Hello, everyone. Welcome to today's call on sustainability and responsibility at Pernod Ricard. S&R is a key driver for Pernod Ricard, with its mission to create sustainable and responsible moments of conviviality. My name is Edward Mayle, Director for Investor Relations, and joined today by Maria Pia De Caro, EVP Integrated Operations and Sustainability, Noémie Bauer, Chief Sustainability Officer, and Morgane Yvergniaux, Global Head of Sustainable Terroir. We released this morning a video presenting details of our key S&R pillars and showing the progress being made in line with our commitments. This morning, we also announced the validation by SBTi of Pernod Ricard's carbon reduction targets in line with 1.5 degrees Celsius climate scenario. Today, you can put your questions directly to our S&R team, and operator, we can now open the line for questions. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. To remove yourself from the question queue, please press Star and Two. Please pick up the receiver when asking questions. Anyone who has a question may press Star and One at this time. The first question is from Edward Mundy with Jefferies. Please go ahead. Afternoon. Thanks for taking the time, and thanks for the video. I've got three questions, please. The first is on the supply chain. And like a lot of CPGs, Maria Pia, that you've worked at, such as P&G, Mondelez or Unilever, have got a fairly optimized supply chain, you know, a lot of platforming across the network, a lot of cross-border supply. But Pernod tends to be quite local, you know, valuing terroir in its production process. I mean, how do you balance this, the importance of terroir with some of the best practices from other CPGs? And as part of that same question, there's obviously a big digital transformation taking place at Pernod. Is that coming through in the supply chain as well? So that's the first point on the supply chain. The second question is around responsible hosting, which is a key priority for Pernod. We've seen from the World Health Organization a bit of a shift in emphasis from historically targeting harmful consumption towards a sort of no safe level stance. You know, clearly, there's a lot you're doing already to promote the concept of responsible consumption, you know, drinking less, but better. But does this change the way you operate at Pernod and with the broader industry when it comes to responsible hosting? And then the third question is really around, you know, LTIPS. I think social responsibility is 20% of the LTIPs. Could you just remind us how that's filtered down, you know, through the rest of the business, you know, on an annual basis? Thank you. Thank you. I will give the floor for your first question to Maria Pia. Thank you. It's a wonderful question, actually, and I think it allows us to also explain how the strategy for integrated operations marries the strategy of sustainability for Pernod Ricard. We have had an incredible success as an enterprise by working with a decentralized model. Now, this approach has served us extremely well for close to 50 years. Now, as we continue to grow and our business continues to expand, we have realized that we actually need to take the best of the other CPGs, as you say. Indeed, I work for some of the most prestigious companies in my past. So we need to take some of the best practices of these other CPGs and integrate them smartly and efficiently in the Pernod Ricard model. One of the things that we have done for operations, we have actually called it integrated operations, to drive this principle of connecting the different parts of the business while maintaining the focus and the attention, the preciousness of the local values of the local brands or the local terroirs. So what we said is that, as integrated operations, we are here to unlock potential. We unlock potential across three vectors: the vector of creating a sustainable, superior products. So sustainability is an integral part of that, together with R&D and together with quality. So we continue looking at all of our operations, but we are actually becoming more explicit, if you like, at what are the operations that we want to make more efficient, or we want to connect better to drive more value for, for the enterprise. And then, we want to be more agile. And again, this concept of integration, so leveraging the strength of a decentralized organization, but building on a, on a joint backbone. So what I'm trying to say, in fact, is that yes, we are very proud of our local specificities, but we see it harmonizable, if you like, and we see that it's perfectly possible-... to still maximize scale by making sure that we have common approaches, common capabilities, common KPIs, to drive the maximum value for Pernod Ricard, or as we say in operations, to unlock potential for Pernod Ricard. Thank you, Mariapia. For your second question regarding the no safe level of alcohol, this claim has been contradicted by scientific research for decades. We believe that when you read scientific research, that moderate drinking can be part of a healthy lifestyle. We believe that everyone should avoid drinking in excess, and this is why local governments provide guidelines to drink in moderation. We are very proud to be displaying a QR code, providing information to our consumers that we call the digital label, to make sure that consumers can actually make informed choices and follow those drinking guidelines. For your third question on LTIP. For LTIP, we have only 20%, which is related to S&R, and we provide LTIP to about 400 people within the company. We have internal banding, and it's from band C and above. Thank you. Thank you. Just on my first question, are you able to provide a few more sort of examples of, you know, some of the common approaches