Dear Friend,

For most of us, some months of the year are just better than others. For me, June and July are truly epic months.

I typically wrap up the last week of June and start the beginning of July in Montana, fishing with some of the finest personal and business friends that I have on Earth (most often, each person in attendance fills both definitions of friendship). We are the guests of the most generous and kind family I have ever met at their indescribably beautiful working ranch which stretches for miles and miles along the banks of the Shields Valley River. And, we are lucky enough to do way more than fishing while we are there: sporting clay, off-road ATV rides, hiking, elk watching, photography, mixology…you name it and we celebrate it and the outdoors to the fullest.

From there, it’s off to my family summer home for our annual celebration of this great nation’s independence and democracy and the love of family bonds.

Then, onto Orlando to attend the American Sportfishing Association’s “iCast,” the largest fishing industry event in the world. Imagine well over 200,000 ft.² of fishing products from more than 700 exhibiting companies. Rumor has it this year that nearly 14,000 participants were in attendance from over 70 countries and all 50 states. I floated around the place like a kid in a candy store wanting to try every flavor and shape of the offerings.

The outdoor recreational industry is all about continual advancement in product development. If you’re not innovating, your oxygen will become thin. In no sector of the industry is this truer than fishing. So it’s not surprising that nearly 1,000 new products were introduced this year. I’ve been attending this conference for more than 20 years, and I cannot tell you how far the quality and performance of the products has come over those nearly three decades. This year the product launches felt especially fresh, perhaps having been held back the last few years by the overhang of the pandemic. I was sad to leave the event, but happy to have identified a few new products that will surely be in my boat over the coming months.

And so, we lead this week with a story on Americans’ continued enjoyment of fishing with 54.5 million Americans ages six and over having “gone fishin’” in 2022, citing escaping everyday stresses, spending time in nature and with family or friends among the top benefits. “Seizing the day” is not stopping at recreation but continuing into Americans’ attitude towards spending, according to Wharton professor Jeremy Siegel, who believes YOLO (you only live once) consumers are propping up the economy this summer. In this vein, we also look to Prime Day, back-to-school shopping, and our preoccupation with takeout dining. Please check out these and other stories as well as our Thinking Green series!

Be Well and Be Outdoors,

Jim D'Aquila

News That Matters.....

Americans Continue to Find Their Best Selves in Recreational Fishing

Following a record increase in participation in 2020, Americans continue to find enjoyment, companionship, and peace of mind on the water, according to data from the Recreational Boating & Fishing Foundation’s (RBFF) 2023 Special Report on Fishing.
Fishing participants ranked spending time in nature, escaping everyday stresses, and spending time with family or friends among the top benefits.
19.8 million women went fishing in 2022, a 40 percent increase over the past decade.
Participation among children ages 6-12 grew by 3 percent to 7.8 million, over one million higher than a decade ago.
Eighty-six percent of current fishing participants started fishing before age 12, and 23 percent of those considering but not yet participating in fishing were under the age of 18, which underscores the importance of introducing fishing at a young age.

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‘YOLO’ Spenders Are Propping Up the Economy, Says Wharton Professor Jeremy Siegel—But They’re About to Run Out of Cash

According to Wharton professor Jeremy Siegel, the U.S. economy appears to be “progressing smoothly, with a resilient consumer impervious to the impact of higher borrowing costs.”
These spenders are the “YOLO (you only live once) consumers” who, Siegel believes, are spending the last of their cash reserves on traveling and enjoying the summer.
However, the Russell E. Palmer professor emeritus of finance warned that this could signal “the last good stretches for the economy before the summer ends and credit card bills come due.”
He added that in the past, when students return to school in September and October, this has previously made for some “dicey periods for the markets.”

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Prime Day Has Helped Make July a Mini-Shopping Holiday. Here’s What It Could Say About Consumer Sentiment in 2023

The two-day shopping event this year coincides with other shopping holidays from competing retailers [like Target, Walmart, and Macy's].
This year, these July deals will likely cater to the consumers who plan to get their back-to-school shopping done earlier than usual while scouting out the best deals.
At the same time, spending turnout for Prime Day and other July shopping holidays this year could be a strong indicator of how consumers will come out for major shopping holidays through the remainder of 2023, a year in which inflation, high interest rates and economic concerns has weighed on spending.
“With more than 40 percent of consumers planning to do their back-to-school shopping online and July being the top month for back-to-school shopping in general, we anticipate consumers taking advantage of early promotions, such as Amazon’s Prime Day, to find great deals on the essentials of core supplies, apparel and footwear,” said KPMG consumer and retail strategy principal Julia Wilson.

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BTS Spending Expected to Decline as Inflation Takes its Toll

Deloitte’s 2023 back-to-school survey found that spending for K-12 students is expected to decrease 10 percent to $597 per student.
In addition to a 23.7 percent increase in the cost of school supplies in the past two years (per the Bureau of Labor Statistics’ Consumer Price Index), 3-in-10 (31 percent) of surveyed parents said their households are in worse financial shape in 2023 than last year, and half (51 percent) expected the economy to weaken in the next six months.
Among parents spending less, 51 percent attribute it to reduced disposable income (up from 45 percent in 2022), while 75 percent of those spending more point to increased prices (up from 60 percent in 2022)
Back-to-school shopping will likely focus on finding ways to economize, including researching the best deals, shopping earlier and getting items (and possibly returning them) in the most affordable manner.

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Takeout Becomes America's Preferred Dining Mode

The majority of Americans would rather order takeout or delivery than sit down and eat at a restaurant.
That’s according to a recent survey of 1,000 people by US Foods, which found that 57% of them preferred to get their food to go, while 43% favor on-premise dining.
Three-fourths said “it’s enjoyable to eat at home” and, of course, more convenient. Half appreciate the fact that they can watch TV while they eat, and a third enjoy wearing comfortable clothes.
The average person gets delivery 4.5 times per month and dines out 3 times per month, according to US Foods.

