An Unlikely Victim of the Pandemic

The market held steady this week with much of the focus falling on the Democratic National Convention.  To a large extent, the economic data continues to improve with sales data indicating a very strong housing market.  There was also a bit of company news worth noting, so let’s start with that.

You may or may not remember the debate when Tesla started selling cars direct to consumers, thereby cutting out the traditional dealership. This was revolutionary at the time and sparked several major lawsuits. It is often the case that disruptions like these create opportunity and sometimes progress. Another company that is disrupting this space is Carvana, which is a totally online car buying experience. But what caught my eye this week is that several large European carmakers are going to begin rolling out internet-based sales channels of their own. Volkswagen is taking it one step further by creating standardized pricing for its new ID.3 electric vehicle, regardless of where or how the car was bought. Traditionally dealers set their own prices. I imagine if this finds its way to the United States, car dealers will have something to say.

In other news, I’ve talked quite a bit about the likes of Beyond Meat and Impossible Foods this past year. The rise of plant-based meats has taken the market by storm and has had considerable success. These alternative meats have penetrated into both the fast food industry and supermarkets wide and far. However, I still have my doubts, especially with regard to the health claims or lack thereof. Nonetheless, are there any limits to what one can do with pea protein? This week I learned that Nestle has cracked the code on fake tuna. While it took years for its predecessors to come up with the exact texture and flavor profile for beef, Nestle’s “Garden Gourmet” tuna product was developed in less than nine months. The jury is out on whether this too will be a wild success (pun intended) but be prepared to hear more about it as the company plans on rolling it out globally in the coming year.

And one last piece of interesting news which you should be aware. I know it is early to start talking about the holiday shopping season, but retailers are thinking about it and putting plans in place now. As I alluded to last week, retail patterns have shifted more prominently to online shopping since March. While it isn’t clear whether this trend is temporary or permanent, I can say those retailers who created a large online sales channel have benefited greatly. We learned this week that companies such as Target, Best Buy, Kohl’s, and Walmart are beginning to de-emphasize the traditional Thanksgiving to Black Friday store shopping period and are setting online holiday promotions in its place. It makes me wonder if the mad rush into brick and mortar stores after Thanksgiving will be another casualty of this pandemic.

In closing, I turn to the lowly peanut.  You may not have given it much thought, but the lack of a traditional baseball season has had more than one victim.  It turns out there are more than 2.3 million pounds of in-shell peanuts languishing in cold storage waiting for fans to return to ballparks.  It turns out only a certain peanut bred for the proper size and look of its shell make the cut for the ballpark trade.  It’s called the Virginia.  But all is not lost.  It turns out the real hero of the pandemic is peanut butter.  Sales in March jumped 75% over those from the same month a year earlier.  Additionally, it seems manufacturers can’t produce enough peanut butter for FEMA and the food banks.  However, no one wants to think the unthinkable: that those Virginia peanuts will end up in a peanut butter jar.  One producer put it this way, “I would liken that to using a really fine beef tenderloin to make ground beef.  You can do it, and it would make great peanut butter, but it would be a great economic loss.”  Now you know.

Bruce J. Mason, MBA