and some of the KPIs to drive that maximum value for Pernod, as you get that balance between, you know, what you've seen at some of the other CPGs and what you're seeing at Pernod, where you're obviously protecting the decentralized nature of production? I will give the floor to Maria Pia. Yeah, it's a good question. I have so many examples coming to mind, that I need to think of, of the best one. If, if I can take the question a step, back to the point I was making. What we see, that, maximizes the value of global and local is having, a very clear view of what we want to achieve. So as an example, if, I want to, optimize water in my operations, the first step is to understand who are the greatest contributors of water. So in our case, there is a portion of that, a sizable portion of water, that is coming from terroir. Another portion of water comes from the distilleries. So this is the first statement. So you look at, your key driver, your key KPI. Then you look at what are the key drivers that you can leverage to optimize that measure, because that is what is important to you. And then it doesn't really matter if you have 1, 2, 10, 100 units, because the approaches, the way to measure, the competencies of your team will be the same or very similar. And therefore, by highlighting what are the key goals, prioritizing them, identifying what are the key strategies for execution, and implementing those with 3 words that are very dear to our CEO, with simplification, with empowerment, and with discipline, allows then a company, be a centralized company or a decentralized company, to quickly progress on the action plan. Now, this also means, if you like, that some of the strategies will drive definite scale. Now, it might drive, now, not for water necessarily, but if I take, a procurement of, cereals or, a procurement of, components, that, where in the past, we might have tended to do things, in different units, we have now a common backbone, or we are progressing towards a common backbone, common approach, and again, a more integrated organization to maximize the value. So I would say the best way to reapply the power of, the large companies, the P&G, the Unilever that you mentioned, to a historically decentralized model like Pernod Ricard, is to be very clear on goals, very clear on strategies, very clear on resources, and the competencies that you need to unlock. You get that right, then, you can, you know, you can unlock the value. Very good. Thank you. The next question is from Trevor Stirling with Bernstein. Please go ahead. Good afternoon, Maria Pia and Noémie. Two questions on my side, please. The first one, I was intrigued in the video by the Swedish farmer who hadn't plowed his field for 20 years. Now, that's a radically different approach from the traditional approach of breaking up the soil with plowing and harrowing. And I can see how that works where you're direct contracting with farmers in southern Sweden. If you think about something like, say, scotch, where you're getting barley from suppliers, from maltsters, and its indirect approach, can that regenerative approach also work for barley in Scotland? That's the first question. And the second one, perhaps more broadly, you mentioned that you're refreshing your strategy for next year, for 2025. I appreciate it's very early, and you can't preempt what the conclusions will be, but are there any broad aspects that you can share with us where you're looking to refresh and upgrade the strategy? ... Thank you. For your first question, I'll give the floor to Morgane. Thank you. And thank you for this question that allow me to explain you our global Regenerative Agriculture vision, which is a holistic approach that embed every impact, not only focused on carbon and soil, but also on biodiversity, on water, and on people livelihood. So what we can do with our Swedish farmers is that suit the best to this local context, considering the local climate, the local type of soil, the local farmers' culture. And this is a specific framework. What we can do in Scotland is under the same umbrella, Regenerative Agriculture, but more suitable for Scottish Terroir. For example, we can implement cover crop in Sweden, but we cannot implement cover crop in Scotland, considering the huge amounts of rain, for example, during the season. So it's a global umbrella. And coming back to the first question about the best balanced model between our different locations, so it's from a global perspective into local adaptation. So we have this global vision that allows to pick and choose the right set of practice or the right set of mitigation and adaptation practices into the local context, and then allow us to contract directly with the farmers, considering their capacity to deliver our ambition. Thank you. For the second question on the refresh of the strategy, so I can already share that there are three main categories of reason why we are refreshing. The first being in 2025, it's the milestone of our roadmap. Our roadmap goes until 2030, but in 2025, there are some goals that are that have the deadline. So we'll check out what goal have been achieved and some goal that have been achieved before 2030. I can give you the example of the Bar World of Tomorrow, where we had a goal to reach 10,000 bartenders by 2030, and we already trained more than 12,007 bartenders. So we're gonna adapt the strategy with this kind of this kind of reason. The second one, being new framework, and we launched the strategy in 2019. But since then, the world has evolved, and I can give you the example of SBT and the science-based target for nature. That did not exist in 2019, and this is the kind of framework that will take into account in the refresh strategy. And the third, the Corporate Sustainability Reporting Directive, the