JPM European Beverages Q 2021-10-13 3886260

Europe Equity Research
14 October 2021
European Beverages
Q3 21 preview compendium: Sub-sector performance
and valuation differentials in focus
While we acknowledge the significant valuation gap with Spirits on 27.5x 2022 European Consumer Goods and
P/E vs Beer on 19.6x and Soft Drinks on 19.8x, we do not see Q3 reporting itself Beverages
to be a catalyst for this overall gap to close (ex-technical factors) given trading Celine Pannuti, CFA AC
differentials. On one side we expect the spirit sub-sector to continue to exhibit (44-20) 7134-7123
strong growth (JPMe +14.8%) and positive demand momentum. On the other side celine.pannuti@jpmorgan.com
we caution on earnings downside in Beer/Soft Drinks on FY21 and FY22 in the Bloomberg JPMA PANNUTI <GO>
face of substantial RM and distribution costs and weakening top line momentum Fintan Ryan AC
in Q321. We highlight stocks where we believe 2022 concerns are overdone/ (44 20) 3493-0176
priced in, Overweights – Heineken, Britvic and CCEP – or where we see the fintan.ryan@jpmorgan.com
strongest top-line momentum with earnings upside in 2022 – Campari and Pernod Jared Dinges
Ricard. We remain cautious on Anheuser-Busch InBev given forecast headwinds, (44-20) 7134-3951
technical overhangs (Altria 10% stake), along with more structural concerns jared.dinges@jpmorgan.com
(Global Beverages - Brewing Disruption). Ines Lo Franco
(44-207) 1347-360
 Top-line drivers: For Q3, we expect +6.0% organic sales growth ines.lofranco@jpmorgan.com
(Beer/Spirits/Soft Drinks +3.3%/+14.8%/+4.1%) or 6% above Q3 2019 levels J.P. Morgan Securities plc
(+4%/+14%/+2%). Overall, we expect DMs organic sales to increase by +2.3%
(+1% vs Q319) vs +18.7% in Q2 (-3% vs Q2 19) as Europe re-opening comes
through (despite some weather-related softness). EMs are strong (+7.1%, +8%
vs Q319 compared to +33% in Q2, +6% vs Q219), led by Africa/Middle East
lapping an easy base of comparison and strong demand in the LatAm region
though held back by Asia-Pacific on SE Asia renewed COVID-19 restrictions
and softness in China beer demand. While channel mix is likely to be a tailwind,
we expect little sequential pricing in Q321 (outside of some EMs such as
Brazil), raising questions on quantum and speed of pricing into FY22 (where
RM inflation should see a steep acceleration), with most pricing actions more
likely to come in Q4/Q1.
 Company preference: At this point in the cycle and in the context of
commodity inflation, rising bond yields, and preference for cyclicals, we would
approach the sector with a preference for those names that have underperformed
already while still being recovery beneficiaries and/or have cost saving offsets to
fall back on (eg. Heineken (OW), CCEP (OW), Britvic (OW)) and those that
offer better protection to rising raw material costs thanks to a more favorable
pricing/demand environment (eg. Pernod Ricard (OW), Campari (OW)).
 FY21/22 outlook: For FY21, we model aggregate organic EBIT of +23.2%
(Beer/Spirits/Soft Drinks +17.4%/+43%/+19.5%) with adj EPS of +28.4%
(Beer/Spirits/Soft Drinks of +26.6%/+33.8%/+28.2%). Looking into FY22 while
acknowledging the external environment (including pricing), we model +9.2%
organic EBIT (+8.4%/+12%/+8.6%) and +13.4% adj EPS growth
(+15%/+12.6%/+10%).
 Input cost inflation to worsen: As seen in our JPM Commodity tracker, rising
raw material costs will be a dominant headwind for the Beverages sector into
H2/FY22, with FY22 cost inflation shaping up as worse than FY21 across the
board (~5%/26% for FY21/FY22). Since June, the Beer and Soft Drinks names
have witnessed the most pronounced inflation acceleration (which has weighed
on sentiment and estimates), while Spirits names should be better protected
mainly thanks to a better ability to put through price increases.
See page 17 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the
firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of Simon Taylor at The Chancellor, Masters and Scholars of The University of Cambridge.
Celine Pannuti, CFA Europe Equity Research
(44-20) 7134-7123 14 October 2021
celine.pannuti@jpmorgan.com
Table of Contents
Q3 21 earnings season – In the charts ...................................3
Navigating the Q3 21 Earnings Season ..................................4
Q3 previews – top picks & avoids into Q421/2022...................................................5
Top-Line: Q3 momentum to ease, with focus on pricing ..........................................8
Mixed margins dynamics.......................................................................................10
Earnings: clear divergence in EPS momentum .......................................................12
Valuation divergence at the highs ........................................14
(44-20) 7134-7123 14 October 2021
Q3 21 earnings season – In the charts

Figure 1: Quarterly Top-Line LFL growth, CY Q321e and vs Q319 Figure 2: Organic EBIT Margin progression (bps), CY H221e and vs
25% 21%22% H220
400 276
20% 17% 17% 257
15%
14%
200 129 116 140 143
15% 12%
10%
12% 11%12%
10% 27 50
9% 2
10% 8% 8%
5% 0
4% 5%
5% 3% -6 -42 -41 -6
1% -200 -76 -93
-161 -150
0% -230 -252
-400 -279-279 -292 -288
-5% -1%
-3% -4% -3%
-10% -600
-640
-800
Q321E vs Q319
Source: J.P. Morgan estimates. H220 H221e
Source: J.P. Morgan estimates.
Figure 3: European Beverages organic sales growth by region Figure 4: European Beverages JPMe FY21/22E EPS revisions, Oct-21
40% vs post-H121
30% 15%
11%
12%
20% 9% 5%
4% 5% 4% 5% 4%
6% 3%
10% 0% 3% 1%
3% 0% 0% 0% 1%
0% 0%
-3% 0% 0% 0% -1%
-10% -2%
-6% -2% 0% -3%
-20% -9%
-12%
-30%
-15%
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-18% -15%
EM DM EU Beverages
Source: Company reports and J.P. Morgan estimates. FY21 FY22

Source: Company reports and J.P. Morgan estimates.
Reporting dates Figure 5: European Beverages – Consensus FY2 P/E vs US 10year

bond yield (rhs)
Date Company
29 3.5%
21-Oct Pernod Ricard (Q1 sales)
26 3.0%
22-Oct Remy Cointreau (Q2 sales)
23 2.5%
26-Oct Campari (Q3 results)
27-Oct Heineken (Q3 volumes) 20 2.0%
28-Oct ABI (Q3 results) 17 1.5%

28-Oct Carlsberg (Q3 sales) 14 1.0%
03-Nov CCH (Q3 sales)
11 0.5%
09-Nov CCEP (Q3 sales)
8 0.0%
15/16-Nov Diageo CMD (London/virtual) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
17-Nov Royal Unibrew (Q3 results) Beer Spirits Soft drinks US 10yr yield (rhs)
24-Nov Britvic (FY results) Source: Bloomberg Finance L.P., J.P Morgan estimates
25-Nov Remy Cointreau (H1 results)
(44-20) 7134-7123 14 October 2021
Navigating the Q3 21 Earnings Season

