Good morning and welcome to Diageo's FY 2025 preliminary results Q&A conference call. Your call today will be hosted by Nik Jhangiani, Diageo's Interim Chief Executive. This conference is being recorded. To ask a question today, please press star followed by one on your telephone keypad. To withdraw your question, it's star followed by two. We're now ready to start the call. Sonya, please go ahead. Thanks very much. Good morning everyone and welcome to Diageo's fiscal 2025 results Q&A. I'm Sonya Ghobrial, Head of Investor Relations, and I'm joined this morning by Nik Jhangiani, Interim Chief Executive. Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements, including those with regard to our estimates, plans, and expectations. Please refer to this morning's release and the company's U.K. and U.S. filings for more detail, including factors that could lead to actual results that may differ from those expressed in or implied by any such forward-looking statements. Hopefully you've all seen this morning's press release and presentation. For those listening to our webcast who would like to ask your questions, please use the dial-in details included in today's press release. With that, I'll hand the call back to the operator for your questions. Thank you. We'll start today by taking our first question from Sanjeet Aujla from UBS. Your line is now open. Please go ahead. Hi, good morning everyone. A couple of questions for me please. Firstly, on the U.S., Nik, are you able to give us a sense of how you're thinking about the depletion outlook? Appreciate you've called out a bit of caution at the start of fiscal 2026, but love to get your sense of how you think about depletions there. Should we interpret the inventory message to imply shipments in line with depletions on a full year basis in the U.S.? Secondly, you're investing a lot behind Europe. The spirit part of the portfolio has been quite a bit under pressure in fiscal 2025. What are you hoping for out of Europe in fiscal 2026 as the investment steps up? Thanks. Thanks, Sanjeet, and great to be here today with all of you on your first question. I think you know clearly our focus in 2025 was to get the inventory levels back to more normalized levels, and as you saw in Q3, clearly there was a pre-tariff kind of buy-in, which we believe has largely been cycled through in Q4. We will continue to look at that from an angle of how that might play out during Q1 as well. Largely, we believe that has come through. Clearly, we were trying to manage to get fast to more normalized stock levels, and I think we've achieved that. The team feels good about where we are from both local as well as imports. Just putting it back into perspective, we are planning for a more cautious consumer environment in the U.S. for fiscal 2026 on the top line, but very much focused around how and where we can continue to outperform. We are doing a broader strategy, sharpen and refresh across the group to really look at how do we get a broader brand portfolio growth happening both in the U.S. and across the rest of the globe. In some ways, that does also talk to your question on Europe. Clearly, you're absolutely right. I think the spirits market for us was in sharper decline than we would have loved to see. I think we see that as an opportunity, actually looking forward to better control some of the outcomes in Europe by being a lot more locally focused and occasion led. I think that's the opportunity when we talk about kind of reorganizing ourselves to be able to capture that growth. I talked a little bit in my prepared remarks around the fact that, you know, Southern Europe, just using that as one example, the fact that we were managing four or five very unique, very different markets. You'll know from my prior experience, you had a lot of focus as you looked market by market to the consumer dynamics and, more importantly, even the customers, and your Route-to-Market strategies are quite different. I think if you look at France for instance, having taken that over and setting ourselves up and setting up a more competitive and market relevant route to market, working with our customers, looking at that outlet segmentation that I've talked about, that's one of the first markets where we're doing some really good work around that to be able to look at unlocking those growth opportunities in spirits, and not just in whiskey. For instance, France, which is a large whiskey market, same thing in Italy or Spain. I would say even in a market like Germany, combining Germany and Austria and Switzerland, having a focus there allows us to really be a lot more consumer in terms of customer centric. I think that's what we're excited about. That brings us that much closer to the market and hence we feel that we will be able to go and support growth, and it's not a one- year focus. This is what we're looking at in terms of a longer- term trajectory as we look forward. Our next question comes from Simon Hales from Citi. Your line's now open. Please go ahead. Thank you. Morning, Nik and Sonya. Two from me as well please, if I can. Firstly, I'm building on some of the things you were saying there. Can you just talk a little bit more about the moving parts in that fiscal 2024 fiscal organic sales guidance to be similar to 2025? On my math, given the interest is probably down in the first half, it suggests an acceleration of somewhere around 4% or above in the second half of the year. I know you referenced in your prepared remarks things like the timing and saying the Chinese New Year perhaps impacting the H1 H2 shift. What gives you the confidence that you're going to see that H2 acceleration come through? Secondly, can I ask about j ust some technical factors that maybe are impacting EBIT and earnings into 2026? On the EBIT side, Diageo carried out a number of disposals in the year which you flagged. I think you've disclosed that the decontamination of those probably is about a $50 million reduction in starting EBIT. Since the year end we've also sold Ghana and the Seychelles Brewery. How big an impact will that have from a scope standpoint? Below the line on finance cost, I think you capitalized some finance costs, I believe for the first time in the P&L. Given that some of the projects related to those capitalized finance costs are ongoing, how should we think about the size of that element in the finance line as we go into fiscal 2026 and beyond? Great. Let me tackle the first question. I think clearly you've rightfully called out what does the field look like