Table of Contents
Investment thesis .............................................................................. 3
Outlook ....................................................................................................................................3
Valuation ..................................................................................................................................3
Risks ........................................................................................................................................3
Why target premiumisation?............................................................ 4
Structural changes ....................................................................................................................4
Profitability benefits ..................................................................................................................4
Mature markets - nothing else? ................................................................................................7
What is premiumisation? .................................................................. 9
Defining premiumisation...........................................................................................................9
Where did premiumisation come from? .................................................................................10
Understanding premiumisation...............................................................................................11
A premium world?........................................................................... 13
A Global view..........................................................................................................................13
1. Emerging markets growth ..................................................................................................13
2. Intra-category trading up .....................................................................................................15
3. Increasing prices .................................................................................................................16
Where premiumisation fails ........................................................... 18
The myth of premiumisation...................................................................................................18
Is premium really growing faster?...........................................................................................18
Can the industry price over and above inflation? ....................................................................19
Looking at the wrong history? ................................................................................................20
What is driving premiumisation?.............................................................................................21
Premiumisation failures...........................................................................................................22
What can go wrong in emerging markets...............................................................................23
Beyond the era of premiumisation ................................................ 25
Premiumisation headwinds and tailwinds...............................................................................25
Who is the volume winner? ....................................................................................................27
Growing the top line in the new era........................................................................................32
How to grow earnings in the new era.....................................................................................33
Forecast changes and risks to consensus ..............................................................................36
Valuation .......................................................................................... 37
Late cycle dynamics................................................................................................................37
Recommendations and target prices ......................................................................................40
Company valuation methodology and risks ............................................................................43
Campari Group ................................................................................ 44
Diageo............................................................................................... 46
Pernod-Ricard .................................................................................. 48
Remy Cointreau ............................................................................... 50