Pernod Ricard S A

Welcome, everyone, and good morning. So we're very pleased with Hélène to welcome you to our Q3 FY24 sales calls. Hélène, you're going to start with a few opening remarks, and then we're going to jump straight into Q&A. For the Q&A, I would remind you that we would like to take only two questions per caller, so that you all will have an opportunity to ask your questions.

Hélène, over to you. Thank you, Florence. Good morning. Good morning, all, and thanks for joining this Q3 sales call today. So I guess you've been reading the press release published on our website this morning. Today, we are reporting a robust performance for the first nine months. We've been improving momentum at Q3 with organic net sales stable. Organic net sales for the first nine months are at minus 2%. I'm pleased to highlight that volumes in Q3 are back in growth at circa plus 1%, which is a strong positive signal after four consecutive trimesters of decline. This includes, by the way, growth on our strategic international brand also at plus 1%. The strength of our diversified premium international portfolio and our broad geographical footprint, balanced across regions and between mature and emerging markets, enabled us to largely offset contractions, albeit for very different reasons, in the U.S. and in China. Our performance year-to-date is robust, as we have now exited post-COVID super cycle in most markets, with normalization now largely completed outside the U.S. So please allow me to first highlight some performance in some of our key markets, beginning with India, one of our most win markets, as you know. So as indicated at H1, we expected to see an acceleration in momentum, and that is what we report today, with India growth of plus 8% in Q3, leading to plus 5% year-to-date. So growth is strong, growth-based, and accelerating with a continual demand for spirits, with continued and sustainable trends towards premiumization, and an overall strong performance of our strategic international brands, like Jameson, Absolute, and Debenivet, but as well on our Indian whiskeys. Moving now to our second mystery market, global flower retail, which is also improving, with a strong growth for the portfolio, notably Jensen, Martel, and of course, Repertoire, sustained by an improving sell-out momentum. So Global Carrier Retail is growing 5% year-to-date and enjoyed a very strong Q3 at plus 39%, with this Q3 growth amplified by phasing, which is both a catch-up on H1, you remember we were highlighting negative phasing in H1, and selling ahead of Q4, So Q4 will be as well lapping the quite elevated comparison basis. We have as well enjoyed strong growth yesterday in a number of other markets, notably Japan, Germany, and Turkey, and an accelerating performance in Q3 in Spain, Brazil, and South Africa. Europe is proving particularly resilient at plus 1% today and plus 4% in Q3 through Russia. This is driven by strong growth in Germany, Poland, and as well broadly stable in markets like Spain and France. Asia and the rest of the world, excluding China, is particularly dynamic. Very strong growth in India and global travel retail, as I just mentioned, and in Japan and Taiwan. Africa and the Middle East continues to deliver a very good performance, notably Turkey, where the performance of Shibas, Valentines, but as well Omeka is outstanding. and in South Africa and Nigeria, in particular with Mattel and Jensen. So let's move now to U.S. and China, two of our most win markets that have contracted this year, all these for very different reasons, I must say. So the U.S. first. We have reported an Excel of minus 8%. Starting with our sell-out performance, the nine-month sell-out performance is rather stable, that is the H1 sell-out at circa minus 3%. Our ambition to accelerate sequentially is taking a bit longer in the current context, and this is because the market is experiencing very aggressive price promotions after the first OMG. We are addressing this through our agile and data-led revenue growth management, supported by our key digital program, Vista Revit, ensuring that we protect the long-term strong equity of our brands. We have as well accelerated our activations, notably on Jensen, which has enjoyed the highest marketing investment ever made by Panerical USA, the head of St. Patrick's Day, but has also shown activation on our newly applied brands, namely Jefferson, Codigo, and Trubo. The market continues to normalize, with the consumer demand remaining resilient, currently at CECA plus 1 to plus 2%, though below its normal long-term growth rate. So with regard to our net sales in the U.S., They continue to be impacted by ongoing inventory adjustments, as you know, mainly at retailer level in H1, and starting in H2 more so at the wholesaler level. We are closely monitoring inventory levels together with our wholesalers, and we expect inventory adjustments to continue over the coming months and into fiscal year 45. In China, where we enjoy a strong leadership position, our performance both to date and into free reflects the challenging macro-environment, which is negatively impacting consumer sentiments. This has led to a weak CNY, with some down-trading, although depletion volumes grew. The performance of Martin & Oblige is solid, and our premium brands Jensen, Absolute, Olmeca, and Beefeater are as well enjoying strong growth. Given Q4 is traditionally a small quarter, And in addition, we are facing innovative outcomes this year in Q4. Performance in China for the full year can be expected to be quite similar to the year-to-date performance. So looking at the full year for this year, 2024, and why the environment remains challenging, we are confident in delivering dynamic Q4 next year, improving that is nine months, and leading to next year's growth, broadly stable for the full year, as already mentioned in February for our H1 presentation. We have confidence in the positive momentum for Q4, as in most markets, we have exceeded the post-COVID super cycle, which provided a difficult comprehensive basis. Normalization is largely completed outside the U.S., and our return to volume growth in Q3 is an encouraging signal. We are lapping last year price increases, with those new prices now anchored in the marketplace and in the mind of the consumer. This accelerating momentum is visible already in Q3 in many markets, and I mentioned them a minute ago, and is expected to continue. Let me as well highlight the efforts on brand activation in our markets, supported by consistent A&P investments and leveraging our key digital programs for improving effectiveness. We expect to deliver organic operating margin expansion in 2024 as we continue to focus on real-world management and operational efficiencies with E&P at circa 16% of net sale and disciplined investment in structure. I use the opportunity of our quarterly sales updates to pre-size our organic profit from return on operation variance at circa plus 1%. We remain very confident in the attractiveness of the global premium international spirits market and in the long-term demographic and consumer trend tailwind that sustains demand. That concludes my opening comments. And now, Florence, I think we can open the line for questions.

Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Andrea Pistacchi with Bank of America.

Yes. Good morning, Hélène. Good morning, Florence. Two questions, please. The first one If I may, on your operating profit guidance, to deliver 1% for the full year, I think you need something like about 10% in the second half organic EBIT growth, which implies quite meaningful margin expansion. Now, you just touched on some of the factors, revenue growth management, obviously tight cost control. But considering also the headwinds that you have from the soft performance in the US and China, which are high margin business, could you maybe give a bit more color on the confidence you have in delivering this margin expansion and really what the drivers are? My second question, please, is on China. I was hoping that you could put a bit more color on the 12% decline in China, given also the easy comp that you were up against. Is this a reflection of soft underlying demand, which of course is soft, was a decline compounded by some distributed destocking after the Chinese New Year. And sort of connected to China, if I may, your premium international brands are growing strongly actually in China, Jameson, Absolute, etc. What do you think explains the very different performance versus Cognac? Is it the channels they're exposed to, the smaller base of these brands, or is there anything else? Thank you.

So, good morning, Andrea. I think you have probably almost 10 questions in your two, I would say, themes. But let me try to be efficient here. So, first question on the guidance and what it means for the distance to go. I'm sure you will understand. I'm not going to detail to you what could be the P&L in Q4 to achieve the guidance. What matters is what has been the strength of the performance so far and the visibility it can have given and our ability then to precise the guidance for the full year. So, first I will start with the first line of the PML and then I will stop. Obviously, to deliver our guidance, we will have some acceleration from the top line in this Q4, which I guess I will have the opportunity to come back to, but which is the continuation of strong acceleration, which is already happening in quite a few markets that I listed in my opening remarks. For instance, just to name India with a strong acceleration expected in Q4 after a strong nine-month performance. But it's not only going to be India stories. There are many other markets. in a good top-line trajectory as we speak. We're going to face more favorable comp as well, because if you remember, last year in H2, our volume started to be impacted by the full implementation of price increase, and now this is already well anchored into the market, and so we are cycling to an extent more favorable comp. For the rest of the P&L, I mean, We've been, as you know, protecting value, protecting gross margin quite consistently in the recent past. So you could expect that to materialize for the full year. And this is thanks to optimization strategy, to the sizable price increase that we put in place and to carry over this year's last year price increases. Many operational efficiencies that we are helping to support limit the impact on the cost of the inflationary pressure coming from different drivers. AMP, there's always some fading from one quarter to the other. What matters is that we have and we continue to have strong ambition in terms of brand activation. And when it comes to discipline in the structure cost, obviously, this is something which is as well going to support the bottom line delivery for the year. So moving to China. So maybe let me use that question to say that I guess there could have been some different assessments of the comp in Q3 or Q4 in China. It's not always very easy to read. First comment, I think, and we were clarifying that, I suppose, in the Per recall, there is no timing impact of later CNY in Q3, because there was already sales happening in December. So this, in a way, to some extent, is not supporting growth in Q3 numbers. Then, if you