for H2 and what gives us the confidence there? I think there's a couple of things that I would focus in on and I would look at it from an angle of where we want to build more capability and where we want to really accelerate some of our work. The areas that I would really call out in four main buckets. Clearly a lot of work that we've kicked off on driving for much softer commercial execution at point of sale. I think that is critical in terms of allowing us to bring together really that great work we do at the brand and how do we bring it live and activate the point of sale, be it off-trade, on-trade, and a lot of work that we're doing when we're looking at menu placements, back bar displays, but having very clear metrics and KPIs against which we can measure our progress. This will be a multi-year journey, but we feel the work that we are kicking off or have already kicked off in several markets should allow to help with that. The other piece I would call out is, you might recall we talked about six priority markets on RTDs. I think when we step back and look at Smirnoff Ice, what we actually set up in what was the category 20 years ago, and the fact that even with some reinvigoration and stuff that we're doing around the brand, the flavors, the portfolio offering, how we're looking at that piece in terms of the relevance to consumer occasions is what we'll try and accelerate. I think you'll see that in the first half, but really that will ramp up in the second half. I would say the last piece is really the broader work we want to do on our portfolio. Clearly we've had some really good performance in key brands and some of our global brands, be it Don Julio, be it Guinness, be it, you know, what we've talked about with Crown Royal and Johnnie Walker, even though the organic sales declined, they gained share. I think there's more that we can do when we look at both the mainstream core and premium core. We've got to be able to start driving that. I think when we look at the Premiumization piece, that's very much there to stay. How do we continue to build on the Johnnie Walker brand, for instance, and the price laddering, everything that we've done with Blonde as one example on one end of the spectrum and what we're doing all the way up to Blue Label involved. I think the last piece I would really say is we've laid out a clear strategy on most where you've got great liquid winning brands and we need to execute that at scale as well. I think those are the three big pieces that I would call out that we feel good about as we look forward. That's not just a half 2026, that's an ongoing piece of work that we'll be looking at. From an angle of your technical factors, I think you rightfully called out with what we have already exited as of the end of the year, that's about $50 million in operating profit, had about $250 million in NSP. When you look at the deal that had not completed year end but have since completed, that's really Ghana and Seychelles sales that would have approximately another $15 million impact on operating profit for fiscal 2026 and about $350 million NSP. Again, those would all be normalized. When we look at scope and growth as we look forward in terms of finance costs, we'll come back to you with specific numbers but remember there was also an element of what was a bit of prior adjustment. We would expect that to more normalize as we looked at 2026. We can come back to you with some more specifics around that offline. Our next question comes from the line of Celine Pannuti from JPMorgan. The line is now open. Please proceed. Thank you very much. Good morning. My first question, Nik, is on the first half. You call the weakness in the organic. Can you give us a sense of where do you see that? Because obviously you talk about your question about North America, but I wanted as well to understand how you look at China. China proves to have been quite weak and beyond Chinese New Year. Trying to understand what's going on in the country as you see reversing your portfolio towards maybe less expensive SKUs and what does that mean for margin in that region that has been usually quite litigated. My second question is on the organic EBIT guide. If I look at the savings, roughly speaking, I think that probably would contribute to half of the organic improvement above top line growth. In an environment where top line is slightly positive, actually talk about what are the other drivers of that extra organic EBIT expansion. I noted that gross margin was held by lower compensation in 2025. If you could give us what it made cost $1.50. Thank you. Great. I think if you look at the half one in terms of the guide, you're right. In terms of us, you know, we clearly are planning for a more cautious environment and I would say that's probably one that flew more severe that, you know, I would expect to see that more RC awaited because we've also got the lacking of some of the Don Julio restarting. You know, that happened in half one of 2025. Quite honestly, when you look at the Nielsen NABCA data, if you look at the auxiliary, you can see that, you know, the consumer environment and the consumer wallet is still stretched. The team is doing a lot of work to really look at how do we reinvigorate some of the other brands and some of the stuff that I just talked about. The early signs in terms of the Route-to-Market changes that we're making in North America are really starting to pay dividends. We're getting very positive feedback where we've implemented this with well-trained feet on the street for the distributor and our level in terms of what they're able to drive with customers to improve portfolio mix offerings and ultimately drive their margin and revolves odds as well. I think there's a strong focus on wanting to continue being that customer of choice with our retailers. I think RTDs I talked about where clearly the US would be one of those six priority markets which is an opportunity as well. Pivoting onto your question around China, clearly outside of Chinese New Year timing, the market has been more challenged. I look at that market and having visited, you know, late last year and having spent time with the team, you know, again in March in Southeast Asia where, you know, we were getting some good data points of what was happening. I think the team is doing a lot in terms of looking to your point around are there different parts of the portfolio that are important from an angle of being able to still have relevance for our brands in the right path and ensure that the