infamous CSRD. The CSRD has many topics that are listed by the directive, and we just finished our double materiality metrics. And so in the refresh of the strategy, we will make sure that we address all of the material topics for the group. Thank you. Very helpful. The next question is from Jeremy Fialko with HSBC. Please go ahead. Hi there. Thanks for the webcast and taking my questions. So a couple of packaging related ones for me. So you talked on the webcast about ecoSPIRITS and the huge reductions that you can get in terms of packaging waste. So perhaps you could talk about, I suppose, what are the main obstacles to getting this rolled out, given the, I guess, the big savings that it has, and, you know, what you think the longer term potential of that is? And then the second one, I was reading an article about paper bottles, and that's something which again, you've been trialing. Can you talk about those again, what are the main impediments and, you know, how you think that they can play a role within your portfolio, or at least the packaging mix of your business? Thanks. Thank you. So for the first question on ecoSPIRITS, so it's indeed a solution that can help us address more than 90% of waste and also up to 80% CO2 reduction. So this solution is very positive. We have been trying to extend this pilot in a few cities and countries to a global agreement that will come shortly. So I'm very happy to say that just be patient, very shortly, something positive will be announced. But the obstacles that we have been facing are because this is a change of mindset. We are changing from a linear way to distribute our product to a circular one, where we need to have reverse logistics, have the bars trained as well on how they can use this 4.5-liter keg instead of regular bottles. So the change of mindset and the transformation is the main obstacle, but very shortly we'll extend this solution. Regarding your second question on paper bottles, so, we have been trialing it in the UK right now. And to tell you about the main obstacle is, it's the research and development. Because the paper bottle is about a plastic, inside the paper, bottle, and we are investing together with other companies such as L'Oréal or P&G, to improve the R&D and have this plastic, liner. - liner as thin as possible. And the goal of the R&D is to make sure that the full plastic and paper bottle will be recyclable in the paper stream. And so this takes time, and that's why we're taking time to deploy it further. And Maria Pia would like to add something. I think packaging. It's a wonderful question, and it's a wonderful opportunity for our industry. ... because there are recyclable models like ecoSPIRITS. And as Noémie told you, stay tuned. We are very happy about what can be done with that model. On the paper bottle, it's definitely a technological route, but as Noémie explained, the alcohol properties are such that you need to make sure that you prevent the transmission, the migration of the alcohol through this membrane or this film, this coating that you have on the paper, that makes it a challenge. But it is not the only way to packaging. So I think the subject of future of packaging and marrying research with marketing and continuing to evolve the consumer awareness to packaging is it's an extraordinary opportunity for sustainability. At Pernod Ricard, we have also been working, as an example, in India, on recycling bottles. So not just ecoSPIRITS in bars or pubs or hotels, but more broadly in the country, which is also extraordinary because the challenge of glass is that glass is a wonderful material because it is inert, but it takes a lot of energy to produce. While, if you use it multiple times, that impact will be greatly reduced. But also in that case, R&D, customer, route to market, strategies, the readiness of the countries to create this recycling is essential. Because what you might want to do on the research and development side is actually improve the property of the glass by making it more resilient, because on one side, you want to lightweight it, and on the other side, you might want to reuse it more time. So all of those challenges combined make sense that the packaging and the future of packaging is one of the most exciting areas, and a company like ours can truly play a role and a good role for the consumer, a good role for the customer, and a good role for the planet. Okay, thank you very much. The next question is from Richard Withagen with Kepler. Please go ahead. Yeah, good afternoon. Thanks for taking my question. I have three questions on your water consumption, please. First of all, do you have any initiatives to lower the indirect water consumption from Pernod Ricard? Second question is, are you already encountering any issues in the availability of water, or have you made a risk assessment, perhaps on this? And then the third question is, what is currently the cost of water for Pernod Ricard? And also there, have you run any sensitivity analysis in case the cost of water would increase? Thank you very much. So regarding your first question on indirect water consumption. First of all, this is part of the science-based target for nature that I was mentioning for the refresh of the strategy. We are currently doing the assessment of what are the actions that we will take and our footprint. Bear with us. We do not have figures yet to be sharing, but what I can already tell you is that a lever to really reduce the water consumption in our supply chain, which is mostly in agriculture, will be through regenerative agriculture. And the vision that Morgane shared with you shows that it's a holistic approach that covers the soil, the crop, and also the water, because when you have healthy soil, it's gonna capture better the water, and