think about what was last year's situation in China, Q3 was made of very different things. Beginning of Q3, meaning January to mid-February, as you remember, this was the peak of COVID contamination, so very low performance and consumer demand everywhere. But then the quite dynamic post-CNRI and post-COVID, I would say, rebound, especially when it comes to wedding and banquets that supported urban incomes. plus the recovery of the on-trade, and we are fighting that this year in Q3. So I would suggest that what matters is what is the situation in China for the year, and probably occurring in nine months, and what to expect in Q4 rather than focusing on quarter, because anyway, as we were expecting, the consumer demand is impacted by the weak demand, macroeconomic environments. We were cycling quite high mass, and that's the main driver of the H1 performance. This time we are cycling a lower CNY for sure, but as I just said, quite a dynamic post-CNY last year, which is not happening to be very clear. So CNY this year is weak. it was expected, and it's not better than our expectation. And post-CNY, it's soft. So your last question, I think, was related to trade inventory in China. So as you know, we're not commenting trade inventory on a quarterly basis. But to be fair, we were expecting, as I just said, quite soft CNY. So the... The trade inventory right now, I would say, are okay. And what matters is that, as usual, we're going to focus on landing the year with a healthy level of trade inventory. So when you think about the distance to go in China, Q4 is always a kind of low quarter. As I was mentioning in my opening remarks, we expect the full year to be quite similar to the day-to-day performances. And yes, I think it was the final question on the premium brands versus cognac, because that's something which is growing quite strongly in China. Premium brands, meaning Absolute, as well as Jensen, and the Omega brand is performing well. So it's true that it's quite different in terms of moments of consumption. We are recruiting new consumers, new generation with those brands that are as well more affordable. quite dynamic channels, like, for instance, Western-style bars, lighthouses, and so on, and obviously, as well, much less exposed to festive seasons. So, great performance of those premium brands. By the way, this is something that, as you know, we identified as a strong opportunity already a few years back. We had a specific team supporting the addition of those brands that have been built already more than five years ago and which is doing a great job.

Great, thank you.

The next question is from Simon Hales with Citi.

Thank you. Morning, Helen. Morning, Florence. So two for me then. Florence, can I start off just on the US? I wonder if you could just give a little bit more colour around the inventory adjustments you've seen in Q3? And I think you said in your remarks, you expect that to continue into Q4 and possibly fiscal 25 as well. Is that right? And how do I think about the scale of ongoing wholesale inventory adjustments as we move through Q4 and beyond? So that was the first question. And then maybe coming back to, secondly, the guidance overall for the full year in terms of top line, clearly you're still going to broadly flat organic sales growth, I think that probably means you need to do mid to high single-digit group sales growth in Q4. If I take what you've said on China trends continuing for the full year at a similar rate we've seen for the nine months or around down 10%, shall we say, probably still a double-digit decline in the US, that's probably a third of your markets that are still declining double digits in Q4. And that means the rest of the business probably needs to be growing mid-teens plus to get you to flat for the year. I'm just trying to reconcile that given you've still got the drag of Russia in Q4, you've got tough comps in Europe. What markets are really going to massively accelerate in the fourth quarter to get you to that flat full year organic sales growth delivery?