brand equity is still, and we know that people will come back and that same migration journey, particularly in a market like China, is very much impact but at the same time there's an opportunity to be looked for at a broader range of products that we can sell as well. I think, you know, clearly cautious but we are doing the right things in China. I think across APAC as well, you probably look at China and seen some of the Baijiu numbers. We do hope that that will start improving depending on how the government continues to look at some of the restrictions that they've put in place towards the second half of the year. Some more to come on that. In regards to your EBIT question, clearly the savings are what is the main drivers of growth, and the big area that we're continuing to unlock is twofold. I would say on the third investment on A&P spend, we are already seeing some early opportunities of how we can better rationalize for investment, but returns driven investment. Right. Both on the customer A&P and the trade investment side, that's a positive. I would say we continue to focus on the absolute dollars of spend on the development on non working dollars, and the team has been doing a phenomenal job, and we're moving at pace with what we can do to really replicate some of the work that we've already done in 2025 and where those costs get captured. Right. Because quite honestly, if we're doing this well with our conscious creating agile gong communities, really leveraging the virtual content studio, there should be very little that we should have to be incurring at the market level. Those are all benefits, and part of that will go back into supporting m edia scale and reach. There will be a fall through to the bottom line. I think I called out in my prepared remarks that we had already initiated some actions around North America corporate and some of the markets in APAC in Q4 2025, which obviously will then start getting U.S. benefits in second half of 2026 as well. That is a positive move. We feel good about being able to deliver against that EBITDA that we've provided both from where we see organic growth opportunities and from the savings as well. On COGS inflation, I think we're seeing low single-digit underlying COGS inflation. Remember this comes back again to where the team within supply has done a very good job. We continue to look at productivity to be able to offset that, and we'll continue to have that everyday productivity mindset as we look forward. Our next question comes from the line of Andrea Pistacchi from Bank of America. Your line is now open. Please proceed. Yes. Morning Nik and Sonya, for two questions please. First one is on FX, I believe. Could you give a bit more color? You said you've made some changes to how you're hedging currency. Could you give a little bit more color on that and on the $60 m illion impact on EBIT that you anticipate for this year? Could you say how much of that is translation versus transaction, please? I have a specific question on a brand, please, which is Astral in the U.S. You're talking about wanting to broadcast growth to more brands in the US, and in the press release, I think you call out specifically Astral as a tequila brand growing very strongly in the super-premium price segment. How much of a focus is t his brand for you? Could you see it becoming really scaling up, becoming, say, a $1 million case brand? Would it be a slow burn, or do you think it could be quite fast? Great. Thanks, Sonya. On the hedging policy, you know, we've done a lot of work with our treasury team on a twofold piece. I would say one was really looking at how can we extend the coverage duration and align the hedge targets more closely with the operating profit exposure. Right. I think over time this should really help reduce that volatility. When you look at it in terms of what does that actually mean practically, we're looking at both hedged or unhedged transaction exchange exposure and what we would like to hedge, not in isolation with where we see the unhedged translation exposure, which we don't go out to cover, but we were almost in some ways overhedging and then having the impact from the translation piece and netting that out allows us to have a much more effective hedging approach and less volatility, as I said. That's what we will be doing and you'll continue to hear more on that. The $16 million impact is how much is really the translation piece based on what you see today from an angle of the current spot rates. We can give you more detail on that. Our growth continues to move, but clearly we'll come back on that. You rightfully called out Astral in the U.S. because I think while we've done a really good job in trying to now reset Casamigos and it's still at very early days when you look at the element of yes, it's coming to the dedicated division, but getting the pricing ladder and positioning right relative to Don Julio and ensuring that we've got the right outlets and solid segmentation in terms of where Casamigos, you know, rightfully has the opportunity to win is now what we're going to be leveraging going forward. You've got a new advertising campaign which I think is really exciting. We just launched in a few states the RTDs under the Casamigos brand, which is going to have a growth halo effect on the brand and that's going to go nationwide. Remember these are more still when you look at it at the super-premium plus or actually even above in terms of price points. Astral Tequila has a great role to play in being able to address that super-premium, where a lot of other brands are playing. Quite honestly, I think now having gotten Don Julio and Casamigos right and we want to get those back in growth, we have a huge opportunity to start winning with Astral, which again is great liquid. Right. I actually would say to you it's an approach that we're taking beyond North America only, where clearly I think Astral will play a critical role when we look at expansion into these global markets with a clear strategy. Not just on winning with Don Julio and Casamigos, but how do we win with Astral as well? You're looking at now the three price segments that we can actually effectively flow around. Will it be a slow burn or a fast build? I'd like to believe it's going to be a fast build that we're going to be working on. I think the team is working at speed in the U.S., and we're clarifying the position for the rest of world as well and where Astral truly plays. I think it is the preferred brand for the most part that we will go