Hello everybody. Thank you for joining today's call with Conor McQuaid, Chairman and CEO of Pernod Ricard North America. We hope you've watched this morning's video release in which Conor shared his views for Pernod Ricard and the U.S. spirits market. For this Q&A, I remind you we'll have our Q3 results released on 25th of April so we're not able to discuss our Q3 performance today beyond data in the public domain. To ask a question you'll need to press star one on your phone. Let's begin with the first question please. Over to you operator. The first question is from Andrea Pistacchi, Bank of America. Please go ahead. Yes. Hi hi Conor. Hi hi Ed. Thank you. I have three questions if that is okay please. The first one Conor on execution in the U.S. You say that Ann Mukherjee has really laid a strong foundation and now it's really about stepping up execution. So in what areas do you feel that you need to step up execution? Is it how you operate on the ground with the sales teams? Is it innovation? Leveraging data more or sort of all of this? And what are you tweaking or changing if anything in order to achieve this? Second question please on pricing and the pricing environment. So in the last couple of years you were very proactive with pricing and indeed the whole industry took price. But the pricing environment is more difficult now. So what are you seeing on price? What categories are more difficult besides cognac? And have you been able to put anything through recently? And also if I can how you think about pricing in the U.S. in the in the longer term. And I ask this because historically there hasn't been a lot of price, plenty of mix but probably not a lot of price in the U.S. And my last question please is on Skrewball. You have a strong position in flavored whisky now and the brand has seemed to have had a more difficult year in 2023 after some strong growth. So can you mentioned briefly in the prepared remarks but could you talk a bit more about your plans to return Skrewball to good growth? Are there any flavors in the pipeline? Thank you. Good morning, Andrea. Thank you for the questions. Good morning to everybody on the line from New York this morning. It's my first coming to the conclusion of my first 90 days in this particular role and the great honor that I have to lead this team. So as you rightly say within the video, I called out our desire for a greater degree of focus on execution as one of the key areas that I wanted to build on the great legacy that I've inherited from Ann. Maybe just to contextualize some of what we have seen Ann's time and tenure in the business as having delivered. Clearly, we've brought new capabilities into the team. We've got much more enhanced media focus and much more multicultural focus within the team. We've made those portfolio adjustments and those additions to the portfolio in the areas that we believe are attuned to the marketplace including tequila and RTDs. We've had clearly a clear focus as per the Pernod Ricard organization globally on bringing digital and the KDPs to life. So where do we need to go going forward? We really need to focus now on making sure that strong foundation and those transformational efforts translate into stronger execution on the ground across the brands. We're citing three clear areas in order to do that. The first of which is the on-premise you know through the supercycle and the challenges that hospitality has had. That has normalized to a point and now we feel there's a huge opportunity to get back in and working with our hospitality partners across the country to build advocacy for our brands. And secondly, we want to really show up in culture in a much more meaningful way. So experiential will be important as well as making sure that the brands are culturally relevant on an ongoing basis. So that's in a brand-building sense. On a commercial sense, then it's really leveraging all the insights and data capabilities that we're getting, and making sure that that execution at the point of purchase is informed by data and is being driven against a standardized set of KPIs as we bring greater discipline to our executional endeavors across the country. So that's what I mean when I say I wish to see greater focus on execution. It's the translation of the good work to date brought to bear on much more of what we're doing on a day-to-day basis. And that linkage with our wholesale partners and our rep and retail partners through the KDPs. From a pricing perspective, I mean, ultimately, as we've seen, we've taken strong pricing, as you know, through the last number of years. We've been one of the leaders in taking those bold prices in the context of the inflationary environment we've found ourselves in. Longer term we would see more low single-digit pricing than maybe the mid-single digits that have been the order of the day over the last while. And ultimately it's again back to using the data, the insights that we have to be much more targeted and focused in our revenue growth management intent. Clearly pulling those levers of promotional activities in a more deliberate way as we try to continue to bring price to bear where we see opportunities within the marketplace. And finally the last question was Skrewball. Yeah. So yes. I mean we now have a number two position in flavored whiskey in the U.S. Again a growing and dynamic category. I think it's a great addition to the portfolio and fully complements the rest of the comprehensive portfolio