Okay, thank you. I was about to say I'm going to try to answer faster, but your questions are quite long as well, but very relevant, of course. So let me try to answer them. I started the first one, which is about the U.S. inventory. So obviously a hot topic. We were expecting inventory adjustment to continue in H2. This was already quite sizable in H1, mainly at retail level. For all the reasons you know, but that I can remind you, which is first, the good news is that there is no more supply chain ventures. So I would say no need to build a higher level of inventory to face whatever supply chain disruption that we had in the past. And second, which is obviously a key driver of inventory adjustment, the high interest rate environment. I'm sure it will not be a surprise for you to know that we are probably now in a higher for longer interest rate environment compared to where we were a few weeks ago, so this is as well, I would say, supporting our expectations for inventory adjustment to keep happening. We are focusing strongly on the inventory levels, obviously. We are working quite closely with our wholesalers and distributors to adjust the inventory level to the new reality of the market that I just described. When you look at our numbers in these nine months, just mentioning, for instance, the gap between the net sales and the sell-out, which is roughly five points for our portfolio, This is obviously largely linked to trade inventory reductions, even if there's probably as well some phasing from one month to the other, especially because of some technicalities in March. So trade inventory adjustments are occurring at wholesalers and retailer level. Again, retailer level notably in H1. And we expect the conditions that are leading to those inventory management, including as well wholesalers, to persist, as I just said, meaning cost to carry and reduce supply chain risk. So that's why I was mentioning in my opening remarks that you should expect inventory adjustments at wholesaler level to increase. to materialize in H2 and as well in the 2015. Second question, yes, guidance, distance to go, especially on top line. So this was a very detailed question. I think I covered already China. When it comes to comparable basis, I think you mentioned Toscon in Q4 in Europe or in other geographies. Globally, and without giving you a guidance on every market, we are cycling favorable content in Q4, obviously not in China. But in many other markets, this is becoming to be more favorable because of the volume slowdown last year that was materializing post-price increase implementation. And it's not only technicalities. As I said, the nine-month performance is made of quite a different trajectory in many markets that are growing with acceleration in Q3. And by the way, the growing growth in Q3 is not anecdotal. I think it's a very good week to expect in the coming weeks. So, as I mentioned already, India is accelerating in nine months. We expect a strong Q4 in India. Global travel retail is improving with a very strong Q3, so there will be some adjustment in Q4, but that will change the trajectory, which is a good momentum improving in travel retail. Again, if you want me, I'm happy to list all the markets that are performing strongly, and that will continue to perform strongly in Q4, for instance, Africa and the East, but as well, Asia, including China, Central and Eastern Europe, and as well, improvement in some Latin markets like Brazil. So, and maybe the last market I didn't cover is the U.S., but I did it in a way with your first question. But please keep in mind as well that the comp, which could look high because of the growth last year in Q4, was a growth, but there is quite low Q4 in fiscal year 2022, which, as you know, was quite disrupted by supply chain tensions, so a very different picture from Q3 to Q4 in fiscal year 2022. So confidence in our ability to deliver that performance for the full year. which I believe makes a lot of sense when you look at our performance in the nine months.

Brilliant. Very helpful, Helen. Thank you.

The next question is from Sanjit Ujula with UBS.

