Specialist
Former VP at LVMH Moët Hennessy Louis Vuitton SE
Agenda
- US premium spirits market update – key dynamics including volume and value growth drivers and consumer behavioural trends
- Moët Hennessy USA's (PAR: MC) spirits portfolio and growth strategy, focusing on Hennessy
- US cognac competitive landscape – Bacardi, Beam Suntory, LVMH (PAR: MC), Pernod Ricard (PAR: RI) and Rémy Cointreau (PAR: RCO)
- Division mid-term growth and profitability outlook
Questions
1.
Could you discuss some of the longer-term structural trends you’re seeing within US premium spirits?
2.
You alluded to scarcity, but at the same time there’s the more in-home consumption. Traditionally, in-home consumption has been less premium than on-premise. How does that play into this acceleration of premiumisation of the spirits category?
3.
The commentary and the numbers would suggest the cognac category has benefited from this cocktail-at-home uplift during the pandemic. Would it be fair to say there that it’s recruited new consumers to the category as they experiment during lockdown? What might happen to these consumers when the on-trade, if it’s not already fully recovered, fully recovers? Do they stay with the category?
4.
You alluded to the heritage of cognac in the US which is obviously one of the fastest-growing spirit categories in the US. How different must the growth drivers be to other premium spirit categories, just to get a feel for what is it so specific about cognac?
5.
Coming back to the demographic and diversification point, what was the core category demographic, and how has that evolved or diversified over time? Where might there still be demographic opportunities, if they do in fact exist?
6.
Cognac’s producers have to manage their supply, and one way to do that is price. How receptive are US consumers to price increases, do you think, going forward? Are there any key price points with some of the lower classifications, where the temptation might be to look towards other brown spirits and move away from the cognac category if it gets priced too aggressively?
7.
Where do you think we are in the growth cycle with cognac? Are we still, relatively speaking, early days? Are you confident this isn’t a short-term trend or a bit of a fad? What might be some of the risks we could be overlooking to the future growth trajectory of the cognac category in the US?
8.
How was the Hennessy brand established in the US and how has it evolved to where we are today? It is perhaps a slightly different proposition to how it might be perceived in Europe or in China, for example.
9.
What does the Hennessy portfolio look like in the US today broadly across stratifications, and how has that portfolio mix evolved?
10.
We often hear about the premiumisation within a category or a brand portfolio, but you say the lowest classification, VS, is growing the fastest. Is that because it’s just new consumers coming into the category and they’re looking at it as a premium category as opposed to the premiumisation dynamic within the brand portfolio itself?
11.
Outside of these macro brown spirit tailwinds, how does Hennessy specifically, within its own control, think about the growth strategy, particularly with retaining consumers within the brand, the cognac category, and ultimately encouraging consumers to trade up the portfolio?
12.
You spoke about the Never Stop, Never Settle campaign diversifying the core demographic beyond the African American consumer. Today, roughly how big is the African American demographic consumer of Hennessy? How should we think of that breakdown of the demographic, so we can understand where things could shift going forward?
13.
How big is the opportunity for the Chinese American consumer, given the heritage that cognac has in China, which is arguably even stronger than what we’ve seen in the US?
14.
You mentioned Richard Hennessy, which is, if I’m understanding correctly, relatively new in terms of the portfolio. What are the prospects for it to play in that ultra-premium market, if ultra-premium is the right definition, which historically has been occupied by Louis XIII, and, alongside that, how big is this ultra-premium opportunity for cognac in the US?
15.
How might the consumer perceive Hennessy vs Rémy Martin? Do they have slightly different brand equities, images or perceptions for Martell? Presumably even within the cognac category, they’re considered to be or perceived slightly differently. How would you compare those differences?
16.
How should we think about D’usse as a relatively more recent emerging trademark in the cognac category in the US? Is that something you share? How wary might some of the other players be of D’usse as a competitive threat?
17.
How well-placed do you think Hennessy is to grow market share of the cognac category, or do you think it’s more about participating in the growth of the cognac category in the US? If it is not going to expand on its leadership position, where do you think that threat might come from within cognac?
18.
What are some of the synergies for the other brands in the portfolio? Obviously, Hennessy is probably the strategic focus, but what do the other brands bring to create value across the portfolio?
19.
How does Moët Hennessy compete with players such as Diageo or Pernod? I appreciate MH has got very appealing premium brands, but it obviously doesn’t operate at the same scale across the much broader portfolio. How does it compete, or is it a case that the price points are so attractive, the economics just work from a distribution perspective?
