Food&BeverageJanuary2017

Food & Beverages
January 2017
New challenges in Consumption according
to Mc Kinsey, Bain & Co and BCG

Vincent BARON – vbaron@oddo.fr – 01.44.51.81.27
Léopold AUTHIE – lauthie@oddo.fr – 01.44.51.81.37
Laurence Hofmann – lhofmann@oddo.fr – 01.44.51.86.82
Food & Beverage
Consumption viewed by Strategy Consultancy Firms
2
• According to Bloomberg, we were the 37th analyst covering Nestlé …
• Instead of creating information, we have exited the world of finance to examine
instead the available publications of the major strategy consultancy firms, i.e.
McKinsey, Bain & Co and the Boston Consulting Group (BCG).
• These firms seek via their publications to win over these Food & beverage CEOs in
order to accompany them in their reflections,strategic priorities for their companies.
McKinsey:
• “Urban World, The global consumers to watch” (April 2016).
Bain & Co:
• “How Brands Can Prepare for European Retailing’s Tectonic Shifts” (May 2016),
• “China’s E-commerce: The New Branding Game” (December 2015),
• “Winning Over Shoppers in China’s New Normal” (July 2015), partnership with Kantar WorldPanel.
Boston Consulting Group:
• "The Winner-Take-All Digital world for CPG", (March 2016),
• “How Healthy Foods are Nourishing Growth in the CPG Industry” (April 2016),
• “The New China Playbook” (December 2015). The latter was conducted in partnership with AliResearch,
the “think tank” affiliated with the Chinese internet giant Alibaba.

Food & Beverage
Major Consumption Trends
3
• Demographic is no longer the engine of growth for consumption.
 Decline in growth rate from +1.4% (pop. CAGR of the last fifty years) to +0.4% for the next 50 years.
 Knowing each client, the challenge to track and capture per capita consumption growth.

Food & Beverage
4
• A more effective distribution of wealth, key to growth of consumption
 Just 10% of all additional income will be spent by the households in the top quintile (the richest 20%).
 This ratio stands at 60% for 50% of the lowest-income households.
 Wealth distribution has deteriorated in recent years notably in the US and the UK. (cf. Branko Milanovic
« Global Inequality: A new Approach for the Age of Globalization » avril 2016)

Food & Beverage
5
• The local economy, vital for a more effective distribution of wealth
 Young generations (notably Millennials) sensitive to these arbitrage in favour of the local brands.
 Young generations experiencing tougher times than their parents (baby-boomers).
 Social networks excellent for federating consumers in favour of local brands (horizontal marketing)

Food & Beverage
Mc Kinsey and the 3 Groups which Count
6
• Generations carry greater weight than country residence
 Mc Kinsey proposes analysing consumption growth via nine groups of individuals whose consumption
behaviour will be homogeneous from 2015 to 2030.
 Country of residence not the discriminating criterion, generation is key.
 « Pensioners in mature markets» (19%) and Chinese "working-age » Chineses (18%) main drivers.
 Lacklustre consumption amongst US working-age consumers (10%).

Food & Beverage
Mc Kinsey & the « Golden Pensioners »
7
• The gold of pensioners in mature economies, a growing currency
 58% US pensioners, 26% European and 16% Northeast Asia (Japan, South Korea).
 Demography main growth driver, +2% per year (arrival of Baby-boomers on retirement).
 Main expenditure: tourism, leisure (cruises, etc.) and healthcare spending.
 Although, 13% of their annual budget on food, 47% of growth in the US food sector.

Food & Beverage
Mc Kinsey & the China’s « working-age » Consumers
8
• Spending sprees by China’s working-age consumers
 Main growth engine: the doubling of individual consumption, i.e. CAGR +5.4% pa. over 2015-2030.
 E-commerce, pleasure products, "cheaper & better", priorities of Chinese "working-age consumers"
 Food main post, 21% of budget.
 Rise of « solitary » consumers. Search for quality, brands and new products.

Food & Beverage
Mc Kinsey & US « working-age » Consumers
9
• Lacklustre consumption amongst working-age consumers in the US
 Poor demography (+0.4%/year) et weak consumption per capita (+1.4%/an)
 Share of global consumption currently 21%, set to fall to 16% in 2030.

Food & Beverage
Mc Kinsey & US « working-age » Consumers
10
• « Value for money » and « confidence » main drivers
 Budgets under significant pressure
 Income of Millennial 9% lower than Generation X when they were this age around 15 years ago.
 Student debt: $100bn in 2000 up to $1,395bn (Student Loan Debt Clock), default rate close to 10%.
 Income disparity: median income of 20% richest young US households 8x higher. In 2000, only 4x.