Hi, Helen, Florence. A couple from me, please. I was wondering if you could just elaborate a little bit more on your prepared comments around the pricing and promotional environment in the U.S., Can you just talk a little bit more about which categories and price points you're seeing that more aggressive activity? And just give us a little bit more context on how you're adapting to that. So that's my first question. My second question is on India. You called out growth acceleration in Q3, upbeat expectations into Q4. Can you just clarify that you're now lapping the loss of the daily license and perhaps give us an update on where you are with that situation as well? Thank you.

Yes, thank you. So pricing promotion in the U.S., so that's true that this is something which has increased in the recent weeks after what was a soft O&D that we were already – highlighting in our H1 numbers. As you know, we've been quite, I would say, bold in our first increase that we took in the recent past everywhere, but as well in the U.S. We have, as well, improved quite significantly in terms of our ability to implement very efficient promotion, and we are tracking that with our key digital programs. But the context is a bit more aggressive than it was at the end of the year. So we are adjusting our promotional intensity to make sure that our brands are well positioned to attract, obviously, consumer choices. So we do that with, I would say, agility, of course, but as well, discipline and effectiveness, thanks to our or key digital programs. So what you can expect from our brands in the coming weeks is, first and foremost, strong activation, both in terms of, I would say, marketing investments, but as well, work-to-work management initiatives. Second question on India. So let me clarify. India acceleration, It's really the translation of very strong fundamentals in that market where we've been, as you know, performing quite strongly for more than 20 years. We have a very strong portfolio, both in terms of Indian whiskey brands and international spirits that are both performing quite strongly. And this is why we are confident in our ability to accelerate as well in Q4 in that market. And the market impact of daily is not anymore in our comparable basis, starting in Q2 this fiscal year. So no more as well, obviously, in Q4.

Thank you. Thank you.

The next question is from Sarah Simon with Morgan Stanley.

Yes, I just had a question on marketing. You've obviously said you're going to maintain ANP at 16% for this year. Given you've lost share in the US and it's still a large market, even if less important for you than some others, and just thinking more broadly, do you still think you can hold ANP at 16% for fiscal 25 and beyond, or do you see any need to actually increase spending? Thanks.

Thank you. So first, let me clarify, 16% is an average number at group level, just to help you guys having some visibility on what to expect in terms of investment, and as well, obviously, which for us is very critical to demonstrate that we have strong ambitions to build very strong equity across the world. to obviously, say, support great ambition in the future. So 16%, again, it's at book level. It's higher in the U.S. If you remember, we're close to 20% in H1 in the U.S., which materializes strong acceleration of activation in that market, which, as you just said, obviously, is the market for us, number one market for the sector and number one market as well So, you can expect the acceleration of activation in the U.S. to continue in the coming weeks, in the coming months. So, without taking too much risk, I think that's a statement that will be identified. So, maybe just to say, to elaborate on that, we are very dynamically allocating our resources across the realm, meaning the strong focus and prioritization of the U.S. market, not only, but of the U.S. market. And we are, as well, obviously, seizing any opportunity, depending on the current dynamics of the market, to reallocate our money behind the right strategic priorities. So it's not a static picture with which we start the year and then we stick to the initial plan. We are adjusting that continuously, especially in an environment which is as volatile as it is right now.

Okay, thanks. Thank you.

The next question is from Edward Mundy with Jefferies.

Morning, Hélène. Morning for us. I appreciate it's probably a little bit too soon to be talking about fiscal 25, but just coming back to some of the commentary from the H1 participants, about potentially being within the range of that framework of 4% to 7% range. What do you think are the building blocks to get there? Perhaps the Russia headwind fading off, maybe some of the destocking coming to an end. How do you think about getting towards that range and really building on that inflectional thing in the third quarter into fiscal 25? That's the first question. And then second of all, I mean, historically, you've delivered margin expansion at 50 to 60 basis points when you're delivering within that range of 4 to 7. Yet this year, you're still getting some margin expansion despite more like flattish revenue growth. Do you think into fiscal 25, you need to be within that 4 to 7 range to deliver margin expansion? Or do you think if you were slightly below that range, you'd still be able to get margin expansion as you've done within fiscal 24?