The gap between sentiment and valuation in the Beverages sector has rarely been as
distinct as during Q3 where Spirits was +4% vs Beer -15% and Soft Drinks -8%, as
the summer “re-opening” wave tailed off and based on differentiating options on the
ability to manage near-record raw material inflation into 2022. While we
acknowledge the significant valuation gap with Spirits on 27.3x 2022 P/E vs Beer on
19.2x and Soft Drinks on 19.7x, we don't see Q3 reporting itself to be a catalyst for
this overall gap to close given trading differentials (JPMe organic sales growth
Beer/Spirits/Soft Drinks +3.3%/+14.8%/+4.1%) and likely cautious Beer/Soft Drink
management commentary and consensus estimate headwinds.
We highlight stocks where we believe 2022 concerns are overdone/priced in,
Overweights – Heineken, Britvic and CCEP – or where we see the strongest top-line
momentum with earnings upside in 2022 – Campari and Pernod Ricard. We remain
cautious on Anheuser-Busch InBev. We note upcoming potential catalysts from
investor updates/capital markets days for Diageo (15-16 November) and ABI (6
December) which could offer more certainty on the 2022/MT sector outlooks.
Q3 2021 reporting highlights
 We forecast average Q3 organic growth for Beer/Spirits/Soft Drinks of
+3.3%, +14.8%, +4.1% with differentiated company performance (from -
1% to +21.6%) depending on different comps and country/channel
exposure.
 Regionally, we expect DMs organic sales to increase by +2.3% vs +18.7%
in Q2, and emerging markets organic sales to +7.1% vs +33.1% in Q2.
EMs led by Africa/ME at +11.9% lapping easier comps (-6.8% in Q3 20)
and strong momentum in Latam (+8.4% vs Q319).
 We see EBIT margins -130bps in H221E vs -135bps in H220 with
headwinds from A&P reinvestments as well a geographic mix (eg SE Asia)
and incrementally rising raw material costs for EM Beer/Soft Drinks in H2
– though these will be more significant for profitability going into FY22.
Top picks & avoids into & beyond Q3 21 reporting
Prefer recovery beneficiaries and/or protection against inflationary pressures
We prefer Heineken (OW) and CCEP (OW) for Europe recovery building with on-
trade reopening; Pernod (OW) and Campari (OW) for positive consumption
momentum in spirits and better ability to take pricing; and Britvic (OW) for UK
exposure and valuation discount.
Full valuation/ increasing raw materials headwinds
Diageo (N), CCH (N), Remy Cointreau (N), Carlsberg (N), Royal Unibrew (N).
Heightened margin pressures and unfavorable FY22 outlook
We take a more cautious view on ABI (UW), as we see increasing earnings risks and
while the company is facing higher RM costs in FY22, tough comps ahead and
technical overhangs (Altria 10% stake). We also point out to continued pressure on
returns from inroads in Beyond Beer (with mixed success - Global Beverages -
Brewing Disruption). We see further margin downside at Fevertree (UW) with raw
material and logistics headwinds potentially adding to its recent margin woes with
little signs of the company taking pricing to offset the pressures.
(44-20) 7134-7123 14 October 2021
Q3 previews – top picks & avoids into Q421/2022

With a worsening raw materials environment, we prefer names with clearer earnings
visibility, a better ability to offset margin pressure and stronger top-line momentum.
This drives our preference for Heineken (OW), CCEP (OW), Campari (OW), Pernod
Ricard (OW) and Britvic (OW). On the other hand, we caution on ABI (UW),
Carlsberg (N) and CCH (N), given a sharper input costs inflation risk which could
still weigh on 2022 consensus. We see further margin downside at Fevertree (UW)
with raw material and logistics headwinds potentially adding to its recent margin
woes with little signs of the company taking pricing to offset the pressures.
Positive forecast momentum and/or attractive valuations

Pernod Ricard (OW; PR): Q1 FY22 sales - 21 October. We expect a more
favorable pricing environment and a strong start to the year with Q122 LFL +16.7%.
We expect the phasing of FY22 delivery to be H1-weighted (+13.4%/+13.2% H1
organic sales/EBIT vs +8.8%/+8.9% in H2) driven primarily by easier comps during
the first half. We now forecast FY22E +11.4%/+11.7% organic sales/EBIT driven by
a strong underlying momentum in China (+11% OSG), continued positive sell-out
trends in the US (+7%) and recovery in India (+18%). The strong top-line
momentum along with a +1.1% FX tailwind support the +15.6% FY22E EPS growth
to €7.12, and we forecast +12.0% growth in FY23E to €7.98. Pernod shares now
trade on 26x 2022 P/E and 18.6x 2022 EV/EBITDA versus EU Spirits on 27.5x and
18.9x, respectively. We are encouraged by PR’s organic sales growth momentum
driving margin expansion in the medium-term, as well as its compelling valuation
(c.-9% discount) compared to peers. Overweight. Q1 FY22 preview: Strong top-line
momentum in Q1, FY22E EPS increases by 1.5%
Coca-Cola Europacific Partners (OW; CCEP): Q3 2021 sales - 9 November. For

Q3, we forecast comparable FX-neutral sales +20.6% to €3,880m or -1% on a pro-
forma basis. We keep our FY estimates broadly unchanged with +26.5% comparable
FX-neutral sales growth (vs +26-28% guidance), +42% comparable EBIT growth to
€1,711m (vs +40-44% guidance), and €2.75 adj EPS, pro forma this comes out at
+6.6% organic sales, +20% organic EBIT to €1,822m, and €2.90 adj EPS. Despite
some support from API M&A synergies and Europe re-opening momentum tailwinds
(Reviving the Sparkle), CCEP has underperformed in the last month, similar to other
Beer/Soft Drinks stocks on fears for raw material pressures into 2022 which in this
case are likely to be overdone (H1 2021 call feedback). On our forecasts, CCEP
trades on just 15x 2022e P/E and 11.7x EV/EBITDA, significantly below the sector
on 22.8x/14.9x, respectively. Overweight. Q3 2021 preview: Tough Q likely but FY
outlook remains robust
Heineken (OW; HEIA): Q3 2021 trading statement - 27 October. Following

sequential volume improvement during H1 (incl. +19% in Q2), we expect renewed
beer volume declines in Q3 driven by COVID-19 related lockdowns in Southeast
Asia. We model organic beer volume -4.3% (on a -1.9% comp) with Asia Pacific the
main drag at -39%. The resulting operational de-leverage from the Asia Pacific
volume weakness (-23% H2) along with recent management commentary on raw
material inflation (as well as accelerating cost inflation) leads us to take a more
cautious stance on FY21 and H122 margin recovery. Consequently we reduce our
FY21e/22e EPS by 6%/2% as we re-phase the margin recovery towards H222 and
FY23. FY23e EPS comes down by 0.8% due to FX and we continue to model 17.1%
FY23e adj. EBIT margin. While short-term volatility is likely (e.g. current
Vietnam/South East Asia COVID-19 restrictions) and phasing of savings vs
reinvestments (e.g. A&P) is uncertain, we remain confident of HEIA returning to
(44-20) 7134-7123 14 October 2021
sector-leading organic sales growth and double-digit EPS growth over the MT, and
believe Heineken is best placed amongst Beer peers to offset rising input cost
inflation through price/mix and cost savings. ST pandemic headwinds in APAC,
confidence in MT growth remains
Campari (OW; CPR): Q3 2021 results - 26 October. Despite tougher comps, for
Q3 2021 we forecast +7.6% organic sales growth to €545m, +12.9% organic EBIT
growth to €132m and +14.5% adj PBT growth to €125m. By region, we forecast
Americas strongest at +10.5% led by strong underlying demand and some re-
stocking in the US (+12.5%). While underlying demand in Europe and channel mix
should get a tailwind from on-trade re-opening, very strong comps and softer weather
in northern Europe is likely to hold back Northern, Central & Eastern Europe
(NCEE, +7.7% organic) and Southern Europe, Middle East & Africa (SEMEA,
+4.6% with Italy -4%). Renewed COVID-19 lockdowns in Australia/New Zealand is
likely to be a headwind to Asia Pacific where we expect -5% decline in Australia but
+4.8% organic growth for the division, boosted by new China wholesaler ramp-up
(with potential for upside surprise on re-stocking). Margin-wise we model organic
gross margin +95bp to 61.0% with +115bp organic EBIT margin to 24.2% as SG&A
is a -25bp headwind yoy offset by a 45bp A&P tailwind. Orange Fever: MT
outperformance drivers; 3%/5% upgrades to 2021/22E
Britvic (OW; BVIC): FY21 results – 24 November. We are now looking for
+15.5% organic sales and +34% organic EBIT growth for H2 FY21 and +7% and
17.5% for FY22, respectively. While we bring our EPS estimates down by c2%
reflecting likely building input and logistics cost pressures, we note the
underperformance of the shares in the last month (-7% vs European Beverage sector
flat), seemingly largely pricing these headwinds in already. On our forecasts, BVIC
trades on just 15.8x calendar 2022e P/E and 11.1x EV/EBITDA, a c30% P/E
discount to European Beverages on 23x and 15.0x, respectively. While not immune
to external pressures (e.g. UK supply chain disruption broadly), we are reassured that
the business is more resilient than historically driven by its FY16-19 business
transformation investments (along with an attractive FCF/de-leverage profile),
support from continued on-trade/out-of-home recovery and still encouraging off-
trade market share momentum (Nielsen Europe). Overweight. FY21 preview: Still
set to deliver earnings inflection despite external cost worries
Full valuation and/or worsening earnings visibility