Food & Beverage
Mc Kinsey and the 3 Groups which Count
11
• Other groups similar to « golden pensioners » and « Chinese working-class »
 « China 60-plus »: significant +6% pa. (2015-2030). Traditional and basic products. Internet less crucial.
 « Working-age »: other regions in Asia and Latin America similar to Chinese.
 « Working-age » in Europe, limited growth of around 1% over the period, similar to US working-age.

Food & Beverage
Bain & Co’s Hesitations
12
• In China, the ramp-up of local brands
 Strong rise of the E-commerce (10-25%e in Food for 2020, 50% in Beauty & Personnal care)
 Growth of local brands (including pure internet players)

Food & Beverage
Final Blow from Boston Consulting Group
13
• 50% of US consumption market growth
expected to be generated via the Internet
 Major brands have little control over the first
pages of online players.
 54% of US households (41 millions) are Amazon
Prime subscribers.
 60% of traffic comes from mobiles and 80% of
sales are first page results.
• Chinese working-age consumers -
internet is the priority
 The 18-35 year-olds set to drive this growth.
 E-commerce beats traditional brick-and mortar
stores hands down.
 More brands in China (strong growth of local
brands) and fewer brands in Europe.

Oddo Food & Beverage
Coverage : Food
14
• Best pick in Food, Nestlé: Fundamentals rather challenging (cf. note published
summer 2016) but arrival of the new CEO (January 2017), a catalyst for some
market excitement:
 Disposals of some activities
 L’Oreal stake disposal (20bn€ at least): cash return, share buy-back ?
• Cautious on Danone, “Bear Case scenario” (€55) more and more likely.
FOOD

Food & Beverage
Nestlé
15
Nestlé - Buy
Target price 85CHF
 EPS growth relaunch will not come from Volume, neither Price
 Consolidate situation on pensioners in mature markets (US) and conquer
Chinese working class mainly through e-commerce.
 Disposals of some activities (Confectionery, Prepared dishes)
 Challenging acquisitions of high margin activities (Cosmetics, Nutrition)

Nestlé
« Art of Riding a Bicycle »
16
• Nestlé's portfolio examined applying the McKinsey growth group criteria
 Healthcare and wellbeing for the retired populations of mature economies.
 Pleasure and “Internet friendly" for Chinese working-age consumers.
 Millennial-friendly products for US workers who are multicultural, selective and poorer than their elders.

Nestlé
BUY, Target Price at 85CHF
17
• 85 CHF target priced based on a DCF
 WACC 6.5%, Perpetual Growth +1.5%
 Preferred over Danone (Neutral, TP 63 EUR)

Food & Beverage
Danone
18
DANONE - Neutral
Target price 58EUR
(Bear case at 55EUR)
 Bear case (€55) appears more and more likely
 Difficult relaunch of dairy in Europe
 Value destructive acquisition of WhiteWave (peak of growth,
not E-commerce friendly)
 Marging squeeze due high milk price (price at farm gate)

Danone – NEUTRAL – TP 58€
19
• Acquisition of WhiteWave: better news for the planet than for shareholders
 Growth and healthy eating… but Value destruction and challenges
 Danone’s WACC is around 7%. The ROIC on the acquisition is estimated at 2.5% in 2016e and
potentially 5.4% with synergies in 2020s
 WhiteWave synergies 5x higher than for Numico in 2007 for costs, 60% instead of 12% of 2015 EBIT
 Price paid 21x Ebitda … vs. the conclusion of the recent analysis of Bain Capital
(http://www.forbes.com/sites/danielfisher/2016/08/29/young-hedge-fund-manager-cracks-the-private-equity-code-small-stocks-and-
leverage/print/)
“The difference between success and failure usually came down to purchase price.
The dividing line seemed to be seven times cash flow. When PE firms paid more
than seven times earnings before interest, taxes, depreciation and amortization
for a company, their chance of success plummeted, regardless of how much
managerial magic they threw at it.”
Source: Forbes – August 2016 – Bain Capital & Dan Rasmussen

20

21

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Danone – Bear Case Scenario
Margin Squeeze: Powder Milk
23
• Already some Pressure for Early Life Nutrition (22% of sales, 38% of Ebit):
 +60% price increase on milk powder due to new imports from China
 Price increase limited due to strong competition in Chinese market
 Early Life Nutrition: Most contributive activity (22% Ebit Margin, vs. 13.6% for the Group)
 Challenges to come:
o Indirect sales close to 0% - end of baby food “carry-trade”
o Shipping cost for Danone to compensate for “Direct sales”
+60%
since July
2016