with. We do have some other brands as well. Remember, we've got Don Julio. We just brought in 1707. I think we're making sure that we've got the right positioning on the right brand equities and strengths that we want to build on across the market. Clearly, we have the liquid and the capacity to be able to do that. Tequila is a big part of our global strategy, and I think the team's been doing a phenomenal job trying to unlock value and grow that. Our next question comes from the line of Trevor Stirling from Bernstein. The line is now open. Please proceed. Yeah. Morning, Nik and Sonya. Two questions, please, Nik. First one, just go back to the U.S. and your Route-to-Market or transformation in the U.S. Could you just give us a little bit more color about what changes actually are you making on the ground? Is it actual speech on the street. Is it the same people doing different things? Second question, perhaps longer term, Nik, if we look back in a couple of years' time, what do you think will be the next big global brand or brand to have really significant contribution to growth? We have Don Julio, we have Guinness doing incredibly well at the moment. What do you think will be the third big brand looking for? Thanks, Trevor. What does it really mean in terms of the change in terms of, you know, the U.S. route to market? I think a couple of things. Clearly this is about incremental feet on the street, both from our distributor partners as well as ourselves, but being clear on what the role of those salespeople and extra feet on the street is, is what's critically important. I think that's what we're changing. It's about having a much more focused model where I think we're really leading the industry in terms of both incremental, to my point, but upskilled resources to drive and help our partners drive proper execution. We want to build those customer relationships that allow us to help them grow their business, and as a result of them growing their business, us growing our business, but then being seen as that partner of choice. I think it's both number of people, but what do they actually do to be able to drive incremental value for our customers and ourselves as opposed to, you know, order taking. Being very mundane around that piece. What are we practically doing? We've got an academy for beverage leadership, where we have some training resources in terms of how do you actually sell and upsell and help your partners, how do you bring them things that they might not have thought about, whether it's new brands, whether it's facts for this format that can help when we look at the type of CCF work that we do and understand the occasions that that outlet is serving, in what kind of brands and portfolio should be relevant and how they can actually help position and sell those, whether it's front of store, whether it's gondola and aisles, whether it's around in bar menus, displays, etc. It's really helping them being able to uplift their performance. I think we're doing it in a very targeted way where we see the upside when we look at the outlet universe and where is the largest value pool, what we want to go after first. I think we're committed to building these capabilities nationally and maintaining that leadership. This is going to be great as we look at this, not just in North America, but that's what drives my focus that I talked about in terms of how do we truly drive commercial excellence and execution at the point of sale. To your question around what's the next big global brand, I'd love to believe it's not just one more. I'd like to believe there's a lot more that we can do. I think that's what I'd like to come back with in the next months as we work on sharpening that strategy that, you know, I think can really help us look at in an evolving TBA landscape. You know, how do we actually appeal and drive for more casings and more consumers wanting to buy our brand. We've got an amazing portfolio. When you look across all of the categories in which we play, I just don't think we've necessarily been as deliberate stepping back and looking at it from an angle of selective plays on mainstream, our premium core, as well as what we can do on a Premiumization journey with Johnnie Walker with more. You've got an amazing portfolio of more. You've got a very clear scaffolding now around what plays globally and what plays really strong regionally. I talked about Tequila right now with that last question from Andrea. I think we feel excited about a number of vectors as opposed to one single brand that I'd like to see as the most big one outside of Don Julio and Guinness. More to come on that further as we go forward. Our next question comes from Edward Mundy from Jefferies. Your line's now open. Please go ahead with your question. Morning Nik. Morning Sonya. One of the things that's come through quite clearly both from the presentation and also on Q&A today is the sort of desire to broaden the growth opportunities beyond Guinness, Don Julio, Crown Royal, and some of those big successes as you reinvigorate growth and leverage the full breadth of the portfolio. I'd be interested in sort of philosophically what's really going to drive that. Is it going to be the reprioritization of aim to provide more oxygen to a broader range of brands, or is it really execution driven, moving the goalpost to really drive that deliberate portfolio strategy? That's my first question. My second question is on the U.S. specifically. I think in the presentation she talked about looking to drive more balanced growth, so that balanced growth across both the portfolio but also balanced growth across volumes, price, and also mix. Great, thanks. Thanks for the question, Ed. I think from an angle of, you know, broaden the growth opportunities. I think clearly we're a consumer goods company, right. I think supporting our brands in the right way with goods focused around both returns, but sufficiency of investment is critically important as well, right. I think all the work that we're doing on the customer AMC and particularly the non-working will actually give us more oxygen to invest in the media scale and reach piece with appropriate returns to be able to get that breadth of portfolio effectively covered. This is not going to be a single year journey, right. This is going to be a multi-year journey. I think it starts up with really understanding back to that consumer, back to that occasion where the value pools are and how do we then ensure that we've got the right resources backing where the growth