that we have. Skrewball in its transition has been challenging, as we've brought it into the Pernod Ricard network across the country we have had some issues over the last period of time. And as the transition went through clearly we weren't in tune with the cycle of promotional activities that we would normally put in place in support of a brand within the portfolio. We believe we're coming through that now and we're now in a better position to plan with more clarity as to what we would wish to do with the brand into FY 2025. I do think we've got huge capabilities within our own business. We know how to operate in the on-premise which is such an important channel for Skrewball. But additionally we're doing some work now in bringing a new creative platform to bear on the brand and is looking to upweight our media investment going forward. So it's it's a great brand. It's a really fun brand. And I think it's one that we're gonna have a lot of success and obviously a lot of fun in executing against. Okay. Thank you. The next question is from Sanjeet Aujla with UBS. Please go ahead. Hi, Conor. Thanks for taking the time to speak to us today. Two questions from me. Firstly, on Jameson. Can you just talk a little bit about your medium-term growth expectations for the brand? You spoke quite a bit about refocusing on the core, but can you also just talk a little bit about the role of line extensions and to what extent you need to innovate behind the brand to broaden the occasions and demographic there? And my second question, you know, more broadly is that you know I think in the past there's been a great desire to grow in line or ahead of the industry, which has never really come through yet. But as you look at the the shape of the portfolio, do you think it's capable of growing at least in line or ahead of the industry once the industry recovers? Thanks. Thanks for the question. Obviously, Jameson, a brand very close to my heart and one that I've had an intimate relationship with in the U.S. over years. We are still hugely optimistic to the growth opportunity that Jameson has. If I go through the portfolio specifically in the context of Jameson Original, there is considerable headroom there. We look at the household penetration of Jameson versus its number one and number two competitor. And we are at least half of the household penetration of those two brands. So Jameson has that opportunity to become part of that repertoire that's our competitor and have that household penetration at the levels of our competitor. That will require us to continue to recruit. Again it's not a uniform picture across the country. We have states in the U.S. where we underindex versus those where Jameson has had that opportunity to become the number one or number two competitor whisky against the competitive set. We look at the markets like Florida and Texas as two markets in which we still believe there's huge headroom for growth as we continue to recruit into the brand. Our next priority our second priority within the franchise in the portfolio is Black Barrel. We will continue to try and get the consumer who loves Jameson in its original format to trade up at appropriate moments and make that superlative whisky a relevant choice for them at key selling periods throughout the year. and we do see a role for Orange in so far as it's the number one on-premise innovation one year after launch and the number two off-premise innovation one year after launch within the marketplace. So we're seeing good traction in multicultural and maybe some non-traditional Jameson consumer profiles that the franchise hasn't touched to date. So there's a lot of work we can continue to do in a targeted and focused way. And then obviously we've brought in some of the RTD propositions to ensure that bond and connect moment which is so synonymous with Jameson has the right convenience proposition to play. But we're clear on the priorities within the portfolio. It's very much centered on Original and the headroom for growth therein. As I say, a very clear focus on the rest of the portfolio and what each of those will play as we go forward. To your second question, in terms of growth ahead of the ahead of the industry or growth at least at the level of the industry, I think we have had those headwinds within the portfolio where we've been underexposed to both tequila and RTDs that have significantly grown ahead of category over the last number of years. So we've sorted those in the sense that we've now got the correct propositions within our portfolio. And we now, as to my earlier comments, need to focus on the execution against what we have given ourselves as the challenge and the target. And I think we're set up for success. I think we've done a lot of the foundational work to date. And now with the correct portfolio to hand, those, the combination of those two, give us the greatest opportunity we've had for quite some time to close that gap to market. And indeed, holding to that aspiration to beat the market in the near term. Thank you. The next question is from Sarah Simon with Morgan Stanley. Please go ahead. Yes, hi. I've got two questions. First one was on RTDs. Have you done any? Well, I assume you have done specific research into exactly why consumers are buying this. Is it just because it's easier to drink, you know, when you go to a field or something? Or is there something specific about RTDs that's driving such outsized growth? And the second one was