Margin Squeeze: Liquid Milk
24
• Liquid milk price rebound expected in 2017 with:
• Could be back above 300€ ton, i.e. 20-30%
• Deflationary situation maintained in Europe, thanks to pressure from distributors
• Competition pressure in the US market (Chobani, General Mils)
Milk in Europe Milk in US

Margin Squeeze: Milk impact
25
• 20% milk price increase equal -200bp on Ebit margin
• Milk (liquid & powder) is about 40% of raw materials
• Raw materials about 30% of sales, i.e Milk about 10-12% of sales !
• 2016 Ebit margin gain profile already reflecting “milk powder” price increase
• H1 16 margin gain was at +90bp of which +45bp from “one-off”
• H2 16 margin gain is expected at just +10bp, maybe due to powder milk price increase
• Full year guidance maintained between 50-60bp
• Real threat on MARGIN EXPANSION for 2017
• For 2017 we expect +20bp Ebit margin gain, about “flat positive” for consensus
• Ebit margin expected for 13.6%e for 2016, 13.8%e for 2017
• -100bp for 2017, back below 13% as in 2014 (a decline of -7%)
Danone Ebit margin

Margin Squeeze: Valuation
26
• Bear Scenario at €60 at best: back to average historical PE, close to 19x
• Retailers won’t accept any price increase from Danone
• Danone kept most of margin gains due to raw materials over the last 3 years.
• US competition, currently some price promotion from Chobani, General Mills
• In Europe, National brands perceived as « Price benchmark » for retailers.

Food & Beverage
Beverage
27
• Pernod Ricard – REDUCE – TP89€
 Downgraded on the FY results (September, 1st)
 Generous valuation for modest and uncertain growth
 India “cash crunch” may hurt Q2 sales growth & H1 results
• Rémy Cointreau – BUY – TP86€
 A good entry point to play China
 Return to growth in China, more profitable than
anticipated (Internet)
 Solid in US (mature customers) and free call on Travel
Retail
• Diageo – BUY – TP2,400p
 2015/16 results in line. Better EBIT growth of 3.5% lfl.
 The good momentum in the US is set to continue in 2016/17
 Ready to win market share over Pernod in India
 We prefer Diageo portfolio to Pernod’s (cf. our study
“Premiumisation is dead, long live Millennialisation”
• Marie Brizard (small cap) – NEUTRAL – TP 15€
 Disappointing Q2 2016 sales and very limited visibility on
2016 EBITDA
• Best Pick in our Beverage coverage is Remy Cointreau.
• Pernod and Diageo might suffer in the short term of US uncertainties and “cash
crunch” in India (about 10% of each Group sales). We prefer Diageo over Pernod
BEVERAGE

Pernod Ricard – Cash Crunch Impact (1/2)
28
“Cash crunch” in India exists since November 8th.
• Prime Minister decided 500 and 1,000 rupee notes will be discontinuing, i.e. about 80% of total
cash in circulation
• Main reason for that: crack down of corruption and fiscal evasion
• New notes of 500 and 2,000 have been issued BUT very hard for most people to have access to
these new notes
• Keep in mind that just 3% of Indians are paying income tax (cash is used to avoid tax) and just 2%
have credit cards
• According to last press reports some companies has to cut their production of -15-20% in regards
of -20% for sales for fast-moving consumer goods (FMCG)
• Alcohol is certainly not the first priority purchase for many Indian families, thus sales decline might
be significant in November
Impact of India sales for Pernod
• Quick calculation on India for Q2 (calendar Q4): + 8% (October), -15% (November) and + 8%
December, i.e. about 0% for Q2 ...
• Certain that the Q2 will be below the Q1 which was at + 8%. 5% best case and 0% "central case" all
depends on catching up in December. Probably poor catch up on December for alcohol
• 0% in India (11% CA Group) on Q2 instead of + 8% (same Q1) had an -0.8% organic growth impact
on Q2, ie + 0.8% for the all Group instead of + 1.8% previously
• Q2 Asia zone would be at -2% instead of 0%, still penalized by China around -5%
• Over the full year, this bad Q2 could have an impact of -0.2% on the Group, i.e. + 2.6% vs. + 2.8%