opportunities are, but at the same time also looking for future growth opportunities, right. I think we've got to get that balance right. Having said that, I don't think you do one without the other, right. I think we could do that great, but if you don't have a clear execution focus, we'll be doing great stuff on brand building but it never comes through at the point of sale and vice versa. If we're doing great stuff only on execution without having the right support from that through the line piece, you know, I very much see this going together and I think that's what is the great opportunity as you look forward for a number of years to come around that through the line sufficiency across the brands, the building, the availability and the execution with excellence. I truly see that as something that will be a big unlock as we look forward for the years to come. I think the team is excited and invigorated by that, not just in the U.S. but globally as well. I think the U.S. has already started doing that with some of these examples that I talked about in terms of Route-to-Market changes in terms of the U.S. and getting back to growth from a portfolio of perspectives and also balance around the volume, price mix. Listen, ideally I would like to see both, o kay. I am also very conscious that we are in a more challenged consumer environment and that's what we plan for 2026. Without being able to give you specifics around that, is that our focus and goal as we look forward? Absolutely. We've seen volume growth sideways now with regards to how much more that we can do with dinner, more that we can do when we actually look at our premium core and some of our mainstream brands that we can leverage and be able to get that volume growth. I think yes, that will come through, but that's probably more 2027 and beyond. I also think we could look at it from an angle of you probably heard me talk about this or us talk about it at Diageo. I think beyond volume in the U.S. we also have to start looking at transactions on how particularly with smaller format, if we're getting consumers into our brand equities or keeping them there over time as the consumer wallets become less stressed, we would expect them to continue obviously being able to be with our brands and hopefully upsize as we look forward as well. I think in the developed markets as well, we've got to have a focus not just on volume but on transactions as well. Beyond that, across the other markets, clearly we're going to have Africa, Lat, India, some of our other Asian markets be able to drive volume growth. I think that came through well when you even look at our 2025 results from an angle that yes, volume was more challenged in some of our developed markets, when you look at China, etc. We did get a good balance overall between our volume and price/mix. We'd love to continue to see t hat coming through as we look forward. I think one other thing I would call out in the smaller format, while we're driving share in the US, I still believe we don't have our fair share. That's a big opportunity, and that's why my focus is around not just volume but transactions as well. Our next question comes from Mitch Collett from Deutsche Bank. Your line's now open. Please go ahead. Hi Nik. Hi Sonya. In the release you talk about some of the initiatives you are beginning to u se to re-accelerate growth. I'd be really interested to hear how those initiatives tally with your thoughts on some of the potential structural headwinds within the sector. I know you've talked a bit about RTD, but I guess I'm particularly interested in moderation and how you see that trend as an opportunity. My second question, you have given 50% of the cost savings are going to be reinvested. Can you just give us some color? Where will that reinvestment be focused? If possible, how do you think about marketing in fiscal 2026, either in absolute terms or as a percentage of sales? Thank you. Great. Thanks, Mitch. I think you and I actually got to talk about this a little bit when I was in Paris. You know, moderation has been around for a number of years, so it's not something new. I think as you rightfully called out, we are stepping back and looking at this from an angle of we clearly do see today's pressures being largely more macro cyclical. Having said that, we also do believe moderation in some form is here to stay. Moderation, as you and I talked about before, does mean different things to different people. Whether it's about drinking less on weekdays, whether it's about zebra striping, whether it's about going for different formats and options that allow them to manage portion control, I think that's what we've got to tap into more today. We're in a very fortunate position that we have a portfolio of non-alcohol brands, obviously led by Guinness 0.0, that is allowing us to win. Obviously, it's a small base. I think we have the ability with the incredible brands and the power of our innovation team to be able to develop more opportunities not just in RTDs. I'll come back to that in a moment. Also, what you can do with not just no ABV, but low ABV. It was interesting because I challenged my own thinking in the last months when I was thinking, why do we need to have low ABV when you've got full ABV and zero ABV and someone can mix it up? One of my region presidents said a really good example of when he was out in the market and saw a lady pick up a bottle of Tanqueray 0.0 and a bottle of Tanqueray, and he went up and asked her around why was she buying both. It's quite interesting that when you do look at consumers and shoppers, those who are buying zero, zero or zero alcohol are also typically buying full strength because they want to have that choice. You had a really interesting angle in taste that said, I want to have my gin and tonic and I want to get the same flavor, and if I just put more tonic into Tanqueray and dilute it, I lose some of that flavor. By actually mixing and doing equal parts of Tanqueray 0.0 and Tanqueray full ABV, I actually get that taste and flavor profile coming through without the overreliance or overtaste of the tonic coming through. That I think was really interesting. Because I challenged my own mindset saying, well then low ABV does have an option, right? Or an opportunity to play. We've got a great innovation team that can help build that out for us, right? RTDs is a great example of where you can actually manage ABV, calories, where people might be looking for. I think there's a lot more for us to go after to really look at that