Pernod Ricard (RI) Investor update (Q&A) summary

Route to market and distribution changes

• Transitioned 11 states, including Texas, to new wholesalers, focusing on a 'fittest athlete by state' approach for optimal partnerships.

• Texas and four other major states now consolidated under Southern, enabling more streamlined operations and collaboration.

• Transition to Reyes for RTD distribution in seven markets, leveraging their beer distribution expertise.

• Financial and operational disruption from these changes has been minimal, with fill rates above 80% and seamless integration.

• New relationships with distributors for 'gem' brands to allow focused incubation and growth.

Brand and portfolio strategy

• Focus on Power Six brands, with over 70% of A&P resources allocated to them for maximum impact.

• Innovations like Malibu Pink and Malibu-Dole collaboration are driving momentum, especially for summer occasions.

• Skrewball addressed initial supply and promotional challenges, now seeing improved performance with new small-size formats.

• Jameson strategy includes targeted recruitment, new pack sizes, and premium innovations to capture under-indexed segments.

• Martell and Chivas follow a 'Targeted Elevate' strategy in select states, while Seagram's is managed for commercial execution only.

Pricing, profitability, and resource allocation

• Pricing environment is closely monitored weekly, with a focus on data-driven, state-specific decisions.

• A&P spend is held at 18% of net sales, with improved efficiency and concentration on fewer brands.

• AI-driven Matrix tool guides over 70% of marketing investment decisions, optimizing ROI.

• SG&A and organizational structure are regularly reviewed for agility and cost discipline.

• Smaller pack sizes, including 100ml cans, are profitable and supply chain is agile to support growth.