Pernod Ricard – Cash Crunch Impact (2/2)
29
Reco: SELL
• This reinforces my SELL, TP € 89, justified by fragile growth of Pernod in the medium term.
• Quick call with the company (Pernod Investor Relation) confirmed my cautious stance on Q2 sales
growth (next publication H1,February 11th 2017):
 Pernod IR not able to quantify “cash crunch” impact in India but clearly might be significant in Q2.
 For the long term it might be positive for Indian market according the IR (less corruption) but they still
have the threat of Indian GST (“sin tax”) which might affect margins of all the sector in 2017/2018.
 Global market slowdown in the US, rather at +4% vs. +5% previously. Pernod should be close to market,
i.e. slightly below the +5% registered in Q1
 Q1 Mexico was strong due to favorable base effect. Will not be similar in Q2. Thus Americas Zone should be
closer to US in Q2, vs. +8% in Q1.
 Still a very challenging Travel Retail market all over the world.
 IR still very cautious about China. Might be still in decline in 2016/2017 vs. stability expected (“on-trade” is
80% of Pernod business and still rather depressed according IR)
 Africa & Middle East challenging, France weak ….
Target price at €89
• 5% below consensus on my EPS 2017e, Oddo 5.26€ and consensus at 5.53€
• Historical PE of the 18x value over 5 years i.e. 18 x 5.26 = 95 € vs. Consensus 100 €
• PE average over 10 years, 16.6x, i.e. 87€ on my EPS and 92€ on the consensus.

Pernod Ricard – REDUCE – TP 89€
30
Juil-Sept 15 Oct-Dec 15 Juil-Dec 15 Jan-Mar 16 July-June 16 Avr-Jui 16 Juil-Sept 16 Oct-Dec 16 Juil-Dec 16 Jan-Mar 17 July-June 17 Avr-Jui 17
Q1 2016 Q2 2016 H1 2016 Q3 2016 9m 2016 Q4 2016 Q1 2017 Q2 2017e H1 2017e Q3 2017e 9m 2017e Q4 2017e
Asie RdM 40% 1.9% 7.2% 4.7% -2.9% 2.5% -2.1% 1.6% 0.0% 0.1% 0.0% 1.9% 0.5% 2.9% 1.0% 3.9%
% CA annuel 40% 27% 31% 58% 23% 81% 19% 100% 27% 31% 58% 23% 81% 19%
Chine 9% 23% -9.0% 5.0% -1.5% -26.4% -8.7% -7.0% -8.4% -1.0% -3.0% -2.1% 2.0% -0.9% 3.9% 0% 3%
Inde 10% 25% 15.0% 15.0% 15.0% 12.0% 14.1% 4.0% 12.2% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8% 10%
Afrique & MO 5% 13% 21.0% 20.0% 20.5% 7.2% 16.6% 0.0% 13.5% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5% 0%
Japon 2% 5% 3.0% 5.0% 4.1% 5.0% 4.3% 5.0% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5% 2%
Thailande 2% 5% -20.0% -5.0% -12.0% -5.0% -10.0% -10.0% -10.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5% 0%
Corée 3% 8% -15.0% -5.0% -9.6% -10.0% -9.7% -10.0% -9.8% -14.0% -10.0% -11.9% -5.0% -9.9% 2.8% -8% 0%
Australie 2% 5% 5.0% 10.0% 7.7% 5.0% 6.9% 5.0% 6.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5% 5%
Travel Retail 3% 8% -10.0% -7.0% -8.4% -5.0% -7.4% -10.0% -7.9% -5.0% -2.0% -3.4% 2.0% -1.8% 2.6% -1% 5%
Autres (Vietman, Nelle Zélande, …) 4% 10% 0.0% 2.0% 1.1% 0.0% 0.8% 0.0% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0% 0%
Amérique 28% 6.18% 1.7% 3.7% 8.8% 5.1% -0.2% 3.9% 8.0% 3.6% 5.7% 4.2% 5.2% 3.8% 4.9% 4.2%
% CA annuel 25% 30% 55% 21% 77% 23% 100% 25% 30% 55% 21% 77% 23%
US 17% 61% 8.0% -0.7% 3.3% 16.8% 7.0% -3.0% 4.7% 5.0% 4.0% 4.5% 4.0% 4.3% 5.1% 5% 4%
Brésil 3% 11% 5.0% 20.0% 13.1% -20.0% 3.9% 8.1% 4.9% 0.0% 0.0% 0.0% 5.0% 1.4% 4.0% 2% 5%
Mexique & Argentina & Colo 3% 11% -1.0% 2.0% 0.6% 5.0% 1.8% 2.0% 1.9% 30.0% 3.0% 15.4% 3.0% 11.9% 3.7% 10% 3%
Canada 3% 11% 15.0% 10.0% 12.3% 5.0% 10.3% 5.0% 9.0% 10.0% 5.0% 7.3% 5.0% 6.7% -0.4% 5% 5%
Travel Retail 2% 7% -10.0% -18.7% -14.7% -5.0% -12.0% -0.4% -9.3% 10.0% 5.0% 7.3% 5.0% 6.7% -0.4% 5% 5%
Europe 32% 3.0% -0.3% 1.0% 2.5% 1.4% 0.2% 1.1% 6.0% 2.2% 3.8% 2.5% 3.5% 2.5% 3.2% 3.2%
% CA annuel 24% 34% 58% 19% 77% 23% 100% 24% 34% 58% 19% 77% 23%
France 8% 25% -1.0% -11.2% -6.9% -3.0% -6.0% -12.0% -7.4% 15.0% -2.0% 5.1% 0.0% 3.9% -4.1% 2% 2%
Espagne 4% 13% 5.0% 7.0% 6.2% 13.7% 8.0% 6.0% 7.5% 5.0% 6.0% 5.6% 3.0% 5.0% 5.2% 5% 5%
Allemagne 2% 6% 5.0% 3.0% 3.8% 2.0% 3.4% 1.0% 2.8% 5.0% 3.0% 3.8% 3.0% 3.6% 0.9% 3% 3%
UK 4% 13% 6.5% 8.0% 7.4% 3.0% 6.3% 2.0% 5.3% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3% 3%
Travel Retail 2% 6% 2.0% -1.4% 0.0% -4.0% -1.0% -4.0% -1.7% -5.0% 2.0% -0.9% 8.0% 1.2% 17.3% 5% 5%
Russie 2% 6% -5.0% -6.7% -6.0% 8.0% -2.6% 15.0% 1.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5% 5%
Pologne 2% 6% 10.0% 5.0% 7.1% 5.0% 6.6% 16.0% 8.8% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5% 5%
Kazakhstan & Co 1% 3% 5.0% 5.0% 5.0% 0.0% 3.8% 0.0% 2.9% 5.0% 5.0% 5.0% 0.0% 3.8% 9.0% 5% 5%
Autres (Italie, Nordics, Balkans, …) 7% 22% 4.0% 2.0% 2.8% 2.0% 2.6% 2.0% 2.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2% 2%
Irlande
Italie
Total 100% 2.9% 3.6% 3.3% 0.5% 2.5% -0.5% 1.8% 4.2% 1.6% 2.8% 2.7% 2.7% 3.0% 2.8% 3.8%
2016-
2017e
2017-
2018e
%CA
Groupe
%zone
2015-
2016