Okay, good morning, Ed. I'm a bit embarrassed because it's very difficult for me not to tell you. Sorry, but I can't answer any of those questions. So let me try to help. But first, and I'm sure you're not surprised, we're not going to guide on PCR25. This is a Q3 call for PCR24, and we have a chance to talk to you guys soon enough to give you as well more visibility on what to expect in PCR25. So I'm sure you will understand But your question, which are basically, I would suggest, more around mid-term framework trajectory, both in terms of top-line and operating leverage, is something that I'm sure you notice we are reiterating again today. We did that already in the H1 communication, which means that we believe that, I would say, the the dynamism of the sector, but on top of that, the relevance of our strategy and the consistency in the execution of that strategy everywhere is giving us strong confidence in our ability to deliver the mid-term framework, which is, as you said, top-line between 4 and 7, aiming at the upper end of the range with some operating leverage of 50 to 60 bits So this is a mid-term trajectory. It's not time to guide for fiscal year 2025, but as you were rightly highlighting, I think that when you look at our performance in the recent past, post-COVID with a super cycle but very high inflation and now in this normalization environment, it's giving us confidence in the ability to deliver that mid-term framework in the near future.

Thank you. And as it's difficult for you to answer the first one, perhaps I could ask a different first question. Just around global travel retail, which is very strong in the third quarter, to what extent can that continue into the fourth quarter?

So, yeah, travel retail. I'm sorry, the sound is very bad, but I hope that I got the question right. The question is on Q4 in travel retail, right?

Yeah, it was very strong in the third quarter. Does that continue into the fourth quarter? Yeah.

Yes, it does. Okay. So there will be some... I would say moderation because obviously Q3 is super strong. And again, there was in Q3 some catch-up of negative phasing in H1 and probably some positive phasing that happened in Q3 that could have been Q4 sales. But as you know, in travel retail, this is largely depending on the timing of the orders coming from our customers. So that would mean that there would be some... negative impact in Q4 of this positive phasing in Q3, but what matters, because I don't think we should spend too much time on what's happening from one quarter to the other, is that the performance in travel retail is improving. By the way, when we look at the consumer demand momentum, it is improving, even if, obviously, this is only a slow but gradual recovery of Chinese travelers. so far, but as you know, we are already back to pre-COVID in all the other geographies at the end of last fiscal year. Key market for us, our brands are very well exposed to that channel. This is quite a dynamic one, a very profitable one, and a sweet market, so we have strong ambition for clever retail in the near future, but there will be some negative phasing in Q4.

Thank you.

The next question is from Trevor Sterling with Bernstein.

Good morning, Hélène and Florence. Two questions from my side, Hélène. One is, you very kindly gave us the split between shipments, depletions, and sellouts for the nine months in the U.S. Could you just confirm what that was in Q3? And secondly, perhaps more importantly, is coming back to the sellout trends in the U.S., do you see any inflection at all in either the market sellout or your own sellout trends in the U.S.? ? as you got to the end of Q3 and so far in April.

Yes, thank you. So I'm not going to give you the zoom on Q3 numbers for sell-in, sell-out, and duplication in the U.S. I hope you understand. I think we are already very transparent on those numbers. But what I would like to highlight is that First, there is some impact in the month of March. Everyone has noticed this difference of delivery days between March this year and March next year. I don't think we should spend too much time on that because anyway, there will be the positive impact in April. But to the fundamentals of the market, as I was alluding to, this more aggressive promotion context, is not helping to materialize the improvement in the sell-out performance that we are aiming at for our brands. This is obviously the ambition, and we are working hard to make it happen, not only from a firepower point of view, as I was mentioning, with a stronger NP activation, but as well in terms of focus of the execution of our strategy that is Conor McQuaid, our new CEO in North America, had the opportunity to elaborate only a few weeks ago. So a focus on execution, more activation, newly acquired brands that are now going to contribute to our organic performance as we speak. So there's a lot happening now. in the U.S. that are strengthening our confidence in our ability to improve the performance of our brands in the near future. So I think that was the only question.