Carlsberg (N; CARLB): Q3 2021 sales – 28 October. For Q3, we forecast +5.3%
organic sales growth to DKK19.0bn with +2.1% organic volume growth to 41.0m
HL. We expect the DKK1bn quarterly share buyback to be maintained. We leave our
2021 estimates broadly unchanged (+12% organic EBIT to DKK10,793m vs Q2
company guidance +8-11% with upgrade potential; adj EPS +8.4% yoy to DKK47.2)
but our outer year forecasts increase by c1%, mainly due to FX (2022: +7% organic
EBIT, +11% adj EPS). Valuation is unchallenging on 20.8x 2022e P/E and 12.3x
EV/EBITDA vs the sector on 23x and 15x, respectively. We see few catalysts for the
shares to outperform until the impact of CARLB’s potential price increases come
through and/or the market gets reassured on the outlook for input cost mitigation and
future margin dynamics. Neutral. Q3 21 preview: Solid Q3 likely but further 2022
colour required
Remy Cointreau (N; RCO): Q2 FY22 sales - 22 October. For Q2, we forecast
+21.6% organic sales to €345m (+22.8% reported) with strong contributions from both
Remy Martin Cognac (+24% organic) and Liquers & Spirits (L&S +17.6%). We
increase our EPS estimates by c5% reflecting favourable trading momentum and more
(44-20) 7134-7123 14 October 2021
benign FX (c2%; mainly USD). For FY22, we now expect +25% organic sales growth
to €1,269m (H1: +51.6%), +23.7% organic EBIT to €278m (H1: +49% to €150m) and
+19% adj EPS to €3.53 (H1: +43% to €1.86). On our forecasts, RCO trades on 43.6x
calendar 2022e P/E and 26x EV/EBITDA, a c90% premium to European Beverages on
23.2x and 15.1x, respectively, but in line with its historical 50% premium to
International Spirits on 29.2x and 19.9x. Though elevated, this premium is supported
by positive earnings momentum from re-openings and key end-market demand.
Neutral. Q2 FY22 preview: US and China continue to drive earnings momentum with
c5% EPS upgrades
Royal Unibrew (N; RBREW): Q3 2021 – 17 November. Based on likely strong

summer trading across Europe (particularly Denmark), for Q3, we model +4.5%
organic sales growth to DKK2,334m, +3% adj EBIT growth to DKK620m, and +8%
adj EPS growth to DKK10.2. At this point, we keep our FY estimates broadly
unchanged (adj EBIT DKK1,692m) with still uncertainty on price/mix and raw
material management into 2022 (JPM Commodity tracker September update), albeit
we see potential for RBREW to at least update the bottom end of the FY21
DKK1,625-1,700m EBIT guidance range. While RBREW is not cheap trading on
27.6x 2022e P/E and 19x EV/EBITDA (vs the sector on 22.6x and 14.8x,
respectively), we believe the premium can be justified by the strong execution in the
last 18 months and the meaningful MT M&A potential ‒ see Northern Lights (and
laggards) - Nordic markets and consolidation in focus. Q3 2021 preview: Favourable
ST momentum, still questions on 2022 outlook
CCH (N; CCH): Q3 2021 sales - 3 November. Based on continued re-opening

momentum and tourist demand across Europe, along with strong momentum in
Russia and Nigeria, for Q3 we model 8.7% organic volume growth to 667m unit
cases and +14.3% LFL sales (including Poland soft-drinks taxes) to €2,067m (+13%
reported). We increase our 2021E EPS by 0.6% with 24% growth to €1.47, reflecting
the top-line momentum, and by 2% for 2022E with 9% growth to €1.60 (including a
c1% FX tailwind), albeit with a high degree of uncertainty still on the 2022 outlook,
given volatile and inflationary raw materials. On our new forecasts, CCH trades on
18.5x 2022E P/E and 10.2x EV/EBITDA, a discount vs the sector on 22.8x/14.9x
respectively. Q3 2021 preview: Reopening tailwinds to persist, still uncertainty on
raw materials vs pricing in 2022.
Elevated earnings risks on significant raw materials headwinds

ABI (UW): Q3 2021 results – Thursday, 28 October. We cut our FY21E/22E EPS
by 3%/5% due to accelerating input cost inflation (FY22e COGS/hl +9% vs +8%
prior) and recent FX headwinds, and we now sit 12% below Bloomberg consensus
EPS in 2022. For Q3 we forecast organic sales growth of +3.8% (volume -0.5% and
price/mix +4.3%), -4.1% organic EBITDA (margin -290bps) and underlying adj. EPS
+6.8% to $0.86. For FY21e we now model +13.1% organic sales and +8.4% organic
EBITDA (margin -150bps), at the bottom end of the current 8-12% EBITDA
guidance range. For FY22e we forecast +6.8% organic sales (volume +1.1% and
price/mix +5.7%) and +3.9% organic EBITDA (margin -100bps). On our new
forecasts, ABI trades on 18.2x P/E 22e and 11.3x EV/EBITDA 22e, only a slight
discount to Beer peers on 19.6x and 11.6x despite ABI’s inferior earnings growth
outlook and greater risk profile. Underweight. Q3 2021 preview: Top line slowing,
margin pressure building.
(44-20) 7134-7123 14 October 2021
Top-Line: Q3 momentum to ease, with focus on pricing

Overall: Top-line growth should moderate sequentially against tougher bases of
comparison, as we forecast +6.0% for Q3 (+3.3%/+14.8%/+4.1% for
Beer/Spirits/Soft Drinks) vs Q2 at +29.8% (+25.1%/+47.9%/+29% for
Beer/Spirits/Soft Drinks). Compared to 2019, in aggregate we see Beverages sector
organic sales +6%, with Beer +4%, Spirits +14% and Soft Drinks +2%, with
tailwinds from strong demand in the US and EM reopening.
Pricing should pick up further into H2, but to remain below the M-HSD% we believe
is needed to offset the pressures to Gross Profit from raw materials inflation
(~+5%/+26% inflation in aggregate for 2021/22E), adding further weight to FY21E
and FY22E margin downside. For Q3, we model +4.3% and +1.3% price/mix for the
Beer and Soft Drinks names respectively, a substantial part of which will likely relate
to channel/product mix, rather than absolute pricing increases (particularly outside of
EMs).
Regional color
DMs: Developed markets growth of +2.3% (+0.4% vs Q3 19) is led by Western
Europe +4.4% (-0.4%), as the reopening of the on-trade and easing of restrictions
fuel demand. In North America, organic sales growth are up +2.6% yoy, even
lapping tougher comps (Q3 20 +6.1%) which highlights a strong underlying demand
for alcohol, as seen in recent data (US NABCA).
EMs: The environment in several EMs still remains challenging, in particular in

APAC where several countries in southeast Asia are still facing on-trade restrictions
and lockdowns (eg Vietnam), although demand in LatAm remains buoyant. Across
emerging markets, we see +7.1% OSG in Q3, led by Africa/Middle East at +11.9%,
followed by LatAm at +9.8%, Eastern Europe at +9.3% and APAC at +2.4%.
Company dynamics
 Beer: For Q3, we expect top-line to slow down sequentially at +3.3% vs Q2 at
+25.1%, with ABI at +3.8% organic sales growth (vs +27.6% in Q2), Heineken at
+1.3% (+25.2%), Carlsberg at +5.3% (+14.3%) and Royal Unibrew at +4.5%
(+16.2%), as bases of comparison become more difficult.
 Spirits: With the US market still flourishing and a strong momentum in China,
Spirits should see +14.8% organic sales growth in Q3, led by Remy Cointreau at
+21.6% (+17% vs Q3 19), followed by Pernod Ricard at +16.7% (+10%), Diageo
at +14.1% (+15%) and Campari at +7.6% (+21%).
 Soft Drinks: Overall, we expect good top-line momentum in Q3, albeit with a
mixed 2-year progression – yoy we see growth led by CCH at +11.9% (+12% vs
Q3 19), followed by Fevertree at +11.6% (+10%), Britvic at +9.3% (-3%), Royal
Unibrew at +4.5% (+11%) while CCEP lags behind at -1% (-4%).
(44-20) 7134-7123 14 October 2021
Figure 6: European Beverages organic sales growth by segment Figure 7: European Beverages organic sales growth by region
55% 40%
45%
30%
35%
25% 20%
15% 10%
5%
0%
-5%
-15% -10%
-25%
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EU Beer EU Spirits EU Soft Drinks
EM DM EU Beverages
Figure 8: Developed market organic sales growth by sub-region Figure 9: Emerging market organic sales growth by sub-region
30% 80%
25%
20% 60%
15%
10% 40%
5%
20%
0%
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-10%
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-20%
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Q121
Q221
North America Western Europe DM APAC LatAm E Europe Africa/ME EM
Source: J.P. Morgan estimates. Source: J.P. Morgan estimates.
Table 1: European Beverages organic sales growth, calendarized

