Specialist
Senior Executive at Rémy Cointreau SA
Agenda
- Demand and supply impacts of the coronavirus pandemic and early stage on-premise recovery
- Competitive landscape – Pernod Ricard (PAR: RI), LVMH (MC: PAR), Diageo (LON: DGE) and Beam Suntory
- 2020 industry outlook
- Mid-term industry growth review and profitability outlook
Questions
1.
Could you outline China’s western-style spirit market, including overall size, share of the total spirits market and category splits, and highlighting how Cognac and whisky fits?
2.
How would you break down the Cognac market share across the four key players?
3.
Do you have any commentary on the classifications of Cognac? I understand Cognac in China is more premium skewed towards XO compared to other major markets such as the US.
4.
Could you summarise the historical context of Cognac in China and whether it has been premiumising, particularly noting the clamp-down on excess in 2012?
5.
Is Cognac typically consumed during dining occasions or more in the KTV karaoke channel? How important is Chinese New Year to consumption trends and annual sales volumes?
6.
Could you assess the Scotch market dynamics across key players and the split between blended and single malts?
7.
Could you describe the typical consumer profiles for Scotch and Cognac? How much overlap is there between these consumers?
8.
What would you identify as the key growth drivers for Cognac and Scotch over the last couple of years? Who has been gaining or losing market share?
9.
What happened to consumer demand patterns when the coronavirus crisis impacted early in 2020, and what footfall recovery have you observed now that the on-trade is beginning to open up?
10.
Is the profitability for suppliers significantly different between the on- and off-trade?
11.
You mentioned some bankruptcies in the on-trade. What about the distribution channel? China has a very complex, multi-tiered distribution channel, presumably with a lot of inventory sitting there. Has there been any disruption?
12.
There seems to have been an acceleration in e-commerce for Cognac and whisky – you said it was 6% of the market before the coronavirus, and you expect it to be at 20% by the end of 2020. Does that indicate there has been a significant uptick from that 6% in the last 2-3 months?
13.
Are the accelerated e-commerce sales via third parties such as JD.com and Tmall, or is there also some D2C from the suppliers?
14.
How does the profitability for e-commerce compare to on-trade and off-trade?
15.
What are your expectations for supplier margins in 2020, given the shift from on-trade into the higher- margin e-commerce and off-trade, balanced against a significant increase in cost of doing business in the on- trade?
16.
Do you expect the coronavirus will drive structural changes for the industry into 2021, particularly Cognac and Scotch?
17.
Do you think there will be more in-home consumption, or are Cognac and Scotch so embedded in social gatherings in China that it will be more volume loss rather than switch?
18.
It sounds as if Cognac suppliers might have to adjust or adapt their strategies to more affordable price points and classifications. Do you think that will pose supply issues, given that most players in China have been driving a strong premiumisation strategy?
19.
Do you think the underlying growth drivers which have driven the category for the past five years will be fairly similar over the next five years?
20.
Do you foresee any other regulatory risks?