as opportunity. In my mind, no regrets, right? It's not saying that we're not going to be focused on our core portfolio and a broader portfolio. It's not like we don't believe that Premiumization is here to stay and we can still leverage that. We've got a great portfolio and brands to be able to do that. It's about, here's another vector of growth that we can tap into because that is a scene, right, of how people are thinking about how, where, and when they want to consume, right? I think that's what excites us about that piece. To your question around, you know, the 50% being reinvested, I would call that out as, you know, two big areas and that is about better commercial execution and what do we need to do. Whether it's about extra resources, whether it's about training and building up skill sets of those resources to be able to upsell, et cetera, but also providing them with the right tools and that's another area of focus which is around digitization, right, and how do we do that at speed and scale. The other piece comes back to what I touched upon earlier. We are a consumer brands company and we recognize the need to be investing in on-trade and particularly on the media but through the line efficiency, right. I would say where we get efficiency savings, particularly when we look at the non-working and 2025 is a good example of that. You've seen that come down from circa, you know, 20% down to 15%. Our overall dollars stayed pretty much intact, right, and so we were able to reposition that into where we saw good returns and I think we have a more laser-focused approach on that as we look forward. I won't get into absolutes right now in terms of what dollar spend would be. You would expect that overall to be lower but not because the media scaling reach number is coming down. It's actually because we will drive more efficiencies through the commercial and continue to drive non-working dollars out and where we should be putting it, which is back into media scale and reach. Our next question comes from the line of Gen Cross from BNP Paribas. Your line's now open. Please go ahead. Morning Nik. Morning Sonya. Thank you for the question. First question is on total beverage alcohol. I mean in your presentation script you refer to a recent key market study which showed that saving money was one of the top four reasons for consumers moderating total alcohol consumption. I just wonder if we can share w hether saving money was the number one. Reason and what the other top reasons were. The second question is more specifically on U.S. degree. You take in various impairment charges in the year, and one of them is $170 million on various U.S. brands, fixed assets, and inventory, which at least appears to be partly driven by what you described as softening category outlook. Is the right read of this that the view U.S. spirits category growth over the midterm is now being a bit lower than it was under your previous assessment, or is it more just driven by short term pressures? Thank you. Thanks. Your first question then around total beverage alcohol and what we're seeing in terms of consumers' wallets and reasons for what they're focused in on? I wouldn't necessarily say it doesn't vary by market, but that was the top reason. It was definitely a large reason that people were calling out around the consumption habits or what they were spending. The other piece does come back a little bit more to the moderation piece. I am looking at different ways of consuming. I am looking at, back to our point, moderation for me might be drinking on fewer occasions, but when I do consume, I consume with responsibility. I enjoy what I'm having. It might be back to those points around low ABV when I'm looking for more choice. When I'm not getting that choice, unfortunately, I'm going to something else. I talked a little about the conference in Paris around there are people who are just choosing not to substitute. There are people who are choosing to drink something else. I think we have the opportunity. When you look at what can we offer to be able to gain back some of those drinkers into our products for the types of occasions that really serve them well, whether it's RTDs, whether it's smaller formats, whether it's around low ABVs, whether it's about when I drink, I'll drink better, not more. Those are all elements we wanted to tap into as opposed to them drinking more functional beverages or more soft drinks, etc. I think there's a lot more that we want to unpack there as we continue to build on our research as to what are the reasons people are not buying and what can we do to drive more relevance of our brands and our portfolio for those occasions. That's a part of the work that I've talked about in terms of our strategy sharpening that we'll be doing in the months to come together with the broader team and our markets. I think to your question around the impairment charges that we've taken, remember this is very much driven by triggers that you need to look at in terms of how the brand, what the nearer term outlook has been and what the historical data looks like. I don't think it in any way changes our view in terms of the U.S. spirits market on the opportunities there. Really much more around some of the nearer term pressures and how we need to look at that. I think in some ways, you know, while it's never great to take an impairment, I think this allows us to have a clean start again, look forward to really focus on growing those brands in a structured, systematic, and sustainable way. Our belief in U.S. spirits continues to be just as strong, albeit as I said, with an evolving CBA landscape that we'll continue to monitor and look at how we can play and be relevant. Our next question comes from the line of Javier Gonzalez Lastra from Berenberg. Your line is now open, please go ahead. Yeah, good morning Nik and Sonya. Two questions please for me. First one on disposals. Nik, you mentioned at the CMD back in May that you would be targeting d isposals outside Guinness and Moët Hennessy that would be headstrong. We have seen since news that there was a cricket team in India and the after temporary statements have potential of hotel which are indeed substantial as you said. My question is whether we should expect t his to be it or whether there. Might be more in the pipeline. My second question is on agave cost. Would you be able to help us understand better how significant the benefit from reduced purchase costs might be in 2026 or how does it compare your average agave supply price on