Remember the “eyeballs” underpinning the dotcom craze? Investors are no strangers to innovative valuation metrics. Those in the beverage sector now have a new — and less egregious — one to look out for: enterprise value to “maturing liquids”.
With drinks companies trading at record lows compared with their stock of gently ageing cognacs, brandies, tequilas and champagnes, this is yet another indication that the sector may be oversold.
Purveyors of alcoholic beverages have clearly had a terrible time of late. Shares in Diageo, Campari, Pernod Ricard and Rémy Cointreau are down between 20 and 40 per cent in the past 12 months. There is no shortage of good reasons. Diageo’s stumble is in part home-grown, given its stocking troubles in Latin America. Rémy Cointreau and Pernod Ricard have been hit by fears that China might impose tariffs on brandy. Most worrisome of all for companies across the sector is the fact that the US — the world’s most lucrative alcohol market — has gone into reverse, with spirit volumes down 3.3 per cent in 2023.
- The Financial Times. To read the full story click here
