Thanks for the great article - it is indeed very helpful. One question though - and forgive me if it is a stupid one - how exactly can producers target their advertisement if they are not allowed to sell directly to consumers? As you have pointed out above, this applies to the US which is not the centre of the world, but could it be a limitation in other markets and specifically India/China/Africa? Thanks a lot in advance for your time.
Thank you! Not a stupid question at all! You can do advertising so that people are aware of your brand, but you can't link that advertising to a link to sell the product. So it's more like brand marketing! For example an ad on TV doesn't lead to a sale.
Great article. One question, out of curiosity, some of the competitive advantages mentioned seem to resonate more with alcoholic drinks (aging, origin, branding…). Do you know if they are somehow applicable to non-alcoholic drinks too? This seems not a minor issue, if true, when transitioning to a more non-alcoholic drinks product mix, the moat is degrading.
I think you might be overstating the social aspect, and understating the potential effect of glp-1 drugs.
In the US, the top 10% of the population averages more than 10 drinks a day. They are responsible for more than half of all alcohol consumed. These aren’t social drinkers. Growth comes from adding to this group, not selling slightly more premium tequila. The alcohol industry has a lot of tricks to disguise this fact.
This group is also sick and fat and diabetic, and therefore most effected by glp-1 drugs.
1. Understand what "drink" refers to. The most daily consumed alcohol is beer, which I agree that might be impacted by GLP-1.
2. The US is not the center of the world. It's the biggest alcohol market, but most spirits companies are very diversified and GLP-1 is not likely to enjoy a similar penetration in other countries like in the US where the obesity rate is off the charts.
I honestly think the impact of GLP-1 is being overstated if anything by the media and investors. Those drugs will not be taken forever and I don't think they will change society as much as people think.
Maybe, but the negative investor sentiment is there, seems more likely to first develop into a full rerating into single digit PE at the first stumble on earnings or revenue than otherwise, even if the fundamental case is nuanced.
Just finished reading this excellent work.
And just subscribed for 1 year of Best Anchor Stocks.
Full disclosure: the discount will be re-invested in some Lagavulin 16 y
Thanks a lot for the confidence and welcome!
Thanks for the great article - it is indeed very helpful. One question though - and forgive me if it is a stupid one - how exactly can producers target their advertisement if they are not allowed to sell directly to consumers? As you have pointed out above, this applies to the US which is not the centre of the world, but could it be a limitation in other markets and specifically India/China/Africa? Thanks a lot in advance for your time.
Thank you! Not a stupid question at all! You can do advertising so that people are aware of your brand, but you can't link that advertising to a link to sell the product. So it's more like brand marketing! For example an ad on TV doesn't lead to a sale.
Great work Leandro. Very interesting read.
Thank you my friend!
Great article. One question, out of curiosity, some of the competitive advantages mentioned seem to resonate more with alcoholic drinks (aging, origin, branding…). Do you know if they are somehow applicable to non-alcoholic drinks too? This seems not a minor issue, if true, when transitioning to a more non-alcoholic drinks product mix, the moat is degrading.
Possibly of interest: https://valuesque.com/2020/01/25/diageos-liquor-business-the-maturing-inventory-financial-analysis-problem/
I think you might be overstating the social aspect, and understating the potential effect of glp-1 drugs.
In the US, the top 10% of the population averages more than 10 drinks a day. They are responsible for more than half of all alcohol consumed. These aren’t social drinkers. Growth comes from adding to this group, not selling slightly more premium tequila. The alcohol industry has a lot of tricks to disguise this fact.
This group is also sick and fat and diabetic, and therefore most effected by glp-1 drugs.
Very important to...
1. Understand what "drink" refers to. The most daily consumed alcohol is beer, which I agree that might be impacted by GLP-1.
2. The US is not the center of the world. It's the biggest alcohol market, but most spirits companies are very diversified and GLP-1 is not likely to enjoy a similar penetration in other countries like in the US where the obesity rate is off the charts.
I honestly think the impact of GLP-1 is being overstated if anything by the media and investors. Those drugs will not be taken forever and I don't think they will change society as much as people think.
Maybe, but the negative investor sentiment is there, seems more likely to first develop into a full rerating into single digit PE at the first stumble on earnings or revenue than otherwise, even if the fundamental case is nuanced.