The Goods (U.S. Edition) – Rags to Switches
Welcome back to The Goods! This week we’re discussing Pride Month pullback, consumers returning to the kitchen, and this year’s hottest tech launch.
In a classic feral to flight story, five baby racoons and their mother were caught red-pawed in a Canadian Airbus factory and the family reportedly even boarded one of the planes. While the whiskered culprits were safely relocated with no charges pressed, AirBus has not confirmed whether the raccoons have further delayed an already bumpy production process.
What’s In: This Week’s Trends
- The Zero Proof is in the Pudding: The non-alcoholic beer market is bubbling and on track to take ale’s position this year as the second-largest beer category worldwide. The segment grew 9% in 2024 due to Gen Z and Millennials increasingly opting for non-alcoholic beverages, while overall beer volume decreased 1%. Guinness, Heineken, and other major brands launched zero-proof options, fueling global retail sales to surpass $17 billion in 2023. While non-alcoholic beer only holds 2% of market share, it is expected to grow 8% annually over the next 5 years.
- Subdued June: Pride Month festival organizers are facing significant budget shortfalls as major corporations such as PepsiCo and Meta scale back their support, with New York City Pride losing $750,000 in funding. The decline is tied to the Trump administration’s crackdown on diversity, equity, and inclusion (DEI) programs, causing nearly 40% of companies to reduce their Pride-related engagement in 2025. Inside stores, retailers are also taking a “muted approach” to displays, as some brands fear retaliation from right-wing customers and activists.
- Choc Market News: As global cocoa prices soar, consumers’ chocolate cravings have become a million dollar question for investors. Americans are rethinking their sweet tooth while Europeans remain loyal to their daily chocolate fix, treating it more like a grocery essential than an impulse buy. That’s sweet news for Mondelez, which gets 60% of its chocolate sales from Europe. Meanwhile, Hershey – with 87% of sales tied to the U.S. – is feeling the crunch from price hikes, tariffs, and GLP-1 drugs curbing cravings.
Cash or Card: Consumer Behavior
What’s going on with the consumer these days? This week we talk about consumers returning to the kitchen, widespread online gaming among Americans, and the continued allure of wholesale clubs.
- Whisk Takers: Cooking from scratch is back on the menu. As tariffs raise recession fears and weigh on sentiment, consumers are putting on their chef hats and ditching the grocery store snack aisle, opting to prepare their own meals at home. According to Campbell’s, the company is seeing the highest levels of consumers cooking from home since early 2020, with consumption increasing across all income brackets in the meal and beverages category. More meals at home could mean people are eating out less, showing Americans tightening their belts amid economic uncertainty.
- What Are the Odds? Gambling has never been more accessible for Americans, as 94% of U.S. bets in 2023 were placed online. Since a landmark 2018 Supreme Court ruling, 38 states have legalized sports betting and seven allow online casino games, pushing total wagers from about $5 billion to $121.1 billion by 2023. As gambling surges, so do its risks: 2.5 million Americans now have a severe gambling problem and up to 8 million have “mild or moderate” problems, according to the National Council on Problem Gambling.
- Costco-nomics: As inflation worries persist, consumers are turning to warehouse clubs such as Costco, Sam’s Club, and BJ’s Wholesale Club to save money through bulk buying. While wholesale customers avoid higher prices, they still face membership fees and slower shopping trips due to meandering through giant stores and waiting in long exit lines to show receipts. However, S. consumer foot traffic was up 13% at Costco, Sam’s Club, and BJ’s compared to standard supermarkets for the first quarter of 2025, demonstrating the pull of these clubs.
Making Moves: Industry Transformations & Innovation
ICYMI, even industry icons need to reinvigorate their brand presence through unique and creative ways. Here are some new brand moves that you should know about:
- Back in the Saddle: To address declining demand for its at-home fitness gear, Peloton has launched Repowered, a resale platform for secondhand equipment. While used Peloton bikes are common on sites like Craigslist and Facebook Marketplace, this initiative centralizes resales and adds buyer and seller perks. Sellers will receive 70% of the sale price and discounts on new gear, while buyers benefit from product history and protection policies. Repowered is currently available to resellers in Boston, New York City, and Washington D.C. and the company plans to roll out the initiative nationwide in the coming months.
- Rags to Switches: Retailers are no noobs, as they prepare for the highly-anticipated Nintendo Switch 2 to release this week. Most retailers have already sold out of pre-orders and some are leveling up with activations, like Best Buy opening their East Coast stores at midnight on the release date. Although the Nintendo Switch 2 may be subject to 10% baseline tariffs in the U.S., the company committed to not raising the device’s price and expects 15 million consoles to be sold across the globe this fiscal year.
Capital Markets Corner
ICYMI, even industry icons need to reinvigorate their brand presence through unique and creative ways. Our investor relations experts break down this week’s trends and headlines.
- Fowl Play: Private equity firm Roark Capital has acquired a majority stake in fast-growing chain Dave’s Hot Chicken. While the Los Angeles-based restaurant chain did not disclose financial terms, its CEO said on CNBC’s “Squawk Box” that the rumored $1 billion valuation is “pretty close.” Since its founding in 2017, the restaurant operator has expanded to more than 300 locations and last year generated more than $600 million in sales. Roark’s international supply chain has the potential to help the company reduce costs and further expand its geographic presence. The deal marks Roark’s first restaurant deal since its $9.6 billion acquisition of Subway in 2023.
- Fry-By-Night: Activist firm Jana Partners is lining up support for a boardroom battle at french fry maker Lamb Weston after a survey of the company’s top 70 investors showed that a majority support a complete overhaul of the board. Jana owns roughly 7% of Lamb Weston and has been pushing the company to undertake operational and capital improvements, and even to consider a sale. Over the past 12 months, Lamb Weston has seen its stock price fall 37% and the company replaced its CEO in January. The activist has until the end of June to nominate directors to Lamb Weston’s 11-member board.
Tariffs, Ands or Buts
While some retailers like Walmart have taken a direct approach by clearly communicating upcoming price increases due to tariffs, others are opting for more subtle language. These brands want to signal pricing changes without stating them outright. Best Buy, for example, says it is “adjusting” prices, while Deckers Outdoor is “flexing the pricing power” of its brands.
Beyond messaging, several retailers are also taking operational steps to mitigate the impact of tariffs. Costco is working to reduce its tariff exposure by pulling orders forward and reevaluating sourcing for its private-label products. Similarly, Best Buy, Kohl’s, and Gap have announced that they are absorbing some tariff-related costs by diversifying their supply chains.
At FTI Consulting, we help clients think comprehensively about the problems they face, understand their exposure, assess and mitigate risks, and manage change needed. Learn more about our Tariff Mitigation Advisory Solutions. Have questions about tariffs? Reach out to our experts Cory Fritz, Jackson Dunn, Ana Heeren, and John Whitcomb.
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