The Booze Cruise, Q316
It’s time for the next edition of The Booze Cruise, a chart-heavy publication designed to enable
investors to get a better feel for near-term trends in the Beverages industry. How have things fared
in Q316?
Beer – a mixed bag
Warm weather should provide a boost to beer numbers in Q316, particularly in Europe, Russia and
China. The picture is less positive in the Americas (US volumes remain lacklustre, Mexican beer
production has slowed). We expect growth in Asia to remain strong (Vietnam) although expect
trends to remain soft in much of Africa (Nigeria, DRC). Overall, we expect beer volume growth of
+0.6% in the quarter and organic sales growth of +3.2%.
Spirits – solid trends
The US spirits industry remains in good health, although the distillers’ fortunes here are diverse.
Trends in Western Europe also appear robust and India should continue to be a good growth driver
(for now). Cognac shipments to Asia have improved this quarter. Trends in other emerging markets
may be more challenging (notably Brazil).
Company view
We expect ‘ok’ results at Carlsberg and ABInBev in the quarter, and expect good volume growth
at Heineken (weather boost). We expect solid growth at both Diageo and Pernod. We increase
our EPS estimates at Diageo by 10% following the recent GBP devaluation. We look for continued
good underlying momentum at Remy (although optically weakened by the exit from Champagne
distribution).