Spirits are to the drink sector what Hermes is to the clothing industry: A high-end exciting offer.

Spirits companies do not need large acquisitions as they can grow organically.

°The last significant spirits M&A deal happened 23 years ago with the disposal of Seagram assets. Just a few targets are left in this sector and recent acquisitions like Don Papa Rhum by Diageo are small (Eur 430 million)

°Unlike the beer sector, the spirit sector is characterized by organic growth driven by volume and price increases. “Premiumization” has been the key world for Remy Cointreau*, Diageo, or Pernod.

°According to the Cognac association, worldwide Cognac shipments (IE just volumes excluding prices increases) rose from 9.8 million cases in 2000 to 18 million in 2019 (the last year not being distorted by Covid).

Segmentation of the consumption will continue.

°The US mainstream clothes manufacturer GAP had in 2022 the same revenues than in 2004. Hermes multiplied its revenues by 5.6 times between 2007 and 2021.

°The same trend is affecting the alcohol sector: beer companies do not have pricing power. Beer is considered as low-end proposition and is negatively impacted by the consumer switch towards more glamorous brandies and cocktails.

Remy Cointreau is often spotted as an expensive stock compared to Carlsberg trading at 28 times 2023 PER and 18 times EV/EBITDA versus Carlsberg at 18 and 10 times. This gap should continue to expand following the tracks of the valuation gap between Hermes and GAP over the past 20 years…

*Remy Cointreau is owned by Deshima Certificate “Croissance Contrariante Europe”