you have... You're gonna use less water yourself. So that's how we're gonna really work on indirect water consumption. Regarding availability of water, we are doing our business in some high water-stressed areas, such as India or Mexico or Armenia, and we have a goal to replenish 100% of the water consumption in those areas. I can already share with you that we are almost at 60% of the replenishment of the water used in those regions. We are also conducting regularly climate scenarios, where we look in the world, what are the areas with water scarcity or extreme climate events, because water can be scarce or it, there can be too much water as well, with flood. We are looking at those two kind of events that can affect our business, and we are doing that with the risk, the group risk team. The third question on the cost of water, this is a challenge to measure and to be completely transparent. We know that with the CSRD, we're gonna improve the way that we can really put a cost on water, because it really depends on the locality. This is something that we'll do in the near future. Very clear. Thank you. The next question is from Jen Cross with BNP Paribas. Please go ahead. Hi, good afternoon. Thank you for the questions. A couple from me on your Scope 3 emissions target, if that's okay. So it looks like you've moved, to an absolute reduction target and away from an intensity target. And if I look at the recent trend in Scope 3 emissions 2018, it looks like your new 2023-30 targets imply quite significant acceleration in reduction. So I just wonder if you could share some initiatives that you have in place with your partners or the changes that you think will help drive this acceleration? And the second one is simply, given that your emissions targets now look like they're on an absolute basis, does this factor into the group's thinking, when it comes to potential disposals and acquisitions? I'm particularly thinking, you know, if you were to hypothetically sell part of your wine business, would that contribute to a reduction in the emissions target? Thank you. Thank you. For your first question, we are first of all very happy that the Science Based Targets Initiative approved our new targets, which are indeed an acceleration. To name a few of levers that we're gonna use, sorry for repeating myself, I will mention regenerative agriculture. As you may have seen, 50% of our Scope 3 is linked to agriculture emission, and so we are convinced that implementing regenerative agricultural practices, we will really reduce our carbon emissions. And this is also part of the acceleration of our target through the FLAG part of our SBT. Another kind of lever that we'll use is transportation. Perhaps you have seen in the press that we are starting in July to be shipping champagne to the United States through sailing boat. This is the kind of new alternative mode of transportation that we are using to accelerate our journey. When it comes to your, Maria Pia would like to add something. No, I was, I was actually going to take the next question when you were talking about merger and acquisitions. And just very clear that we, we cannot comment on any specific or on any hypotheses. But what I can tell you very comfortably straight for any new joiner or leaver in the business, we make a detailed assessment of the changes to the impacts in our operations and to our baselines, because they go well beyond the sustainability impact. Because we, for any change that happens to the enterprise, we look at what is the impact to the operations, to the physical assets, to the people, to the operating model, and of course, sustainability among others. So just to be reassured, we have a very rigorous process in our M&A team that connects for any activity to the relevant leaders in the organization, so that we can actually draw scenarios and assess what is the best way to conduct our business following again any new joiner or leaver. Thank you very much. Very good. So, at this stage, we don't have any further participants on the line posing questions. So, we have some written questions submitted. I'll take the opportunity to read the first of those. Apologies. There is, one more question from the conference call. Sorry for interrupting. Okay, go ahead. The next question is actually a follow-up from Edward Mundy with Jefferies. Please go ahead. Hi, Ed, I hope it's okay if I get another question in or two. The first is around light weighting of bottles. You know, premiumization is a very important driver for Pernod, you know, over the medium term. But there's a perception, certainly from consumers, that heavy bottles, you know, equal quality. You see this in wine, you see this in scotch. Do you think the consumer's ready to pay extra for, you know, bottles that, you know, are better for the environment, that have been light weighted? So, you know, where are we in that journey, as a consumer, you know, joining the dots on that? Number one. And then I, I guess the second question, which is slightly similar, is that you're spending quite a bit on CapEx at the moment. I know part of that is to expand your capacity in both American whiskey and also in Irish whiskey. But I guess the relatively elevated level is because you're making both those distilleries carbon neutral. Do you think the consumers you know willing to pay more for you know whiskey that's made in a carbon neutral manner and you know willing to pay up for that? Thank you. I will give the floor to Maria Pia. Wonderful, wonderful question. So the first question is, it's very much connected to what I was talking about, on the future of packaging. Clearly, there are consumers that have perceived these very heavy bottles, almost, collector items bottles, as, as premium. I think it is, a role that we can... There