Pernod Ricard – Cash Crunch Impact
31
“The liquor shop and bar staffers and owners said their customers
had less disposable money and hence were buying less. Use of credit
and debit cards has shot up but in most cases this is not enough to
offset the drop in cash transactions. Some, however, said business
had been hit by only 10% to 20%.”
Times of India – Nov 25, 2016

Pernod Ricard – REDUCE – TP 89€
32

Rémy Cointreau – BUY – TP 86€
33

34

35
Encouraging Cognac trends (last update Friday, January 13)
• Strong growth (+42% in volume) for high end cognacs (XO), a strong support for rémy
• Global acceleration in Asia zone, +18% in volume
• Stabilization in North America, about +3.6% in volume
Volume Growth per Zone Volume Growth per Categorie
Source: Oddo, Bureau National Interprofessionnel du Cognac

Diageo – BUY – TP 2,400p
36

Marie Brizard – NEUTRAL – TP 18€
37

Valuation Metrics
38
Valuation - calendarized Oddo Food & Beverage Team
amounts in mn
16-Jan-17
Stock
rating
Current
price
Target
Price
Up / down Mkt Cap (local) P/E EPS CAGR EV/EBIT
EBIT
CAGR
EBIT
margin
EV/EBITDA
EBITDA
CAGR
EBITDA
margin
EV/Sales
Sales
CAGR
Food 2015 2016 2017 2018 2014-2017 2015 2016 2017 2018 2014-2017 2015 2015 2016 2017 2018 2014-2017 2015 2015 2016 2017 2018 2014-
Nestle S.A. Buy 74.5 85.0 14.2% 233 632 22.5x 21.9x 20.5x 18.9x (8.5%) 18.6x 17.8x 16.7x 15.3x 1.9% 15.1% 15.1x 14.4x 13.6x 12.5x 2.2% 18.7% 2.8x 2.7x 2.6x 2.5x 1.0%
Danone SA Neutral 60.8 58.0 (4.6%) 36 323 20.6x 20.5x 19.4x 18.0x 18.3% 14.7x 15.3x 13.9x 12.7x 4.8% 12.9% 10.3x 11.0x 10.0x 9.2x 5.7% 18.3% 1.9x 2.1x 1.9x 1.8x 1.9%
Unilever NV Cert. of shs NR 38.9 NA NA 110 841 21.4x 21.0x 19.4x 17.9x 7.5% 16.3x 16.0x 14.6x 13.3x 7.3% 14.8% 14.0x 13.7x 12.5x 11.6x 3.6% 17.3% 2.4x 2.4x 2.3x 2.1x 4.4%
Associated British Foods plc NR 26 NA NA 20 623 25.3x 23.8x 21.4x 19.5x 4.4% 19.2x 18.0x 15.6x 14.0x 5.7% 8.5% 13.6x 12.8x 11.2x 10.2x 4.7% 11.7% 1.6x 1.5x 1.3x 1.2x 4.7%
Kerry Group Plc Class A NR 69.5 NA NA 12 293 23.1x 21.8x 20.2x 18.3x 7.4% 20.7x 19.0x 17.5x 15.6x 7.2% 11.1% 17.0x 15.6x 14.4x 12.9x 2.2% 13.5% 2.3x 2.2x 2.1x 1.9x 3.2%
Median 22.5x 21.8x 20.2x 18.3x 18.6 x 17.8x 15.6x 14.0x 14.0 x 13.7x 12.5x 11.6x 2.3 x 2.2x 2.1x 1.9x
Food Midcap
