canadian The Very Good Food Company (TVGFC) has been offering its customers plant-based food alternatives for a good three years. In Germany, the trend towards more plant-based food has been growing, partly due to the climate debate. Together with the pandemic and less exercise, many have also taken a closer look at their diet and decided to eat healthier. This can also be seen at TVGFC, which passed the million mark in sales for the first time in March.
The Company barely managed to expand production capacity to meet demand. A look at the figures for the first quarter clearly shows the growth trend. Compared to the previous year, sales increased by 680% to a good 2.6 million Canadian dollars (CAD). Compared to the fourth quarter, 77% more products were sold as the Vitoria plant could produce more. To minimize supply shortages, the Rupert plant was built, and this plant has been producing more than four times as much as the Victoria plant since April. Per day, 13,000 pounds of The Very Good Butchers product range can thus be produced.
In July, a capital increase of approximately 5.6 million shares at CAD 3.70 provided the Company with an additional CAD 20.7 million to build the business. The distribution is continuously expanded. It was published on July 7 that there are now 2876 distribution points; in March, there were only 1,356. An Amazon store was also opened, and Europe is also to be supplied through the cooperation with 3PL Logistics as of July 14. In Europe, the first step will be to focus on online retail. The share has lost considerable value since its stock market debut. Currently, you can even get in cheaper than investors at CAD 3.70, namely at about CAD 3.23.
Amazon - Setback as an opportunity
Last Friday, Amazon investors had to swallow a bitter pill when the price plummeted by over 8%. Nevertheless, the Company is one of the winners of the Corona pandemic. The second quarter numbers prove it too, as sales climbed 27% year-on-year, and revenue increased as much as 50%. Profits were thus well above analysts' estimates. However, investors' focus was obviously on the slowed growth prospects, with management assuming 10 to 16%.
The main growth drivers were the cloud business, up 37%, and the advertising business, up 87%. With Amazon Fresh, the group is trying to get a foot in Germany's billion-dollar grocery and drugstore market. Currently, the offer is available in Berlin, Potsdam, Hamburg and Munich. The offer has existed since 2017, but the pandemic has allowed the business to really take off.
Jeff Bezos' Company has always been visionary in its goals. Most recently, it took the first step toward space tourism. Even though investments in the fulfillment centers could weigh on profits in the coming quarters, the setback is an opportunity for investors because such setbacks are rare for Amazon stock. Afterward, there were always new all-time highs.
Anheuser-Busch Inbev - Debts are depressing
Anheuser-Busch Inbev (ABI) was able to cope with the pandemic better than many a brewery due to its change in strategy towards the Beyond Beer division. Drinking will always be done, but beer consumption is down significantly overall without festivities. Since the Corona rules were largely relaxed in Great Britain and incidences have also declined in many other countries worldwide, considerably more beer has been sold again.
This can be seen in the figures for the second quarter, which were presented on July 29. Sales grew by 28% and EBITDA by 31%. It means that analysts' estimates were not quite reached, mainly due to increased costs in raw materials and marketing expenses. These increased costs are weighing on the debt reduction. Much of the debt comes from acquisitions made by the previous CEO. The current debt level is USD 83.4 billion.
Management wants to push this debt down to 2 times operating profit. The stock fell below the 200-day line when the numbers were announced and is trading at EUR 53.31. A test of the support at EUR 47.26 currently seems possible. If this level is broken, the upward trend is broken. Currently, a lot depends on commodity prices and whether the pandemic will flatten out further. Investors should keep an eye on these parameters.
People always eat and drink, even in the worst times of crisis. The Very Good Food Company is pursuing a rapid growth course, taking advantage of the trend towards vegetarian food, allowing the Company to secure market share. Amazon is a global player where you can now buy just about anything. In Germany, however, the Amazon Fresh concept is still expandable. Anheuser-Busch Inbev is still struggling with the shadows of its past - its debts. If these can be reduced, investors will have an attractive beverage producer on their watch list.