2019 Q120 Q220 Q320 Q420 2020 Q121 Q221 Q321e Q421e 2021e 2022e 2023e
ABI 4.3% -5.8% -17.7% 4.0% 4.5% -3.7% 17.2% 27.6% 3.8% 5.8% 13.1% 6.8% 4.5%
Heineken 5.6% -7.0% -24.4% -4.6% -11.2% -11.9% 3.1% 25.2% 1.3% 13.3% 10.3% 13.0% 5.7%
Carlsberg 3.2% -7.4% -14.6% -2.0% -8.8% -8.3% 3.8% 14.3% 5.3% 13.4% 9.2% 7.4% 4.9%
EU Beer 4.6% -6.3% -19.2% 0.7% -1.6% -6.7% 11.8% 25.1% 3.3% 8.7% 11.9% 8.7% 4.9%
Diageo 4.5% -22.6% -22.6% 1.0% 1.0% -8.2% 39.4% 39.4% 14.1% 14.1% 25.1% 8.2% 5.6%
Pernod Ricard 3.0% -14.4% -35.9% -5.6% -2.4% -11.4% 19.1% 56.5% 16.7% 10.7% 21.8% 7.8% 6.3%
Campari 5.9% -5.3% -15.9% 12.9% -7.5% -4.1% 17.9% 54.2% 7.6% 13.6% 22.0% 6.5% 6.5%
Remy Cointreau -2.9% -25.4% -33.2% -4.0% 25.1% -1.9% 15.1% 105.0% 21.6% 2.7% 34.5% 6.5% 7.3%
EU Spirits 3.8% -19.0% -26.8% -0.7% 0.0% -8.8% 29.7% 47.9% 14.8% 12.2% 24.2% 7.9% 6.0%
CCEP* 3.5% -3.0% -26.0% -2.8% -10.5% -10.9% -8.3% 29.2% -1.0% 9.5% 6.6% 6.3% 3.1%
CCH 3.7% -2.5% -27.3% -0.4% -4.5% -8.9% 4.1% 32.7% 11.9% 12.6% 16.4% 7.8% 6.5%
Britvic 1.5% 0.3% -16.3% -11.3% -5.8% -8.3% -6.5% 22.8% 9.3% 9.0% 9.5% 5.9% 3.1%
Royal Unibrew 0.6% -2.3% -10.9% 5.8% -3.1% -2.8% 10.2% 16.2% 4.5% 6.8% 9.4% 4.3% 3.5%
Fevertree 9.2% -11.9% -11.9% -1.1% -1.1% -6.0% 34.3% 34.3% 11.6% 11.6% 21.0% 13.3% 10.7%
EU Soft Drinks 3.3% -2.5% -24.8% -2.3% -7.9% -9.7% -3.4% 29.0% 4.1% 10.3% 10.1% 6.6% 4.2%
EU Beverages 4.2% -8.4% -21.7% -0.2% -2.2% -7.7% 12.6% 29.8% 6.0% 9.9% 14.2% 8.1% 5.0%
Source: Company reports and J.P. Morgan estimates. *CCEP pro-forma for Coca-Cola Amatil M&A from Q1 21
(44-20) 7134-7123 14 October 2021
Mixed margins dynamics

Raw materials to weigh on H2 EBIT margin trajectory
Overall we expect significant margin pressures in H221E (-130bp yoy), driven by a
deterioration of Gross Margins, especially in Beer as hedges on commodity buying
roll off and inflation/SG&A reinvestments hits the P&L. We expect the greatest level
of EBIT hit yoy within the Beer names (-214bp vs +330bp in H121) driven by ABI
and Heineken at -279bp and -161bp respectively in H2. Margin progression is likely
to be muted for the Soft Drinks names too (-43bp vs +350bp in H121), with
Fevertree (-252bp) weakest due to a ramp up of logistic and input costs. Meanwhile,
Spirits names should benefit from a strong underlying demand in the US and China
and confidence in taking pricing should drive a margin expansion of +18bp in
H221E.
Figure 10: European Beverages organic EBIT margin (change YoY, Figure 11: European Beverages organic EBIT margin build (Change
bps), H221E/H221E/FY21E YoY, bps), 2019-22E
400 500
381
400
300 256
300
200 200 139
75
100 100 8
0
0
-100 -37 -26
-57 -84 -73 -46
-100 -200 -141 -135 -130
-172
-200 -300
-400 -331 -306
-300 -500
-400 -600
-587
-700
H219 H120 H220 H121 H221E H122E
H2 21E H1 22E 2021E Gross margin Reinvestments/cuts in Opex EBIT margin
Source: Company reports and J.P. Morgan estimates. Source: Company reports and J.P. Morgan estimates.
Table 2: EU Beverages change in organic interim & annual EBIT margin, 2019-22e
2019 H120 H220 2020 H121 H221e 2021e 2022e
ABI -81 -739 -230 -476 180 -279 -68 -111
Heineken -28 -672 -279 -452 744 -161 266 114
Carlsberg 106 48 129 91 87 2 44 -7
EU Beer -45 -630 -206 -406 330 -214 41 -35
Diageo 17 -703 -150 -365 513 27 239 125
Pernod 11 -646 50 -199 738 -6 293 45
Ricard
Campari 14 -466 -292 -374 637 116 358 128
Remy -184 -390 268 98 337 -42 40 94
Cointreau
EU Spirits 6 -655 -71 -290 588 18 258 97
CCEP 33 -508 -76 -270 373 -41 146 43
CCH 57 -182 276 17 445 -93 21 -37
Britvic -27 -196 -288 -147 50 140 81 107
Royal 75 -1 143 73 56 -6 29 -51
Unibrew
Fevertree -329 -846 -640 -660 -219 -252 -208 94
EU Soft Drinks 38 -354 32 -152 350 -43 95 20
EU Beverages -21 -587 -135 -338 381 -130 96 5
10
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Table 3: European Beverages organic EBIT growth, calendarized

2019 H120 H220 2020 H121 H221e 2021e 2022e 2023e
ABI 1.7% -32.4% -3.5% -18.3% 31.6% -5.0% 10.3% 2.4% 5.9%
Heineken 3.9% -52.5% -22.1% -35.6% 109.0% -4.5% 34.3% 21.7% 13.7%
Carlsberg 10.5% -8.9% 2.6% -3.1% 15.6% 8.9% 12.0% 6.9% 8.6%
EU Beer 3.3% -35.6% -8.5% -21.8% 51.7% -3.3% 17.4% 8.4% 8.6%
Diageo 5.1% -42.1% -3.4% -18.5% 72.2% 15.0% 39.9% 13.5% 7.1%
Pernod Ricard 3.2% -46.0% -2.4% -17.9% 96.4% 13.2% 46.7% 9.1% 9.4%
Campari 6.6% -30.7% -12.0% -20.3% 88.6% 17.2% 46.1% 12.9% 13.2%
Remy Cointreau -7.7% -31.7% 27.8% -2.4% 62.6% 26.0% 44.3% 8.6% 12.9%
EU Spirits 4.0% -42.2% -2.4% -17.8% 80.9% 15.0% 42.9% 11.8% 8.5%
CCEP 6.0% -48.0% -11.3% -28.2% 59.3% 0.9% 20.4% 10.0% 9.1%
CCH 10.0% -31.2% 18.7% -7.6% 88.6% 4.7% 19.6% 5.1% 9.6%
Britvic 5.6% -13.8% -26.2% -20.0% 9.4% 26.0% 17.7% 15.3% 8.2%
Royal Unibrew 4.7% -7.5% 9.2% 0.9% 17.0% 4.8% 10.9% 1.7% 5.3%
Fevertree -2.1% -23.6% 11.8% -28.7% -0.9% 13.6% 8.1% 19.7% 19.3%
EU Soft Drinks 7.2% -37.8% -1.8% -19.5% 61.9% 4.1% 19.5% 8.6% 9.0%
EU Beverages 4.1% -37.3% -6.0% -20.6% 58.9% 2.2% 23.2% 9.2% 8.7%
RM inflation seeing further acceleration (JPM Commodity tracker September