Savencia SA Neutral 67.7 60.0 (11.4%) 1 057 12.7x 12.8x 11.9x 10.8x 27.8% 8.3x 7.6x 8.0x 7.3x 16.1% 3.4% 4.7x 4.5x 4.7x 4.4x 9.7% 6.1% 0.3x 0.3x 0.3x 0.3x (0.7%)
Fromageries Bel SA NR 502.0 NA NA 3 406 NA NA NA NA ns NA NA NA NA ns na NA NA NA NA ns na NA NA NA NA ns
Dairy Crest Group plc NR 6.3 NA NA 889 18.0x 17.3x 15.9x 15.0x 2.0% 16.9x 16.2x 14.7x 14.0x 14.8% 15.6% 12.7x 12.7x 11.6x 11.2x 6.5% 21.0% 1.7x 2.6x 2.5x 2.4x (30.3%)
Bonduelle SA Neutral 24.9 24.0 (3.8%) 799 14.3x 14.2x 12.5x 11.2x 51.8% 12.3x 12.8x 11.3x 10.0x 0.3% 5.2% 6.8x 6.9x 6.7x 5.9x (0.5%) 9.6% 0.6x 0.6x 0.6x 0.5x 1.7%
LDC SA Neutral 96.5 102.0 5.7% 1 513 13.5x 12.9x 10.7x 12.0x 15.0% 8.2x 8.7x 8.8x 8.1x 9.1% 4.0% 5.0x 5.4x 5.3x 5.0x 8.8% 8.1% 0.4x 0.4x 0.4x 0.4x 6.1%
Fleury Michon NR 63.4 NA NA 265 15.5x 13.6x 11.8x 10.8x 8.7% 11.8x 11.3x 8.7x 7.4x 8.1% 3.8% 5.6x 5.2x 4.2x 3.7x 8.4% 8.0% 0.4x 0.4x 0.4x 0.3x 5.0%
Average 14.8 x 14.2x 12.6x 12.0x 11.5 x 11.3x 10.3x 9.4x 7.0 x 6.9x 6.5x 6.0x 0.7 x 0.9x 0.8x 0.8x
1% 0% -32%
US Food
Mondelez International, Inc. Class A NR 44.9 NA NA 69 329 25.7x 23.0x 21.3x 19.0x 6.2% 21.9x 21.0x 19.6x 18.0x 0.8% 14.3% 18.2x 17.3x 16.2x 15.1x 0.9% 16.6% 3.1x 3.2x 3.2x 3.2x (8.8%)
Campbell Soup Company NR 61.6 NA NA 18 905 23.2x 20.5x 19.6x 18.6x 6.9% 16.8x 14.9x 14.3x 13.8x 6.0% 15.1% 13.7x 12.3x 11.9x 11.5x 8.1% 18.8% 2.8x 2.8x 2.7x 2.7x (1.1%)
General Mills, Inc. NR 61.3 NA NA 35 537 21.2x 20.3x 19.0x 17.8x 5.6% 15.7x 15.4x 14.7x 14.2x 2.7% 16.8% 12.9x 12.7x 12.2x 11.8x 2.8% 20.5% 2.6x 2.7x 2.8x 2.8x (3.8%)
Mead Johnson Nutrition Company NR 70.6 NA NA 13 040 20.5x 20.5x 20.3x 18.8x (2.6%) 14.7x 15.2x 15.3x 14.5x (1.1%) 24.1% 13.3x 13.7x 13.7x 13.0x (0.5%) 26.5% 3.5x 3.8x 3.8x 3.7x (5.3%)
Hershey NR 104.7 NA NA 21 639 25.4x 24.3x 22.6x 21.2x 5.3% 16.0x 16.0x 15.0x 14.2x 5.5% 20.0% 13.8x 13.6x 12.8x 12.3x 3.8% 23.3% 3.2x 3.2x 3.1x 3.0x 0.8%
Average 23.2x 21.7x 20.6x 19.1x 17.0 x 16.5x 15.8x 14.9x 14.4 x 13.9x 13.4x 12.8x 3.0 x 3.1x 3.1x 3.1x
Spirits
Remy Cointreau SA Buy 79.4 86.0 8.3% 3 991 35.4x 32.1x 27.3x 25.3x 26.5% 19.9x 20.6x 18.6x 17.6x 11.3% 16.2% 18.1x 18.9x 17.1x 15.5x 10.6% 18.1% 3.4x 4.0x 3.7x 3.4x 1.6%
Marie Brizard Wine & Spirits Neutral 16.9 18.0 6.6% 563 77.6x 203.2x 28.5x 13.3x (78.3%) 89.7x 63.8x 20.3x 10.2x (329.7%) 1.1% 43.6x 30.9x 15.0x 8.5x 90.1% 2.5% 1.1x 1.2x 1.1x 1.0x 0.2%