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CPG Brands Develop Products Geared to Gen Z

Rather than investing in marketing legacy brands to members of Gen Z, CPG companies are developing new ones to attract these consumers, reports The Wall Street Journal.
As part of an effort to appeal to those born between 1997 and 2012, beers are getting lighter, drinks are becoming more colorful and coffees colder, according to the report.
[Gen Z has proven to be a trickier group to sell legacy products to] partly due to the amount of choice they have grown up with, said Andrew Roth, founder and CEO of DCDX, a Gen Z research and strategy firm.
Ecommerce and wider variety on shelves mean they can shop for the exact brands and flavors that fit their tastes, Roth said.

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Fast-Fashion Retailers Like Zara & H&M Are Introducing Higher-Margin Brands into Their Assortments

In an effort to challenge e-commerce giants, fast-fashion companies are beginning to emulate the marketplace business model.
By selling more brands and higher margin goods, fast-fashion brands not only gain new customers but also improve their image.
Fast-fashion brands have faced competition from e-commerce giants like Amazon for years, said Sky Canaves, senior analyst at Insider Intelligence. According to Insider Intelligence’s June forecast, apparel and accessories sales on Amazon will hit $69.72 billion in 2023, representing 32.6% of total U.S. retail e-commerce sales in the category.
Lee Whitaker, senior manager at consulting firm Parker Avery, said that brands can also gain relevant consumer data from their third-party brand partners. This data could help fast fashion brands get a sense of emerging trends and inform their future merchandising strategy.

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Future-Proofing Impulse Candy Sales in the Era of Autonomous Checkout

Approximately 15.4 percent of c-store confectionery sales come from items purchased on impulse during the checkout process, according to the latest data from VideoMining's C-Store Shopper Insights (CSI) Tracker program.
A 2020 consumer survey conducted by Researchscape on behalf of Zynstra, an NCR company, found 15 percent of shoppers will leave a convenience store and abandon their purchase after just one minute of waiting in line, with nearly half of these shoppers leaving after only 30 seconds.
"As autonomous and self-checkout adoption rises, and shopper dwell time in a physical transaction zone is limited, highly profitable impulse items like candy, gum and mints may be less visible to shoppers," noted Jim Dodge, vice president, convenience at Mars Wrigley.
60 percent of shoppers don't mind waiting in well-merchandised queue systems, according to Dodge of Mars Wrigley. "Ninety percent of shoppers think it's easier to navigate, one in four confectionery shoppers will make a purchase, and shoppers extend their 'shopping mode' for roughly 45 seconds," he said.

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Food Insecurity Rate Hits 17% for Second Time in 18 Months

Reported food insecurity has reached 17%, matching the rate last reached in March 2022, according to the June Consumer Food Insights Report [out of Purdue University’s Center for Food Demand Analysis and Sustainability].
Households making less than $50,000 annually are buying groceries online at a higher rate than other households.
Households making more than $100,000 annually are slightly greater risk-takers, which is reflected by a higher willingness to eat unwashed fruits and undercooked meat.
High-income households, for example, will choose premium local and organic products more often than lower-income households. They also often have more resources to track and understand food labeling or follow recycling and composting practices.

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Thinking Green

In the time fraught with environmental issues that pose a potential threat to humanity, natural ecosystems as well as, our businesses and clients, we want to call to attention to those developing and embracing green strategies to reduce energy, water and paper consumption in order to protect our home, Earth.

Indoor Vertical Farms Fill Empty Office Space as the Industry Grows

According to Kastle, whose KastlePresence service supplies key fobs and locks for office buildings, offices are utilized about half as much as they were before the pandemic.
According to a report from Research and Markets,the global market for vertical farming is expected to grow from $3.2 billion in 2022 to $10.3 billion in 2030.
One such example of a building being repurposed for farming came earlier this year in Brooklyn. Farm.One took a former garment factory and turned it into a provider of fresh produce and herbs for Michelin star-rated and other high-end restaurants.

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Nestlé Announces Initiative to Enhance Regenerative Agriculture Practices

Nestlé has launched an initiative to help bring regenerative agriculture practices to wheat farms within its DiGiorno pizza brand supply chain.
The initiative, which will bring regenerative agriculture practices to over 100,000 acres of farmland, aims to improve soil health and fertility, use less water, energy and fertiliser, enhance biodiversity and help reduce the effects of climate change.
As part of its roadmap to achieve net zero emissions by 2050, the company aims to source 20% of its key ingredients through regenerative agricultural methods by 2025 and 50% by 2030.
Nestlé is also working across its tomato supply chain in the US to support the verification of regenerative agriculture practices, with the aim of sourcing tomatoes grown for its ingredients through these methods in the coming years.

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Levi’s Launches Plant-Based Version of Classic 501 Jeans

Levi’s has marked the 150th anniversary of its classic 501 jeans by launching a sustainable plant-based version.
The jeans are made from 97% bio-based materials, including certified organic cotton, natural indigo dye made by Stony Creek Colors, wood-waste ink, and a patch made from Natural Fiber Welding’s Mirum (a plastic-free vegan leather alternative).
Levi’s has also introduced two other sustainable versions of the 501 — one made from hemp and the other made from textile waste.

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Lazard Private Market Advisory Consumer, Food & Retail Team

Lazard has financial advisory specialists throughout the world with experience and relationships in the consumer, leisure, food/agriculture, and e-commerce/retail industries. These bankers have played key advisory roles in some of the most important, complex and industry-defining transactions. For more information, contact one of our senior team members.