update: Inflation continues to move higher, adding pressures on FY22 earnings) - As
we approach 2022, we note higher inflation expectations for the Beverages sector, with
JPMe +5% and +26% commodity inflation in 2021E and 2022E, respectively. We
expect Beer and Soft Drinks names to be more severely impacted due to a ramp up in
plastics input costs and grains (wheat/barley), while Spirits name should be in a better
position to take pricing in order to offset the raw material headwinds.
We see ABI (UW) as most at risk, and caution on for Carlsberg (N) and Royal
Unibrew (N) due to potential consensus forecasts pressures, though Heineken (OW)
should at least have better visibility on offsets through project EverGreen cost savings
(€2bn vs 2019 base by 2023 with c€1bn run-rate delivery by the end of 2021).
Meanwhile, Spirits names Campari (OW), Pernod Ricard (OW), Remy Cointreau (N)
and Diageo (N) should offer relative protection from commodity inflation headwinds
with commentary thus far being constructive supported by robust underlying demand
and confidence in pricing (albeit with some incremental pressures from logistics and
glass/packaging costs). In Soft Drinks, Fevertree (UW) has again warned on gross
margins due to pressures from logistics and input costs (here) while for Britvic (OW),
CCEP (OW) and CCH (N), we note similar high-level pressures, albeit with
commodity costs being a smaller part of the COGS mix (as confirmed at the recent
CCEP update - here).
11
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Figure 12: European Beverages Raw Materials Index by sub-sector Figure 13: European Beverages Raw Materials Index by sub-sector
(9M hedged) - absolute level (9M hedged) % change y/y
180
50%
160 40%
140 30%
20%
120
10%
100 0%
80 -10%
-20%
60
-30%
Jan-07
Oct-07
Jul-08
Apr-09
Jan-10
Oct-10
Jul-11
Apr-12
Jan-13
Oct-13
Jul-14
Apr-15
Jan-16
Oct-16
Jul-17
Apr-18
Jan-19
Oct-19
Jul-20
Apr-21
Jan-22
Jan-11
Aug-11
Mar-12
Oct-12
May-13
Dec-13
Jul-14
Feb-15
Sep-15
Apr-16
Nov-16
Jun-17
Jan-18
Aug-18
Mar-19
Oct-19
May-20
Dec-20
Jul-21
Feb-22
Beer Soft drinks Spirits
Beer Soft drinks Spirits
Source: J.P. Morgan estimates and Bloomberg Finance L.P.
Figure 14: European Beverages Raw Materials Inflation (hedged + FX) y/y %, by company
40%
33% 34%
35%
30% 29%
30% 27% 27% 27% 27% 26%
25% 22% 23%
21%
20% 15%
15% 12%
9%
10% 7%
5% 6% 5% 5% 4% 5%
5% 3%
1% 0%
0%
-5% 0%
ABI BVIC CPR CARLB CCEP CCH DGE FEVR HEIA RI RCO RBREW Total
2021E 2022E
Figure 15: European Beverages – correlation between pricing and Figure 16: European Beverages – price elasticity: correlation
raw materials inflation and (where available) company-reported between organic volume and price/mix growth 2008-19
COGS/HL, 2008-19 0.3
1.0
0.8
0.2 0.1
0.2
0.8 0.0
0.8 0.1
0.6 0.6
0.6 0.5 0.0
0.4 0.4 -0.1
0.4 0.3
0.2 0.3 -0.2
0.2 -0.2
0.2 -0.3
-0.4
- -0.4
-0.5 -0.4
(0.2) (0.1) -0.6
-0.7 -0.6
(0.4)
(0.3) -0.8 -0.7
ABI BVIC CARLB CCEP CCH DGE HEIA RBREW
ABI BVIC CARLB CCEP CCH DGE HEIA RBREW
Reported COGS/HL RM tracker
Source: Company reports, J.P. Morgan estimates.
Source: Company reports, J.P. Morgan estimates.
Earnings: clear divergence in EPS momentum

With adj EPS -13.6% in H220 (Beer/Spirits/Soft Drinks -16.9%/-9.6%/-7.1%), we
expect Spirits and Soft Drinks to recover yoy in H2 21E at +15.6% and +22.2%
respectively, while Beer decelerates at -2.8% skewed by ABI at -8.7% yoy with
accelerated input cost inflation and FX headwinds. For FY21E, we expect positive
EPS momentum (+28.4% yoy) as the sector recovers from pandemic-related
disruptions (-30.1% in FY20).
12
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Figure 17: European Beverages JPMe FY21/22E EPS revisions, Oct- Figure 18: European Beverages Adj. EPS – JPM vs BBG Consensus
21 vs post H1-21 15%
15% 9%
11% 10% 7%
12%
9% 5% 5%
4% 5% 4% 5% 4% 5%
6% 3% 1% 1% 1% 1% 1%
0% 3% 1% 0%
3% 0% 0% 0% 1% 0%
0% 0%
-1%
-3% 0% 0% 0% -1% -5% -3%
-6% -2% 0% -3% -2%
-9% -10%
-12%
-15%
-15%
-18% -15%
FY21 FY22
FY21 FY22 Source: Bloomberg Finance L.P. and J.P. Morgan estimates.
Table 4: European Beverages adjusted EPS growth, calendarized

2019 H120 H220 2020 H121 H221e 2021e 2022e 2023e
ABI -11.4% -50.1% -11.4% -30.8% 44% -8.7% 12.8% 7.8% 10.9%
Heineken 3.1% -78.6% -36.6% -54.2% 295% 5.9% 62.8% 31.2% 16.3%
Carlsberg 16.5% 2.8% 8.7% 6.3% 12% 6.4% 8.4% 11.3% 11.4%
EU Beer -4.1% -52.5% -16.9% -33.7% 112% -2.8% 26.6% 14.9% 12.6%
Diageo 4.6% -46.0% -12.8% -26.1% 65% 14.2% 28.9% 13.1% 10.6%
Pernod Ricard 9.0% -59.0% -9.3% -24.7% 136% 17.2% 37.2% 11.4% 10.9%
Campari 8.3% -33.6% -16.8% -23.7% 104% 15.2% 51.0% 15.0% 14.6%
Remy Cointreau -9.6% -37.0% 43.0% -12.8% 76% 21.9% 39.5% 11.9% 13.2%
EU Spirits 5.8% -49.0% -9.6% -24.9% 91% 15.6% 33.8% 12.6% 11.1%
CCEP 10.1% -50.2% -10.2% -28.7% 92% 36.0% 33.5% 9.9% 9.1%
CCH 10.0% -42.0% 0.9% -17.5% 82% -1.1% 23.8% 9.1% 11.3%
Britvic 3.9% -19.0% -30.8% -24.9% 7% 28.1% 17.4% 16.9% 6.7%
Royal Unibrew 11.1% -6.6% 14.0% 4.0% 25% 9.1% 14.1% 6.1% 6.6%
Fevertree -5.5% -37.6% -18.9% -28.0% 18% -6.9% 3.4% 19.3% 12.8%
EU Soft Drinks 9.6% -42.9% -7.1% -23.3% 78% 22.2% 28.2% 10.0% 9.5%
EU Beverages 0.3% -50.2% -13.6% -30.1% 102% 5.8% 28.4% 13.4% 11.7%
13
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Valuation divergence at the highs

Wide dispersions remain despite near all-time highs: 2021 has been another year
of divergent performances within European Beverages with the sector as a whole
+6% ytd (2020: -10%), again lagging MSCI Europe +17% (-7%) and MSCI Staples
+6% (-8%). Within this, the underperformance has been driven by the Brewers -8%
(2020: -15%) dragged lower by ABI specifically with robust absolute performance
across Soft Drinks +13% (-11%) and with strength in Spirits +25% (-8%), near all-
time highs. With Beer underperformance accelerating in the last 8 weeks (Q3
performance: Spirits +4% vs Beer -15% and Soft Drinks -8%) on building raw
material fears as the re-opening “relief rally” has worn off, on a consensus basis, the
Beer sector is now trading at just a 15% P/E premium to the wider EU market, just
off the lows and well below its historical average 35% premium – in contrast the
Spirits sector trades at a near-record 75% premium to the market vs its average 45%
premium, a near-record gap vs Beer.
Figure 19: Indexed subsector share price performance ytd

130
120
110
100
90
80
70
60
Bevs MSCI Europe Staples Brewers Spirits Soft Drinks
Source: Bloomberg Finance L.P., J.P Morgan estimates