Stock Spirits NR 1.8 NA NA 354 23.2x 14.3x 12.9x 12.4x 5.6% 11.1x 12.0x 10.4x 9.5x (5.8%) 1.1% 10.0x 9.3x 8.2x 7.6x 7.1% 2.5% 2.0x 1.8x 1.7x 1.6x (0.3%)
Diageo plc Buy 21.8 24.0 10.3% 54 927 24.7x 21.3x 19.4x 19.4x 5.0% 19.9x 19.1x 17.6x 17.6x 4.2% 28.4% 17.0x 16.6x 15.3x 15.3x 2.7% 32.4% 5.6x 5.7x 5.3x 5.3x 5.1%
Pernod Ricard SA Reduce 104.2 89.0 (14.5%) 27 842 20.4x 20.2x 19.7x 19.5x 10.6% 16.6x 15.2x 14.6x 14.5x 4.5% 26.2% 14.0x 13.9x 13.3x 13.2x 4.3% 28.7% 4.0x 4.0x 3.8x 3.8x 3.8%
Brown-Forman Corporation Class B NR 44.2 NA NA 16 995 26.2x 25.2x 24.0x 22.1x 5.3% 17.7x 18.2x 17.8x 16.5x 2.8% 33.9% 16.8x 17.3x 16.8x 15.6x 2.9% 35.6% 5.9x 6.1x 6.0x 5.7x 1.1%
Constellation Brands, Inc. Class A NR 147.5 NA NA 28 924 28.1x 22.8x 20.0x 17.7x 19.1% 20.2x 17.7x 16.3x 15.0x 14.6% 28.5% 17.8x 15.6x 14.3x 13.3x 8.3% 32.2% 5.7x 5.2x 5.0x 4.7x 8.3%
Davide Campari-Milano S.p.A. NR 9.2 NA NA 5 335 29.4x 28.0x 22.0x 20.2x 16.1% 19.2x 19.2x 16.3x 14.8x 10.5% 20.1% 16.8x 16.8x 14.4x 13.1x 6.4% 22.9% 3.8x 3.9x 3.4x 3.2x 6.5%
20.8x 31% 18.6x 17.6x 16.1x 16.0x
Midcap Wine & Spirits 16% 10%
Laurent-Perrier SA Neutral 70.0 73.0 4.4% 413 16.2x 16.8x 16.0x 14.3x 4.1% 17.5x 16.5x 14.8x 13.3x 3.2% 17.5% 15.3x 14.4x 13.3x 12.0x 2.9% 20.6% 3.2x 3.0x 2.7x 2.6x 2.5%
Lanson-BCC NR 33.9 NA NA 241 19.7x 16.5x 14.6x 15.6x (1.6%) 26.7x 22.9x 18.0x NA 3.0% 10.3% 21.8x 19.5x 15.8x NA 7.8% 12.7% 2.8x 2.5x 2.3x NA 1.4%
Vranken-Pommery Monopole SA NR 22.6 NA NA 201 23.8x 23.3x 18.4x 15.3x 10.9% 29.3x 30.5x 27.6x 25.3x (2.0%) 9.3% 21.3x 22.2x 20.7x 19.1x 1.2% 12.8% 2.7x 2.7x 2.7x 2.6x (2.0%)
Brewers
Heineken NV NR 70.1 NA NA 40 310 19.8x 19.2x 17.9x 16.5x 9.3% 15.6x 14.9x 14.1x 12.8x 9.1% 16.5% 11.0x 10.5x 10.0x 9.3x 5.5% 23.0% 2.5x 2.5x 2.4x 2.3x 3.0%
Anheuser-Busch Inbev Sa NR 99.0 NA NA 160 304 21.1x 29.6x 21.8x 19.3x 0.9% 16.3x 21.2x 15.2x 14.0x 16.9% 31.6% 13.4x 17.1x 12.4x 11.5x 13.3% 38.6% 5.2x 6.4x 4.9x 4.6x 14.3%
SABMiller plc NR #N/A NA NA #N/A NA NA NA NA 6.6% NA NA NA NA ns 17.8% NA NA NA NA ns 23.3% NA NA NA NA ns
Carlsberg A/S Class B NR 604.5 NA NA 92 515 22.6x 21.4x 18.2x 16.5x (2.2%) 14.9x 14.7x 13.3x 12.1x 1.6% 12.9% 9.6x 9.6x 8.8x 8.1x 1.5% 20.0% 1.9x 1.9x 1.8x 1.7x 0.4%

