Core Insights - Pernod Ricard has appointed Florence Tresarrieu as the new CEO of its Canadian business, Corby Spirit and Wine, effective January [1][2] - Tresarrieu has significant experience in investor relations and leadership, previously serving as global senior vice president at Altos Tequila [1][2] - Nicolas Krantz, the outgoing CEO, will take on new responsibilities within Pernod Ricard while remaining on Corby's board [2][3] Company Overview - Corby Spirit and Wine's portfolio includes brands such as Pike Creek whiskey, Polar Ice vodka, Lamb's rum, and Nude ready-to-drink beverages, the latter acquired in August 2024 [3] - The Americas market has faced challenges for Pernod Ricard, particularly in the US, with organic sales falling 12% to €641 million in the third quarter [4] - Despite the overall challenges, Canada has shown strong growth, particularly from newly acquired ready-to-drink brands and established brands like Jameson and Absolut [4]

Core Insights - Multinational FMCG companies in India experienced sales impacts in the September quarter due to GST reforms and heavy rains, but anticipate growth in upcoming quarters supported by favorable macroeconomic conditions [1][2] Company Performance - Unilever reported that its emerging market performance is improving, particularly in India, despite short-term impacts from GST reforms, which are expected to benefit 40% of its portfolio with nearly a 10% price reduction [3] - Reckitt's net revenue growth in India was affected by new GST slabs, but it achieved volume-led growth in its Dettol brand [4] - Reckitt's CFO noted that the impact of GST phasing in Q3 was low to mid-single digits, with like-for-like growth in India being low single digits [5] - Heineken's beer volume in India declined by mid-single digits due to heavy rains, but its organic net revenue grew by a mid-single-digit percentage, supported by price hikes [7][8] - Coca-Cola and PepsiCo reported disruptions in the September quarter due to weather conditions, with Coca-Cola's COO highlighting the potential for long-term growth in India despite current competitive pressures [9][10] - Pernod Ricard's sales in India increased by 3%, although they were negatively impacted by excise policy changes in Maharashtra [10][11] - Nestle SA noted strong performance and good momentum in India in its global earnings report [12]

Core Insights - FMCG companies in India experienced sales impacts in the September quarter due to GST reforms and heavy rains, but anticipate growth in upcoming quarters driven by favorable macroeconomic conditions [1] Company Performance - Unilever reported short-term impacts from GST reforms but expects long-term benefits, with a 10% price reduction benefiting 40% of its portfolio [3] - Reckitt's net revenue growth in India was affected by new GST slabs, although it saw volume-led growth in its Dettol brand [4] - Heineken's beer volume in India declined by mid-single digits due to heavy rains, but organic net revenue grew by a mid-single-digit percentage supported by price hikes [7][8] - Coca-Cola and PepsiCo faced disruptions from weather conditions, with Coca-Cola noting competitive pressures in the beverage market that may affect growth [9] - Pernod Ricard's sales in India increased by 3%, but were impacted by excise policy changes in Maharashtra [10][11] - Nestle SA highlighted strong performance and good momentum in India [12]

Group 1: India as a Growth Market - India is recognized as the fastest growing large economy, prompting global corporations to formulate specific plans for the market [1] - The Indian market is largely untapped, characterized as a country of savers rather than investors, presenting opportunities for local investing and retirement products [2] - The beverage alcohol market in India is experiencing rising social acceptance, particularly among younger consumers, contributing to its status as the second-largest whiskey market globally, growing at approximately 8% annually [3] Group 2: Company Perspectives - BlackRock's JioBlackRock venture aims to enhance access to local investment opportunities in India [2] - Brown-Forman views India as a significant long-term growth engine for its Jack Daniel's brand, driven by premiumization and changing social attitudes towards alcohol [2] - Firan Technology Group is establishing a manufacturing facility in Hyderabad, citing India's cost advantages and supportive policies as key factors [3] - Pernod Ricard reported steady growth in India despite challenges from a sharp excise tax increase in Maharashtra, which raised prices and impacted sales [4][5]

Core Insights - The competition in the aged spirits market in India is intensifying, with Indian single malts outselling Scotch in volume terms in 2024, indicating a shift in consumer preferences towards premium domestic products [1][3]. Group 1: Market Dynamics - The Indian market is becoming increasingly affluent and diverse, with consumers showing interest in a variety of spirits, including Irish whiskey, agave, and Scotch, rather than just upgrading from Indian Made Foreign Liquor (IMFL) to Scotch [2][3]. - The free trade agreement (FTA) between the UK and India is expected to significantly reduce import tariffs on Scotch whisky, from 150% to 75% immediately and down to 40% over the next decade, which is seen as a positive development for Scotch whisky sales in India [3][4]. - Irish whiskey exports to India have more than doubled in value last year, highlighting the rapid growth of this category in a market that is becoming increasingly competitive [7]. Group 2: Brand Performance - Jameson is currently the leading brand in the Indian market, with a significant presence and sales volume, making it the best-selling bottled-in-origin spirit in India [4]. - The Irish whiskey industry has grown to more than double its size over the past decade, but it still lacks the maturity of a truly global category, with the US accounting for 40% of its export value [5][6]. Group 3: Scotch Whisky Challenges - Scotch whisky is facing challenges in the US market, where export shipments were flat last year and down over 9% compared to pre-COVID levels, indicating potential difficulties ahead [8][9]. - The single malt segment of Scotch whisky has seen a decline, with a 17% drop in global shipment value in 2024, while blended Scotch has managed a 4.4% increase, suggesting a shift in consumer preferences [11][12]. - The rising prices of aged single malts may be pricing them out of the market, as evidenced by a significant increase in median prices over the past five years [12][13]. Group 4: Strategic Recommendations - There is a need for a more rational pricing strategy for aged single malts and a concerted effort to reframe blended Scotch as a high-quality product, rather than relying solely on celebrity endorsements for marketing [13][14]. - Both Irish and Scotch whisky categories face similar challenges in adapting to a changing market landscape, but there are still lucrative opportunities for those who implement effective strategies [15].

Investment Ratings - Diageo: Sell [2] - Pernod: Buy [3] - Campari: Neutral [4] Core Insights - The US spirits market is experiencing a decline, with overall sales down -3.3% excluding RTDs, and a slight decline of -0.3% including RTDs, driven by a volume increase of +2.6% [6][27] - Diageo continues to lose market share, with volumes including RTDs declining -7.5% and sales down -3.7% [2][11] - Pernod's volumes declined -7.8%, but Jameson showed modest improvement, indicating some resilience in the brand [19] - Campari's performance is underwhelming, with volumes down -1.8% and sales falling -1.9%, despite some growth in Aperol [28] Summary by Company Diageo - The USA accounted for 36% of Diageo's FY24 sales and 46% of EBIT [2][17] - Key brands like Crown Royal and Don Julio showed mixed results, with Crown Royal volumes flat and Don Julio up +20% [11][16] - Vodka brands Smirnoff, Ketel One, and Ciroc all lost market share, with Ciroc declining -27.8% [11][12] Pernod - The USA accounted for 19% of Pernod's FY24 sales and 24% of EBIT [3][20] - Jameson volumes improved slightly by +0.2%, while Absolut and Malibu faced declines of -4.6% and -9.2% respectively [19][21] - Overall sales declined by -6.4%, indicating a challenging market environment [19][23] Campari - The USA accounted for 28% of Campari's FY24 sales [4][29] - Espolon volumes turned negative for the first time since June '23, while Aperol grew by +4.7% [28][31] - Sales fell -1.9%, with a broadly flat price/mix indicating pricing pressures [28][32]