on the data that you referred to. Where exactly are you getting your data from? Is this from retailers or are you getting data specifically from consumers directly? Thanks. Sorry, just a point of clarification in your data question. The data you refer to is? Well, you've been talking about using the data to improve revenue growth management and kind of execute the portfolio better. I'm just wondering where you're capturing this data from? Oh okay. Clear. Let me take the first question then. In terms of RTDs for us from the data that we see and how we're reading the market there is limited cannibalization against spirits. It is an occasion-based opportunity that really brings the spirit-based OTDs into the realm of occasions that would have been traditionally maybe beer occasions or indeed wine occasions. So as I say we see limited cannibalization against spirits. We believe they do have though a halo effect back on the mother brand. And that's really how we would approach the OTD category. So it's relevant consumer proposition in support of the mother brands. And an obvious example in our portfolio at the moment is Absolut and Ocean Spray. So a cranberry vodka OTD proposition. Recognizing that Ocean Spray has a sort of 50%+ household penetration in the U.S. market. Two beloved brands coming together in a relevant proposition in support of the Absolut mother brand strategy as we go forward. Rather than taking from spirits we see it as taking spirits into an occasion that would traditionally have been maybe beer wine or hard seltzer focused. We as I say are very targeted in how we see that playing in support of the overarching brand strategy by brand. The data comes from various sources. Obviously there's syndicated data. Obviously we also have relationships with key partners so that we can get that data into our systems. And then our proprietary algorithm work and the work that the teams have been doing over the last number of years allows us to position that back to our teams and across our network in an appropriate way that allows them to action against it in a meaningful way and in real time. So it's the combination of those multiple sources of data into something that's actionable in real time is what we're striving for. And I believe we've made genuinely industry-leading progress against that intent over the last period of time. Okay. Thanks. The next question is from Trevor Stirling with Bernstein. Please go ahead. Hi, Conor. Trevor here. Conor, you're at the group level you've got the four must-win markets. In your context in the U.S., what would you say are your four critical brands to make the transition work? I mean, you've already highlighted the importance of Jameson. What other two or three brands would you throw in there to say these are the critical elements of success over driving success over the next couple of years? Hi Trevor. How are you? I think the way we've structured our portfolio intent going forward is the criticality of Jameson as a locomotive within the portfolio is paramount. And obviously we need to make sure that that brand is delivering at the levels that we've traditionally enjoyed. Beyond that there are five other brands that we clearly need to make the focus of the team on an ongoing day-to-day basis. And they include obviously Absolut, Kahlúa, Malibu, the Glenlivet. And we've included Skrewball in that as a brand of scale that plays to our opportunity to really leverage those top six brands in the portfolio with our wholesale partners and ultimately with our retailers towards a clear consumer focus for those six. Thereafter we're putting a focus on four other brands that we believe have the growth relay potential to be the big brands of the future. And the focus therein on surprisingly are on the two acquisitions that we've made of late to round out the portfolio. So Código 1530 across its full portfolio of expressions. And Jefferson's as our super premium bourbon play. And we believe we've got two gems in the portfolio that are unique to our portfolio and really unique in the consumer landscape of the U.S. And that's the single pot still reference Redbreast represents as a super premium Irish whisky play. Again embryonic early stage in its development but with huge potential going forward. And we're calling out Del Maguey as the market-leading mezcal in a market in which clearly there's a curiosity towards tequila and beyond tequila into other agave spirits. We believe that clearly Del Maguey has a unique proposition in that regard. Those 10 will be the priority focus for the whole organization. And again how we will seek to execute against those will be the dominant questions and challenge that we're putting to our team and obviously to the rest of the network. That's not to exclude all the other brands within the portfolio as we put structure to how we look to develop our prestige intent how we take forward our focus on whiskies in the broader whisky portfolio that we have. Or indeed cognac in the context of Martell. But it's really a sharpening of focus on those 10 for clear growth levers and the 6 priority focus brands at the initial layer focus. Okay. And Conor, just ask one follow-up, Conor. The Sovereign Brands portfolio that's run completely separately at arm's length, but it is included in your organic growth numbers. Is that right? It is Trevor, yes. But as you rightly say, it's at an arm's length relationship. So that's how we operate at the moment. Super. Thanks