Figure 20: European Beverages absolute FY2 P/E vs MSCI Europe Figure 21: European Beverages relative FY2 P/E vs MSCI Europe
Staples and Market Staples and Market
26 1.7
1.6
23
1.5
20 1.4
1.3
17
1.2
14 1.1
11 1.0
0.9
8
0.8
5 0.7
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Beverages MSCI Staples MSCI Europe Bevs vs market Bevs vs Staples
Ave vs market Ave vs Staples
Source: Bloomberg Finance L.P., J.P Morgan estimates.
Source: Bloomberg Finance L.P., J.P Morgan estimates.
14
(44-20) 7134-7123 14 October 2021
Figure 22: European Beverages sub-sector – Consensus FY2 P/E vs Figure 23: European Beverages relative FY2 P/E vs MSCI Europe
US 10year bond yield (rhs) Staples and Market
1.9
29 3.5%
1.8
26 3.0%
1.7
23 2.5% 1.6
20 2.0% 1.5
1.4
17 1.5%
1.3
14 1.0%
1.2
11 0.5% 1.1
8 0.0% 1.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Beer Spirits Soft drinks US 10yr yield (rhs) Beer vs EU market Ave Beer Spirits vs EU market Ave Spirits
Source: Bloomberg Finance L.P., J.P Morgan estimates Source: Bloomberg Finance L.P., J.P Morgan estimates.
Stock selection remains key: On our forecasts, the Beverages sector as a whole
trades on a full 23.2x 2022 P/E and 15.1 EV/EBITDA. Similar to the dispersion seen
in the last 12 months, Spirits on 27.5x/18.8x lead the sector overall and ahead of
Beer (19.6x/11.6x) and Soft Drinks (19.8x/14.4x). Divergence within our coverage
remain elevated, with Fevertree (54.2x calendar P/E) and Remy Cointreau (43.6x)
leading the way, while on the contrary, CCEP at 14.6x and Britvic at 15.8x still lag
the sector, albeit with still lingering uncertainty on margins and earnings within
Beer/Soft Drinks into 2022, while for now Spirits remains supported by apparently
buoyant demand in the US and China in particular.
Figure 24: European Beverages - drivers of share price performance 2021 ytd
40% 35% 36% 31%
30% 25%23% 15%
21% 22% 23%
13%15% 19% 16% 17%
20% 13% 13% 16% 14%
11% 13% 13%
7% 9% 8% 7% 6%
10% 5% 6%
1% 1% 1% 0% 0% 2%
0%
-1% -3% -4%
-10% -5%
-11% -10% -9%
-11% -12%
-20%
-18%
-30% -23%
-40%
ABI HEIA CARLB DGE RI CPR RCO FEVR BVIC CCEP CCH RBREW MSCI MSCI MSCI
EU Bevs EU Europe
Price change P/E change EPS change Staples
Source: J.P. Morgan estimates, Bloomberg Finance L.P.
15
(44-20) 7134-7123 14 October 2021
Figure 25: European Beverages organic sales CAGR 2021-23E (lhs) Figure 26: European Beverages adj EPS CAGR 2021-23E (lhs) vs
vs calendarised 2022 P/E (bottom) calendarised 2022 P/E (bottom)
18% 14%
RCO FEVR 12% CPRRCO
16%
14% DGE 10%
RI CPR 8% CARLB
12% RI RBREW
CCH HEIA
10% 6% CCH
ABI DGE
8% 4% HEIA
BVIC CCEP
6% CARLB RBREW 2% BVIC
4% CCEP 0% ABI FEVR
2% -2%
0% -4%
10 15 20 25 30 35 40 45 50 55 10 15 20 25 30 35 40 45 50 55
Source: J.P. Morgan estimates, Company data.
Source: J.P. Morgan estimates, Company data.
Figure 27: JPM European Beverages valuation table

Up/ Mkt. Cap P/E EV/EBITDA Adj. EPS growth FCF Yield Div. Yield ND/EBITDA
down
Rating TP Price side ($bn) 21E 22E 23E 21E 22E 23E 21E 22E 23E 21E 22E 23E 21E 22E 23E 21E 22E 23E
Europe
ABI UW € 46.0 € 48.0 -4% 112.3 19.6 18.2 16.4 11.7 11.3 10.6 13% 8% 11% 5.4% 5.6% 6.5% 1.7% 2.1% 2.3% 4.3 4.0 3.6
Britv ic OW £10.75 £9.04 19% 3.3 18.4 15.8 14.8 12.7 11.1 10.2 19% 17% 7% 5.5% 6.6% 6.9% 2.7% 3.2% 3.4% 2.2 1.8 1.5
Campari OW € 14.0 € 12.5 12% 16.9 46.6 40.5 35.3 30.3 26.6 23.4 51% 15% 15% 0.6% 2.1% 2.4% 0.5% 0.6% 0.7% 2.4 1.7 1.2
Carlsberg N DKK 1,200 DKK 1,091 10% 25.1 23.1 20.8 18.6 13.2 12.3 11.5 8% 11% 11% 4.8% 5.5% 5.6% 2.2% 2.4% 2.7% 1.5 1.4 1.3
CCEP OW € 57.5 € 46.5 24% 24.5 16.0 14.6 13.4 13.0 11.7 10.6 34% 10% 9% 5.8% 7.9% 8.7% 3.1% 3.4% 3.7% 4.9 4.2 3.6
CCH N £27.25 £25.17 8% 12.6 20.2 18.5 16.7 11.6 10.3 9.4 24% 9% 11% 1.9% 3.7% 4.2% 2.4% 2.5% 2.7% 1.8 1.5 1.3
Diageo N £38.00 £36.02 6% 114.6 28.2 25.0 24.0 19.3 17.1 15.9 29% 13% 11% 3.2% 3.1% 3.5% 2.1% 2.2% 2.3% 2.7 2.5 2.4
Fev ertree UW £19.00 £24.52 -23% 3.9 64.7 54.2 48.1 53.9 43.8 35.4 3% 19% 13% 1.0% 1.7% 2.0% 0.7% 0.8% 0.8% -3.0 -2.9 -2.9
Heineken OW € 120.0 € 91.56 31% 61.0 28.0 21.4 18.4 13.2 11.4 10.2 63% 31% 16% 3.3% 4.7% 5.0% 1.3% 1.6% 2.0% 2.8 2.2 1.7
Pernod Ricard OW € 225.0 € 199.0 13% 60.3 28.9 26.0 24.9 20.6 18.6 17.1 37% 11% 11% 2.6% 2.7% 3.4% 1.7% 1.9% 2.1% 2.7 2.4 2.1
Remy Cointreau N € 170.0 € 172.1 -1% 10.1 48.8 43.6 40.7 29.6 26.0 23.4 40% 12% 13% 1.3% 1.3% 1.5% 1.1% 1.2% 1.2% 1.2 1.1 0.9
Roy al Unibrew N DKK 800 DKK 804 0% 6.1 29.3 27.6 25.9 20.4 19.1 18.2 14% 6% 7% 3.2% 3.7% 3.6% 1.9% 2.0% 2.2% 1.7 1.5 1.4
Beer Average 201.5 22.7 19.6 17.4 12.5 11.6 10.7 27% 15% 13% 4.7% 5.3% 5.9% 1.6% 2.0% 2.2% 3.5 3.1 2.7
Spirits Av erage 201.8 31.0 27.5 26.1 21.1 18.8 17.2 34% 13% 11% 2.7% 2.8% 3.3% 1.8% 1.9% 2.1% 2.6 2.3 2.1
Soft Drinks Av erage 47.3 22.2 19.8 18.0 16.5 14.4 12.8 26% 11% 10% 4.2% 5.9% 6.5% 2.6% 2.8% 3.1% 3.1 2.6 2.2
European Beverages Average 450.6 26.4 23.2 21.4 16.8 15.1 13.8 30% 14% 12% 3.8% 4.2% 4.8% 1.8% 2.0% 2.3% 3.0 2.7 2.4
Source: J.P. Morgan estimates, Company data. Priced as of COB 13 October 2021
16
(44-20) 7134-7123 14 October 2021
Companies Discussed in This Report (all prices in this report as of market close on 13 October 2021, unless otherwise
indicated)
Anheuser Busch InBev(ABI.BR/€48.04/UW), Anheuser-Busch InBev (ADR)(BUD/$54.21[12 October 2021]/UW),
Britvic(BVIC.L/903p/OW), Carlsberg(CARLb.CO/Dkr1091.00/N), Coca-Cola Europacific Partners(CCEP/$53.28[12
October 2021]/OW), Coca-Cola Europacific Partners (Euro)(CCEPC.AS/€46.42/OW), Coca-Cola Hellenic Bottling
Company(CCH.L/2514p/N), Davide Campari-Milano NV(CPRI.MI/€12.51/OW), Heineken(HEIN.AS/€91.52/OW),
Pernod-Ricard SA(PERP.PA/€198.80/OW), Remy Cointreau SA(RCOP.PA/€172.50/N), Royal
Unibrew(RBREW.CO/Dkr804.00/N)
Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research
Analysts are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and
(2) no part of any of the Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations
or views expressed by the Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if
applicable, they also certify, as per KOFIA requirements, that the Research Analyst’s analysis was made in good faith and that the views
reflect the Research Analyst’s own opinion, without undue influence or intervention.
All authors named within this report are Research Analysts unless otherwise specified. In Europe, Sector Specialists (Sales and Trading)
may be shown on this report as contacts but are not authors of the report or part of the Research Department.
Important Disclosures
 Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to
Anheuser Busch InBev, Carlsberg, Heineken, Coca-Cola Hellenic Bottling Company, Coca-Cola Europacific Partners, Coca-Cola
Europacific Partners (Euro), Britvic, Pernod-Ricard SA, Royal Unibrew, Davide Campari-Milano NV, Remy Cointreau SA, Anheuser-
Busch InBev (ADR).
 Manager or Co-manager: J.P. Morgan acted as manager or co-manager in a public offering of securities or financial instruments (as
such term is defined in Directive 2014/65/EU) of/for Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro) within the
past 12 months.
 Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Anheuser Busch InBev,
Carlsberg, Heineken, Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as investment
banking clients: Anheuser Busch InBev, Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
entity(ies) as clients, and the services provided were non-investment-banking, securities-related: Anheuser Busch InBev, Carlsberg,
Heineken Holding NV, a parent company of Heineken, Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients, and
the services provided were non-securities-related: Anheuser Busch InBev, Carlsberg, Heineken, Coca-Cola Hellenic Bottling Company,
Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro), Britvic.
 Investment Banking Compensation Received: J.P. Morgan has received in the past 12 months compensation for investment banking
services from Anheuser Busch InBev, Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Potential Investment Banking Compensation: J.P. Morgan expects to receive, or intends to seek, compensation for investment
banking services in the next three months from Anheuser Busch InBev, Heineken Holding NV, a parent company of Heineken, Coca-Cola
Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Non-Investment Banking Compensation Received: J.P. Morgan has received compensation in the past 12 months for products or
services other than investment banking from Anheuser Busch InBev, Carlsberg, Heineken Holding NV, a parent company of Heineken,
Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro).
 Broker: J.P. Morgan acts as Corporate Broker to Britvic.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Anheuser Busch InBev, Carlsberg, Heineken, Coca-Cola
Hellenic Bottling Company, Coca-Cola Europacific Partners, Coca-Cola Europacific Partners (Euro), Britvic, Pernod-Ricard SA, Royal
Unibrew, Davide Campari-Milano NV, Remy Cointreau SA, Anheuser-Busch InBev (ADR), if any.
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
compendium reports and all J.P. Morgan–covered companies, and certain non-covered companies, by visiting
17
(44-20) 7134-7123 14 October 2021
https://www.jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with