fiscal 2025 to existing marketplace? Thank you. Thanks, Javier. As you can very hopefully understand, I can't really talk about specific assets or comment on any kind of population that's out there in the media. I think nothing has changed in terms of our strategy on disposals. We had guided before that this was a part of our commitment, but more being ready from a strategic angle and looking at assets or businesses that we didn't quite see as non-core or what wouldn't necessarily sit in. As we continue to soften up strategies in the forward, this continues to remain the case and I think we're making progress on those substantial asset disposals that I talked about and I feel confident we have a ready school of interested buyers that will allow us to maximize value for Diageo and our shareholders. More importantly, I think those are assets that probably belong well with some of the potential buyers and their level of interest. I will just reconfirm that we do not have any intentions of selling Guinness nor uptake in Tennessee at this point. In terms of a broader portfolio question, just to take that head on, as a part of our review, we are looking at our portfolio. I think Diageo has had a history of being active portfolio managers. Nothing more to add or say there, but we'll come back in due course if there's something of interest to share with you. To your question around agave pricing, I think I'd like to just give you some background in terms of how you all should be thinking about this. We have a very diverse supply chain sourcing strategy and agave in particular we own some of our own production. We do purchase on long-term contracts and we do access spot markets. It's a combination of those. Just the fact that today spot market price for agave is lower should not be reflective of the price going into our tequila COGS, right, because it is that combination. Are we clearly leveraging the combination of all those as we look forward not just into 2026? Absolutely. I think we've got some good liquid already in place now that's positive from an angle that we have liquid to be able to sell on mid-market demand, whether it's on DJ or on Casamigos. Remember that's already in our inventory. That will be coming through. That was at, you know, as prior periods agave cost. That will have an impact as it starts coming through not just in 2026 but more beyond. When you look at that first piece around our supply model and then, you know, on FX, given some of the movements over the past couple of years, remember we do hedge that strong grasp from impact as we look forward. This is a great example of where we would look at both the transaction and the translation ease, particularly with USD and Mexican peso. That should help up in some of our volatility as we look forward. Hopefully that helps to understand how we look at that. Our next question comes from Chris Pitcher from Rothschild & Co. The line is now open. Please go ahead. Good morning, Nik. Thank you. A couple of questions please. Firstly, follow on. On the maturing spirits comments, Nik, I mean if we look at where your inventories are, indeed the industry inventories are across the piece. Have you given, have you given any clarity on what you think your incremental investment will be next year? And then secondly on Guinness, I know it' s still growing strongly. Is there anything in your more cautious this year in the first half on Guinness flowing a bit more, or are you still very comfortable in it continuing the double-digit growth or thereabouts into fiscal 2026? Thanks. On your question on maturing spirits, no, we have not provided anything specific in terms of what that growth would be during 2026. I would just call out, and I think maybe if there was any confusion, just to clarify, when you look at the 2025 numbers in our closing balance, while part of that is obviously the incremental investment in maturing stock, that was about half of it, and the rest of the half is really FX as you restate your maturing liquid balance as we look forward. I think as I talked about, one of the things that we have done, given the liquid that we have and how we look at what is our notional pool of safety stock, it is complex. As you probably know even better than me, you help educate me about what's coming in, in terms of that liquid, which is very valuable liquid, but is complex in terms of the different flavor profiles, the age profiles, what we need for blends, what we need for single malts. I think what the team has done a phenomenal job over the last four months working with me and my broader team is to really understand where we have that incremental notional pool in the age profile and the liquid that we have. How can we actually look at that as we shape our strategy, but more importantly, as we look at laying down more liquid, what is our distilling capacity and how and where can we manage that throttle to be able to utilize some of the liquid but without compromising on the investment for the future? I think that's the work that we've done. I think we're in a position in terms of our planning to be able to see that benefit. It's starting to come through some in 2026, but this will be a multi-year journey because we want to be able to be much more dynamic and look at that almost every quarter to six months to think, have we made some of the right choices? Do we need to throttle up a little bit? Do we need to pull back? Where are the potential risks or what we might be seeing based on how we're seeing demand generation and consumption? That's the work that we've been doing, and I feel that you'll continue to have a much better handle on that, like I said, every six months and doing the right things to protect the long term, but also not draw up on a lot of cash in the short term if it's not needed. To your question on Guinness, I wouldn't necessarily say that we expect anything significantly slower in the first half versus the second. I would just call out that we do have more capacity that's coming on stream in the second half, which will actually help us to even accelerate and build on what has been tremendous momentum, not just in the high growth markets, with our largest market for Guinness in the U.S., but you were with us in Dublin and we talked about the big unlock opportunity. We look into other markets and I think that's an opportunity as we look at how we want to accelerate growth in 2026 and probably in some of the second half numbers as well. That capacity will really help us to get into other markets and leverage