very much, Conor. And best of luck now going forward. Thanks. Thank you very much. The next question is from Olivier Nicolai with Goldman Sachs. Please go ahead. Hi, good morning, Conor. Thank you very much for joining this call. I've got three questions if I may. First of all, Pernod set up tools historically to optimize A&P spending, such as Matrix, for instance. But you know your main competitor is also doing something similar and spending more in A&P on the absolute and relative basis. So do you believe the cost of doing business in the U.S. is increasing and you might have to step up A&P spend even more in the U.S. going forward, at least as a percentage of sales? Second, in terms of your brands, historically Pernod was able to push, you know, 6-8 brands at the same time. But obviously with digital capabilities that number has increased. You've also been very active in M&A. My question is that is there a limit on how many niche brand you could add and support in your portfolio as your portfolio in the U.S. become richer. That's been the case over the last five years. You bought many whiskies: Jefferson's, Texas, Rabbit Hole, Smooth Ambler. You bought four brands recently. I'm just wondering, is there a limit of how many brands you can really push effectively in your portfolio? Thanks, Olivier. Thanks for the question. On the A&P, as we look to the first half of the year, we obviously cited the fact that we'd increased the A&P to net sales ratio to close to 20%, which was somewhat reflective of that O&D, that critical O&D period in the year. We would see that moderating back to a more normalized, on an annualized basis or whatever, around that 18% level, which we believe is sufficient. It's not just though about the relative percentage. It's also about how we're executing against it. And as you rightly say, what we've done through the KDPs is given our teams a much more granular focus on what parts of the investment choices that they're making are working and how better to optimize those areas that aren't working from an ROI perspective. So in Matrix at the moment we have 40% of our total spend covered. In a very short period of time we will raise that to 55-57% of total A&P. And then as the Matrix algorithm plays back to us we're seeing recommendations and our adherence to those recommendations rise over time. So we're close to 80% coherence with what Matrix is telling us to do then reflected in how we spend going forward. So that's what I say in terms of the progress that we're making in bringing those KDPs into our business and using them effectively to really drive efficiency in that A&P number as we go forward. So yes the competitive landscape is considerable. Yes obviously competitors are investing at a significant level. But I'm reassured that we have sufficient in the totality of the A&P that we have. And even more so we've got greater efficiency in how we're spending. On your second question, in terms of portfolio complexity, as I outlined earlier, not all brands within the portfolio get the same level of focus and prioritization or indeed investment. So our challenge is to take the wonderful and extensive portfolio that we have and ensure that we're making the right decisions and sequential choices in terms of how we're actually investing. So in the first instance clearly we'll put that priority focus on the 10 brands that I mentioned. And then we will look to see how we execute against either consumer opportunities be that prestige at a particular end of the market be that against consumer groups that we know have a love and a desire potentially to round out their whisky experience by going across the whisky of the world portfolio that we have. Or indeed in certain consumer occasions where we see trends starting to emerge such as day drinking or the brunch occasion providing an opportunity for various parts of the portfolio. So it's important for us really to make sure that we hone our both our focus within the portfolio as well as our route to market execution thereof. But the broader intent is to continue to increase the number of brands that we have the ability within the organization to effectively execute against be. That continues to be the objective over time. Thank you very much. The next question is from Jian Li, BNP Paribas Exane. Please go ahead. Hi Conor. Thank you for the questions. My first one's just actually a follow-up on the comments you made about your competitive performance and looking to win in the U.S. market. I just wonder, I mean, do you think that's possible as soon as fiscal year 2025? The second question is just on the U.S. market. I'm conscious you don't want to get into near-term trends too much. I did notice that you called out that you expect inventory adjustments to continue in the U.S. market as it remains soft. Just directionally, I wonder if you could comment on whether that has been easing versus H1 or it's not really changed too much. Thank you. In terms of the time frame over which we can close that gap to market, obviously we are ambitious to do so in the shortest possible time. But realistic to know that the context is challenging. And clearly the priority focus that we've given to some of those new acquisitions and the work that we will need to do against those will take some time to bear fruit. So you know, being in this industry as long as I have been, I know that that immediacy of what we do and the reaction in the marketplace or whatever can sometimes