your request.
Anheuser Busch InBev (ABI.BR, ABI BB) Price Chart Date Rating Price (€) Price Target
(€)
01-May-19 N 79.26 82
150 UW €30 N €45 UW €46 26-Jul-19 N 90.00 85
07-Nov-19 N 71.77 71.5
125 N €85 UW €52.5N €36 UW €48 20-Feb-20 UW 68.20 60
28-Feb-20 UW 55.10 52.5
100 N €82 N €71.5 UW €60UW €36 N €55 N €65 17-Mar-20 UW 34.55 30
Price(€)
07-May-20 UW 38.96 36
75 20-May-20 N 37.93 36
03-Aug-20 N 46.12 45
50 03-Dec-20 N 56.12 55
07-Jul-21 N 59.44 65
25 02-Sep-21 UW 52.44 48
06-Oct-21 UW 48.36 46
0
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
18 19 19 19 19 20 20 20 20 21 21 21 21
Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jan 26, 2009. All share prices are as of market close on the previous business day.
Carlsberg (CARLb.CO, CARLB DC) Price Chart Date Rating Price (Dkr) Price Target
(Dkr)
18-Jun-19 N 882.00 895
1,808 N Dkr1,015
N Dkr825 OW Dkr1,340 15-Aug-19 N 950.00 940
10-Dec-19 N 987.00 950
1,582 N Dkr940 N Dkr1,000
N Dkr690 OW Dkr1,250
09-Jan-20 N 993.00 1,000
1,356 04-Feb-20 N 974.00 1,015
N Dkr895 N Dkr950
N Dkr1,000
OW Dkr1,050 OW Dkr1,215
OW Dkr1,230 N Dkr1,200
02-Mar-20 N 887.60 1,000
1,130
Price(Dkr)
17-Mar-20 N 736.40 690
904 30-Apr-20 N 841.20 825
08-Jun-20 OW 900.60 1,050
678
03-Dec-20 OW 937.20 1,215
452 15-Apr-21 OW 1045.50 1,230
29-Apr-21 OW 1077.00 1,250
226
01-Jul-21 OW 1169.00 1,340
0 02-Sep-21 N 1110.00 1,200
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Nov 09, 2007. All share prices are as of market close on the previous business day.
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Heineken (HEIN.AS, HEIA NA) Price Chart Date Rating Price (€) Price Target
(€)
01-May-19 OW 96.24 110
168
OW €83.25 N €85 OW €120 10-Dec-19 OW 95.50 105
147 12-Feb-20 OW 97.76 111
OW €111 N €83.2 N €90 N €105
17-Mar-20 OW 75.02 83.25
126
02-Jul-20 N 81.56 80
OW €110 OW €105 N €80 N €95 N €92
105 03-Aug-20 N 82.24 83.2
Price(€)
03-Dec-20 N 90.12 95
84
02-Feb-21 N 87.10 90
63 11-Feb-21 N 84.50 85
22-Apr-21 N 96.54 92
42 28-Jun-21 N 103.10 105
12-Jul-21 OW 99.14 120
21
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Sep 16, 1997. All share prices are as of market close on the previous business day.
Coca-Cola Hellenic Bottling Company (CCH.L, CCH LN) Price Chart Date Rating Price (p) Price Target
(p)
5,016 28-Oct-19 OW 2327 2,700
OW 2,900p
OW 1,980p OW 2,650p N 2,850p 10-Dec-19 OW 2511 2,800
4,389 15-Jan-20 OW 2711 2,900
OW 2,800p
OW 3,000p OW 2,525p OW 2,750p OW 3,150p
17-Feb-20 OW 2840 3,100
3,762
05-Mar-20 OW 2604 3,000
OW 2,700pOW 3,100p
OW 2,325p OW 2,700p OW 3,000pN 2,725p
3,135 17-Mar-20 OW 1574 1,980
Price(p)
07-May-20 OW 1928 2,325
2,508
07-Aug-20 OW 2172 2,525
1,881 11-Nov-20 OW 2137 2,650
02-Dec-20 OW 2184 2,700
1,254
15-Feb-21 OW 2375 2,750
02-Jun-21 OW 2569 3,000
627
13-Aug-21 OW 2670 3,150
0 02-Sep-21 N 2662 2,850
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 12-Oct-21 N 2378 2,725
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage May 08, 2013. All share prices are as of market close on the previous business day.
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Coca-Cola Europacific Partners (CCEP, CCEP US) Price Chart Date Rating Price ($) Price Target
($)
28-Oct-19 N 54.19 55.5
OW $45 N $41.15 15-Jan-20 OW 51.33 62
96
17-Mar-20 OW 35.79 45
OW $62 OW $51 29-Apr-20 OW 40.08 47.25
80
07-Aug-20 OW 40.61 51
N $55.5 OW $47.25 N $49 OW $70 29-Oct-20 N 36.73 41.15
64
Price($)
12-Feb-21 N 51.36 49
48 02-Jun-21 OW 60.66 70
32
16
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage May 16, 2000. All share prices are as of market close on the previous business day.
Coca-Cola Europacific Partners (Euro) (CCEPC.AS, CCEP NA) Price Chart Date Rating Price (€) Price Target
(€)
28-Oct-19 N 48.40 50
84 OW €41 15-Jan-20 OW 46.05 56
17-Mar-20 OW 32.75 41
70 OW €56 29-Apr-20 OW 37.90 43.5
29-Oct-20 N 31.75 35
56 N €50 OW €43.5 N €35 N €41.5 OW €57.5 12-Feb-21 N 42.05 41.5
Price(€)
02-Jun-21 OW 49.66 57.5
42
28
14
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Apr 02, 2017. All share prices are as of market close on the previous business day.
20
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Britvic (BVIC.L, BVIC LN) Price Chart Date Rating Price (p) Price Target
(p)
10-Sep-19 OW 861 985
1,632 OW 850p 18-Oct-19 N 1068 1,065
03-Feb-20 OW 926 1,065
1,428 N 1,065p OW 875p OW 950p OW 1,075p
17-Mar-20 OW 686 875
1,224 06-May-20 OW 718 850
OW 985p OW 1,065p OW 900p OW 1,000p
23-Sep-20 OW 818 900
1,020
Price(p)
27-Nov-20 OW 822 950
816 14-Apr-21 OW 860 1,000
02-Jul-21 OW 951 1,075
612
408
204
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Nov 09, 2007. All share prices are as of market close on the previous business day.
Pernod-Ricard SA (PERP.PA, RI FP) Price Chart Date Rating Price (€) Price Target
(€)
01-May-19 OW 155.35 185
312 N €145 OW €225 17-Mar-20 N 122.05 130
273 03-Sep-20 N 145.05 148
N €140 N €200
29-Sep-20 N 135.95 140
234
22-Oct-20 N 140.95 145
OW €185 N €130 N €148 N €160 N €190
195 03-Dec-20 N 159.00 160
Price(€)
23-Apr-21 N 175.30 190
156 02-Jul-21 N 187.00 200
117
09-Sep-21 OW 186.00 225
78
39
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Dec 19, 1997. All share prices are as of market close on the previous business day.
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Royal Unibrew (RBREW.CO, RBREW DC) Price Chart Date Rating Price (Dkr) Price Target
(Dkr)
08-Jun-20 UW 560.40 465
1,316 UW Dkr600 N Dkr750 20-Aug-20 UW 676.80 540
19-Nov-20 UW 697.60 600
1,128 UW Dkr540 N Dkr700 05-Mar-21 N 628.60 610
29-Apr-21 N 772.20 700
940 UW Dkr465 N Dkr610 N Dkr800
29-Jun-21 N 803.80 750
Price(Dkr) 752
02-Sep-21 N 826.40 800
564
376
188
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Jun 07, 2020. All share prices are as of market close on the previous business day.
Davide Campari-Milano NV (CPRI.MI, CPR IM) Price Chart Date Rating Price (€) Price Target
(€)
05-Aug-19 UW 8.32 7
24
17-Mar-20 UW 5.62 5.1
OW €13
07-May-20 UW 7.01 6
01-Sep-20 OW 8.59 10
18 UW €6 OW €10.65 OW €12.5
03-Dec-20 OW 9.47 10.65
05-May-21 OW 10.18 11.15
UW €7 UW €5.1 OW €10 OW €11.15 29-Jun-21 OW 11.39 12.5
Price(€)
12 28-Jul-21 OW 11.74 13
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Dec 15, 2004. All share prices are as of market close on the previous business day.
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Remy Cointreau SA (RCOP.PA, RCO FP) Price Chart Date Rating Price (€) Price Target
(€)
05-Aug-19 N 130.00 128
301
UW €103UW €64.5 UW €99 N €165 25-Sep-19 UW 122.60 110
258 10-Dec-19 UW 115.70 103
UW €110 UW €90 UW €97 UW €125 N €167 07-Jan-20 UW 108.70 100
215 24-Jan-20 UW 112.00 90
N €128 UW €100 UW €72.25 UW €116.5 N €150 N €170
17-Mar-20 UW 85.35 64.5
172 29-Apr-20 UW 101.70 72.25
Price(€)
05-Jun-20 UW 124.40 97
129
23-Jul-20 UW 136.40 99
21-Oct-20 UW 153.70 116.5
86
27-Nov-20 UW 148.20 125
43 23-Mar-21 N 159.10 150
26-Apr-21 N 170.10 167
0 04-Jun-21 N 164.20 165
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 30-Jun-21 N 173.00 170
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Mar 31, 2005. All share prices are as of market close on the previous business day.
Anheuser-Busch InBev (ADR) (BUD, BUD US) Price Chart Date Rating Price ($) Price Target
($)
01-May-19 N 88.94 92
162 UW $33 N $53 UW $54 26-Jul-19 N 99.49 94.5
07-Nov-19 N 79.33 79
135 N $94.5 UW $57.75N $39 UW $57 20-Feb-20 UW 73.60 65
28-Feb-20 UW 60.21 57.75
108 N $92 N $79 UW $65UW $39 N $66 N $77 17-Mar-20 UW 37.20 33
Price($)
07-May-20 UW 42.63 39
81 20-May-20 N 41.26 39
03-Aug-20 N 54.43 53
54 11-Jan-21 N 71.08 66
07-Jul-21 N 70.34 77
27 02-Sep-21 UW 62.29 57
06-Oct-21 UW 56.18 54
0
18 19 19 19 19 20 20 20 20 21 21 21 21
Initiated coverage Apr 08, 2010. All share prices are as of market close on the previous business day.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected
total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it
does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P.
Morgan’s research website, www.jpmorganmarkets.com.
23
(44-20) 7134-7123 14 October 2021
Coverage Universe: Pannuti, Celine: Anheuser Busch InBev (ABI.BR), Anheuser-Busch InBev (ADR) (BUD), Beiersdorf (BEIG.DE),
British American Tobacco (BATS.L), Chr. Hansen (CHRH.CO), Danone (DANO.PA), Diageo (DGE.L), Essity (ESSITYB.ST),
Givaudan (GIVN.S), Heineken (HEIN.AS), Henkel (HNKG_p.DE), JDE Peet's (JDEP.AS), Kerry Group (KYGa.I), L'Oréal (OREP.PA),
Nestle (NESN.S), Ontex (ONTEX.BR), Pernod-Ricard SA (PERP.PA), Reckitt Benckiser (RKT.L), Symrise (SY1G.F), Unilever NV
(ULVR.AS), Unilever plc (ULVR.L)
Ryan, Fintan: Britvic (BVIC.L), Carlsberg (CARLb.CO), Coca-Cola Europacific Partners (CCEP), Coca-Cola Europacific Partners
(Euro) (CCEPC.AS), Coca-Cola Hellenic Bottling Company (CCH.L), Davide Campari-Milano NV (CPRI.MI), Fevertree Drinks
(FEVR.L), Remy Cointreau SA (RCOP.PA), Royal Unibrew (RBREW.CO), Stock Spirits (STCK.L)
J.P. Morgan Equity Research Ratings Distribution, as of October 02, 2021