Disclaimer
39
Stockmarket Recommendations
Our stockmarket recommandations reflect the ABSOLUTE change expected in the share price from a twelve month perspective (in local currencies).
Buy (1) Expected increase of more than 15%
ADD (2) Expected increase of 0-15%
REDUCE (3) Expected decrease of 0-15%
SELL (4) Expected decrease of more than 15%
Production and dissemination of the RECOMMENDATION
Oddo & Cie is LICENSED by the Comité de contrôle prudentiel (ACP) and regulated by the Autorité des marchés financiers (AMF).
While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy
or completeness and it should not be relied upon as such. This document expresses the opinion of Oddo & Cie only which is subject to change without notice.
This research has been prepared in accordance with regulatory provisions designed to promote the independence of investment research. the Investment analyst is prohibited from
carrying out transactions involving the instrument concerned prior to the dissemination of the communication.
“Chinese walls” (information barrier) have been implemented to avert the unauthorised dissemination of confidential information and to prevent and manage situations of conflict of
interest. The latter may be explained in detail upon request addressed to the head of compliance.
This publication is exclusively intended for Oddo & Cie’s customers; it is sent by way of information and cannot be divulged to a third party without the prior consent of Oddo & Cie .
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Past performances offer no guarantee as to future performances.
Investment analysts do not undertake personal transactions or for any other person or entity including Oddo & Cie, in financial instruments to which investment research relates, or in
any related financial instruments, if they are aware of the likely dissemination date or content of the investment research, this knowledge is not accessible to the public and clients and
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have not had a reasonable opportunity to act on the basis of the information.
Conflicts of interest
The disclosures of all companies mentioned in this document may be consulted on oddo & cie’s research site.
Distribution to U.S. Investors: Notice to US Investors : This report is issued solely to major US institutional investors pursuant to SEC Rule 15a-6. Oddo Securities Corp. MEMBER: NASD /
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Contact Info
Oddo Securities Corp. MEMBER: NASD/SIPC (U.S.INVESTORS)
A wholly owned subsidiary of Oddo et Cie
Patrick Oddoux President, Oddo Securities Corp. (NewYork),
poddoux@oddony.com
150 East 52nd Street NewYork,
New York 10022
212-481-4002

Food&BeverageJanuary2017

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