have a lag attendant with it. So we will continue to do the right things, make the right choices, and focus on the right areas. And I genuinely hope that we can close that gap to market in the U.S. in the shortest possible time, as I say. So I wouldn't like to put a specific date to it, but be reassured that that's the objective that we share across the company. And the second question is in relation to—sorry, if you can remind me—it was the belief as to where we are within the destocking and the inventory adjustment? Yeah, basically just whether the expectation that inventory adjustments are likely to continue, whether actually there's probably been some sequential improvement versus the first half, or actually that effect is not really changed too much. Yeah, I mean, we were all somewhat disappointed in the O&D. It was somewhat softer than we had anticipated. So we would suggest that the retailer destocking is largely complete, but that honestly it hasn't necessarily translated into an easing on the wholesaler side of the equation as yet. So it's still difficult to read. And I suppose what I'm saying to the teams is I don't honestly believe that this will be a linear progressive improvement over time. I think we're gonna have peaks and troughs. I think it's gonna be somewhat turbulent as we go forward, if I can phrase it like that, by category and, you know, month-on-month depending on the month that has been cycled and what happens obviously in the previous period. So I would like to hope it will start to get better sooner rather than later. At the moment there's still a challenging landscape against which we're working. Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Celine Pannuti with J.P. Morgan. Please go ahead. Thank you. Good afternoon. I have two questions. My first question is on a bit consumption trends. You talked about the success of RTDs. Can you talk about how you see new generation coming into the category? Try to understand a bit their appetite for spirits and you know whether you have any data you can share with us on that. And I presume as well as you probably meet with some of your customers what is a bit the sense that you get from what customers distributors retailers are saying about the potential impacts from GLP-1 on your categories? My second question is on coming back to the question about pricing you said that you know probably you should reverse to low single-digit+ pricing in the industry going forward. But right here right now you also mentioned probably more promotion during the O&D season. It seems given some price cuts in other categories and you know some downtrading that we've seen in some categories as well that it's a bit more promotional and competitive from a price standpoint. Would you agree with that point? And is it fair to expect that that's going to be a bit of a, as you say, turbulence as well to navigate going forward? Thank you for the question. In terms of the the consumer and the new generation coming through into spirits, I think what the data clearly shows is that even that Gen Z consumer who you know at this stage is what 25 26 at the upper tier. So So LDA to 25 26 what we're seeing is that they are coming out of beer and they're coming out of wine. And actually their consumption of spirits is holding. So we do see that consumer as playing into where our strengths lie. They are curious around spirits. They're very into cocktails and that cocktail sociable moment around around a cocktail. So in that sense I think we have optimism to the future that the Gen Z consumer can come with us. I don't believe that you know the normalization that's happening in the market or whatever is explained by any of those dynamics. I think it's in terms of how the GLP is impacting. I think we don't see again this having a significant impact on the consumer dynamics that we're experiencing. And it's been relatively stable across generations. So I think the challenge is more for our colleagues in wine and indeed for beer. In terms of pricing, I mean, pricing as we pointed out earlier, I mean, trending towards low single digits going forward, a sharpening of our focus in terms of our promotional phasing and weight. Pricing is dynamic by nature and the competitive context is one that we have to stay very close to. And obviously, I believe we have a much more robust set of tools and a much more robust internal process to optimize that pricing over time as the competitive landscape stabilizes and the situation becomes more more normalized going forward. So we'll continue to focus on it. We'll continue to put the right resources behind it and make the right calls against the the portfolio opportunities that we've defined. But yes, it's gonna be it's gonna be a it's gonna be a dynamic challenge and one that we're all going to have to face internally within our teams on a monthly basis. Thank you. The next question is a follow-up from Olivier Nicolai, Goldman Sachs. Please go ahead. Hi again Conor. Sorry I got another small batch of questions for you. To again we have an election in the U.S. in November. Are you concerned or how are you preparing for a potential import tariff and which brand within your portfolio you would be able to essentially mitigate its impact by potentially bottling locally and shipping it bulk for instance? That's the first question. But secondly I wanted to hear your view on the implication short term and also long term for the tequila category of the much much