is a role that we can play as industry, looking at alternatives. One alternative could be, I'm just, not making it up, but making a scenario. Imagine, super light bottles or, imagine different type of bottles or different type of packaging that could still, convey the sense of premiumness to the consumer. So on one side, yes, indeed, there are consumers that have been historically enamored or used to see the weight of the bottle as an element of value. At the same time, I'm very confident that with our R&D groups and with the development of technology in the glass industry or alternative materials, we can actually progressively show the consumers that there are different ways, alternative ways of creating premium, premiumization. Now, the other point that you were making around a CapEx, absolutely. We are, as an enterprise, extremely committed to build state-of-the-art distilleries, state-of-the-art operations that are carbon neutral. When you ask me, is the consumer ready to pay a premium for sustainability, I would say that the scenario is very varied out there. Now, as someone referred at the beginning of the call, I'm coming from other industries, and in those industries, when we were doing assessment, we have actually seen that even the eco warriors are not always ready to pay for this technological development. Now, at the same time, I think if we develop our technological roadmap and our package roadmap smartly, we can actually make it affordable for the very same consumers. Step by step, we can work, thanks to our marketing, thanks to societal changes, thanks to initiatives like the Green Deal in Europe or in other countries, create awareness that will actually shift the consumer desire to pay for sustainability. I think at this point, our enterprises need to be smart in how we design our bottle, in how we build our factories, making sure that we meet the commitments, but we keep it affordable. We keep it to the level of affordability that this consumer is ready to pay for, not necessarily linked to sustainability. Great. Thank you. Very good. So I'll turn now to the written questions. Just before I address those, there has been a little bit of feedback that the sound quality is a little bit weak. Just to remind, we will be publishing a transcript of the call when it is concluded. So, the first written question I have: Growing health and wellness concerns are increasingly recognized as a crucial part of sustainability. While it often conflicts with alcohol consumption, recent trends indicate a decline in overall alcohol intake. Given Pernod's commitment to responsible drinking, I'm interested in Pernod's strategy for expanding non-alcoholic beverage portfolio. Beyond Ceder's and Beefeater 0.0, what new additions are planned for the future? Thank you for that question. Indeed, we believe at Pernod Ricard that there can be no conviviality in excess. This is why the company has always been promoting responsible drinking. We are a consumer-centric business, therefore, we listen to what our consumers are looking for. By listening to them, we realize they're looking for alternatives to alcoholic beverages for certain occasions. Some consumers are actually willing to not drink at all, and this is fine for us. This is why we're expanding the no low portfolio. As you mentioned, Ceder's or Beefeater, but we also have lower ABV products. I cannot reveal any new additions in the future, but be sure that this is part of our strategy to expand. Next question we have is: are you preparing living wage and/or living income targets or policies? Thank you. When I mentioned that we will refresh the strategy in 2025, this is part of the current discussions that we have, because the living wage income is part of the CSRD. We are currently looking at this, but we do not have any targets yet to share. And then the next question: on sustainable terroir, how do you manage the climate risk, particularly any negative impacts of higher temperatures on grape supply or key ingredients for our eau de vie in Cognac region, for example? I'll give the floor to Morgane. Thank you, Noémie. So last year, we realized a global climate scenario analysis to identify the hotspot terroir where we will face the potential, climate pressures. And now we are conducting deep dives, particularly, for example, in Cognac, where we want to identify specific, what they call perils, meaning that what is the reason why we could have yield decrease? So for example, in Cognac, as it's mentioned on the question, it could be higher temperature as well as a bad water balance during the crop cycle. It's helpful for us to identify where we need to adapt our, cropping system, for, which, area we need to invest in innovation, for example. This is the reason why, for example, we have R&D on new varieties on grapes, as well as a huge pilot trial in Cognac, seven hectares dedicated to vitiforestry, where we implement a combination of mitigation and adaptation practices, including soil health, to improve water content, soil moisture, and in order to be more resilient to water stress, and vitiforestry to add this new shading area above grapes in order to mitigate the microclimates around the grapes. So it's ongoing. And on top of that, we are discussing with other organization, local organization, the BNIC, for example, or other houses, in order to raise awareness globally on the wine grower community, and to develop trainings on how to increase practices adoption for the growers. So it's under development, especially in Cognac. So thank you very much. I see there are no further questions, so that concludes our call this afternoon on S&R. So just to thank once more, Maria Pia, Noémie, and Morgane for answering your questions today. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.