that growth opportunity in incorporating markets as well. Our next question comes from Laurence Whyatt from Barclays. Y our line is now open. Please proceed with your question. Morning. A couple from me as well, Nik. Firstly on Don Julio in the U.S., we've been talking about balanced growth across the portfolio, but of course in that brand I think a lot of the growth has really been coming from the Reposado SKU as you think going forward. Firstly, why do you think the growth has been so strong in Reposado? What is it about the Reposado category that's really captured attention of consumers recently? Within that, would you expect acceleration on the other parts of the Don Julio brand? I think historically there's a lot more growth in the very ultra premium parts of the brand. Would you expect a bit of a recovery across, say, the Blanco, maybe to other parts as well as the strength you've seen in Reposado? Secondly, since I guess the beginning of this year you talked about growing in the upper quartile of consumer staples and I think on the call, the prerecorded call that we listened to earlier today, you talked about the upper quartile of TSR as what you're aiming at achieving. I think previously in the year you've talked about being in the upper quartile in organic profit growth and the way that the company used to guide. I was just wondering, is that an intentional change in messaging or do you expect the upper quartile in both of those? Perhaps you can just clarify your views on upper quartile. Thank you. Absolutely. Let me start with that one. T hanks for the question, by the way. In terms of what was in the prepared remarks, I think TSR is ultimately an outcome if you're doing things well from an angle of getting that right balance in what I rightfully have said, not just on profit, around all our metrics. How do we look at top line growth translating with positive operating leverage into operating profit, dollar growth faster than that top line growth, and very much around conversion to cash and ultimately better returns? I think we are doing that well with a very clear capital allocation policy that ultimately leads to TSR. I think I was using that just as a proxy as opposed to calling out everything else, but very much in fact in terms of our thinking around a much broader based algo across all of those measures to be able to drive more consistent and positive TSR growth in the years to come. That's what I would call upper quartile, and that's where myself, the exec, and the board are very much focused on setting up our strategy and our focus around being able to deliver that. To your question around Don Julio, it's a great question. I think the revel growth is really coming from the fact that obviously people coming into this tequila category, and typically you come in through something that's more accessible. You might come in through Blanco, but then you do also find that engine of the liquid without going to a very strong age. Liquid in Añejo or even beyond is what is driving that. I think the team has also done a phenomenal job in really steeping Don Julio Reposado in culture, in moments of enjoyment. It really does well in cocktails as well, and I'm speaking as a user myself. That's my go-to drink, right. I typically go for a Don Julio Reposado, and I like that because I have it quite clean, just with soda and a slice of orange, if you want to know. It just kind of gives me that taste of a slightly aged liquid as well. If I'm sipping, I might move up to an Añejo, but if I'm doing just a regular cocktail, I might have a Blanco. I think that's the range offering that we want to continue building on for a broader consumer base. I think you're absolutely right. 1942 and all the variants that we're doing there and how that's playing into culture and bringing in influences. The Don Julio 1942 activations that I saw during Super Bowl were incredible. I think the small formats that we have of the 50 cl in the Don Julio 1942 have been doing amazingly well because you might not see that in the volume numbers, but you see that in the transactions because people really are able to use that from an affordability play or a cash outlay play, but still be able to enjoy what is great, great liquid. I think your question around, you know, the broader portfolio. I'll take the out of the U.S. for a moment. I was starting with our new MD who actually moved from GB into Mexico. He talked about the big opportunity that we have with Don Julio Blanco, which is a very recognized brand, great brand equity, but we've actually funded in that market to only focus on actually higher value offering. Right. In some ways we've left that market open where we have great liquid, a great brand. I think there's a broader opportunity a s we j ust linked to the Premiumization end. How do we get that whole opportunity all the way from Blanco up? It's not just about Don Julio. It comes back to my earlier comments whether what we can do with Casamigos, what we can do with that trial, et cetera. I think there's a bigger opportunity to play for in our broader markets as we look at tequila as a whole. We're very excited about that opportunity going forward. Thank you. That's how we have the questions today. Over to you, Nik, for closing remarks. Thank you. Great. I really want to thank you all for joining us today. I want to reiterate just a few points as we close the call. I know we have much to do, but please be assured that I, alongside the Board and the Executive Team, was fully engaged in both stabilizing and then sustainably growing our business in the coming years. Diageo, rightfully as leaders, should and will be moving the way as we continue to soften our strategy in what is what we've called out as a really evolving TBA landscape. I think we all look forward to sharing more on this in the coming months. We continue to be focused on what we can manage and control, as I've outlined, and continue to focus on building new core capabilities to allow us to win with our customers and continue building our great brands and leveraging consumers' preferences. My team and I have committed to rebuilding a high performance culture, driving clarity across the organization, clear allocation of resources, and execution discipline and excellence. A lot more to come from us in the coming months. We remain committed to being able to drive this business positively for the long term. Thank you for joining us today. This now concludes today's call. Thank you for your attendance. You can disconnect your lines.