lower agave price which is started to come through. Thank you. On the tariff question, Olivier, I think you know we would not be surprised to know that we're obviously looking at that situation closely and we're assessing how best if this was to come to pass that we could manage that situation. So I'd rather not get into the specifics in terms of some of those mitigation plans and some of that thinking. We are clearly monitoring the situation and we would hope against hope that that does not come to pass and that's not a path that is adopted. So on tequila clearly the opportunity is there for us. We are a subscale as we clearly know in the tequila category and the opportunity is there for us to to invest and and and take our fair share within that opportunity. And obviously those COGS tailwinds will be beneficial in how we seek to funnel that opportunity as we go forward. So that's the approach that we'll be taking. Would you expect even more new brands, new entrants in the category or would you, you know, expect some downtrading towards more like a $30 price point or you think that's positive? I believe Código goes at the sweet spot within the portfolio. I think it's got a unique proposition in its focus on quality and its additive-free proposition. Clearly there has been some downtrading north of that $100 price point that traditionally was probably somewhat more dynamic. And the market is coming back into that sort of $50 center point for propositions that obviously Código can play into with its unique proposition as I say and unique variants including the Rosa and the Reposado variants within the range. So we're hugely optimistic to the Código challenge and I think ultimately we've got the right brand in the right part of the market going forward. Perfect. Thank you very much. The next question is a follow-up from Sanjeet Aujla with UBS. Please go ahead. Yeah, hi Conor. Just a quick follow-up on your earlier comments about a renewed focus on the on-premise channel. Can you just talk a little bit more specifically about what you will be doing differently and which are the kind of priority brands you're focusing on in that channel? And what's the weight of the on-premise of Pernod's portfolio these days as well, please? Thanks. So what will we do differently? I mean we have always over-indexed versus the competitor context in our focus on the on-premise. It's born of a belief it was all the way back to our founders' belief that making a new friend a day is a cornerstone of how we bring our brands to market. And the best way and one of the greatest ways to do that is in the on-premise environment. Now that has two facets to it. Clearly one is the gatekeeping role of the bartender and the bartending community who again have been a huge supporter of us across the portfolio over many years with you know a clear prioritization within the Jameson strategy. So we will be working closely with them and building more advocacy opportunities, educational opportunities to work with them on all facets of their business, including how we activate our brands. But also, you know, some of the sustainability initiatives that we've got in the bar world, Our Tomorrow initiative at a global level. So we would say that clearly, in doing that, that will obviously provide us with an opportunity then to present our brands appropriately on menus and in relevant serve profiles that would allow the consumer to really explore the full breadth of the portfolio in relevant serves. And again we cite the success of things like the espresso martini and the Kahlúa Absolut combination as powerful brands against the consumer trend for a cocktail that is of the moment. We believe that you know single-minded approach to bringing those superlative spirits to the menus and you know those impulse purchase occasions in the on-premise again provides an opportunity given the portfolio that we have. In terms of how we reverse reference versus the industry, we would say we're probably 3-5 points above the industry average in terms of our leverage to the on-premise. Hence the reason I see it as such an important opportunity for us coupled with obviously the portfolio that we have. Their second question, Olivier. Sorry, remind me if you would. Hi, I just got a follow-up on the on-premise as well. Just regarding portfolio management, you know, clearly been a big focus on M&A and plugging some of the portfolio gaps in recent years. But do you see opportunities for divestments of the tail of the portfolio perhaps as well? Clearly dynamic portfolio management is something that we look to and look at on an ongoing basis. And that's at both ends of the opportunity keeping our eyes and ears open for those new opportunities those new brands that are coming through. I don't see an obvious gap in the portfolio at the moment, but that's not to say that we're not alive to opportunities as they would present themselves. And likewise at the other end of the spectrum, those brands that potentially are underperforming or aren't aligned to consumer needs or consumer dynamics going forward, that's clearly something that together with our colleagues in the M&A team in Paris that we look to and look at on an ongoing basis. Thank you. Great. Well thank you very much everybody then. That concludes today's U.S. market Q&A. Thank you all for your participation. Special thank you of course to Conor. And I wish you all a great day. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.