Yeah, and we're going to take two more callers. The next question is from Lawrence Watt with Barclays.

Morning, Alain and Florence. Thanks very much. Good morning. A couple of questions from me, please, both on China. Just wanted to understand how dynamic you can be with your O2V purchases. Just sort of in a scenario, I think you continue to believe that China is going to deliver closer double-digit growth for the next 15 years. At least that's what Alex said on the first half conference call. In the event that that didn't happen, and we sort of saw a continuation of this weakness for slightly longer, or perhaps tariffs were to come in that could potentially impact the market. How dynamic can you be with your O2V purchases? Of course, I would assume that you need to make decisions on brands like Neblige, Cordon Bleu, XO, these sorts of things, many years out, in order to be able to produce the product. In the event that China was slower, does that cause an issue for your purchasing of ODB and those contracts long-term, can you get out of them any earlier? And then secondly, of course, we've all seen the news of flooding in Guangdong over the past week or so. Have you seen any direct impact of that on any of your operations or any consumer confidence in that area? Thank you very much.

Okay. Thank you. So first, I think obviously it's not a good year in China. That's a and that's the reason that we want to understand, which is that there is a weak consumer confidence that is directly linked to the weak macroeconomic environment. So the performance of Martel in that context is, I would suggest, quite understandable. especially because, as you know, this is a brand which is very strongly exposed to fetishism. And this is, by the way, something that we are very proud of because this is linked to the very strong position of Martel in a very, I would say, dynamic and exciting category, which is cognac in China. So for us, when it comes to ODB strategy, the only thing I'm happy to share with you is that, and I'm sure you know that, this is for us a very strong competitive advantage, having been able to build a strong inventory thanks to a very strong relationship with our partners in Cognac. This is a key barrier to entry and a competitive advantage for the coming years to support the strong ambition of Martel, again, which is in a very strong leadership position in China. I would suggest to stop there. By the way, this is a Q3 call, so I'm not sure I have the time to elaborate if that can be a supply strategy. But again, Martel is a great brand, and the supply we have behind Martel is for us a key competitive advantage.

And we take the last question.

The next question is from Jeremy Filker with HSBC.

Hi, good morning. Thanks for squeezing me in. So just a couple of questions from me. So the first one is quite a difficult question of pantry or cocktail cabinet inventories in the U.S. I know it's something where anecdotally we hear about it, but I wanted to know whether you've been able to do any more detailed work as to whether consumers are still sitting on kind of excess spirit inventories at home and whether you have a particular view on this topic and the extent to which it is holding the market back. And then the second question is on the price mix element of your growth and how you see that evolving. Obviously that was slightly negative in Q3. You'll be lapping more price rises in Q4. And just when one looks at the mix components of your business in terms of China being weak, travel retail will be strong but not as strong as Q3. How would you see the price mix element of your growth evolving and whether you think that's likely to stay negative over the balance of the year and potentially into 2025? Thanks.

Okay, so I'll start with your second question. And first, again, sorry, I'm not going to comment on what could be price mix for QC25. So the negative mix that we have right now in our numbers is, I believe, exactly what you were mentioning in terms of key drivers, which is market mix. Obviously, China and the U.S. are very profitable markets. So when those markets are under contraction and when India is growing strongly, this has a negative impact when it comes to mix. Even if we are, again, very happy to see India growing, which is a key market for us. When it comes to your first question about U.S. consumers and what about stock at home, Obviously, we don't have a full visibility on that. But I guess the pantry loads you were referring to were already, if I'm not wrong, four years ago. So there's some limits to what people are stocking at home. So I would suggest that that probably means that there's no impact to expect on that front in the near future, because it's probably...

Thank you very much. Thank you so much. Bye-bye.