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage* 51% 37% 12%
IB clients** 54% 49% 35%
JPMS Equity Research Coverage* 49% 38% 13%
IB clients** 78% 71% 52%
*Please note that the percentages might not add to 100% because of rounding.
**Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking
services within the previous 12 months.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
This information is current as of the end of the most recent calendar quarter.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered
companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst
or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com. For material information about the proprietary
models used, please see the Summary of Financials in company-specific research reports and the Company Tearsheets, which are
available to download on the company pages of our client website, http://www.jpmorganmarkets.com. This report also sets out within it
the material underlying assumptions used.
A history of J.P. Morgan investment recommendations disseminated during the preceding 12 months can be accessed on the Research &
Commentary page of http://www.jpmorganmarkets.com where you can also search by analyst name, sector or financial instrument.
Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon various
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companies, public appearances, and trading securities held by a research analyst account.
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Sanctioned Securities. Clients should be aware of their own legal and compliance obligations when making investment decisions.
24
(44-20) 7134-7123 14 October 2021
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JPM European Beverages Q 2021-10-13 3886260

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Europe Equity Research

Q3 21 earnings season – In the charts

Source: J.P. Morgan estimates. H220 H221e

Source: J.P. Morgan estimates.

Source: Company reports and J.P. Morgan estimates. FY21 FY22

Reporting dates Figure 5: European Beverages – Consensus FY2 P/E vs US 10year

28-Oct ABI (Q3 results) 17 1.5%

Navigating the Q3 21 Earnings Season

Q3 previews – top picks & avoids into Q421/2022

Positive forecast momentum and/or attractive valuations

Coca-Cola Europacific Partners (OW; CCEP): Q3 2021 sales - 9 November. For

Heineken (OW; HEIA): Q3 2021 trading statement - 27 October. Following

Full valuation and/or worsening earnings visibility

Royal Unibrew (N; RBREW): Q3 2021 – 17 November. Based on likely strong

CCH (N; CCH): Q3 2021 sales - 3 November. Based on continued re-opening

Elevated earnings risks on significant raw materials headwinds

Top-Line: Q3 momentum to ease, with focus on pricing

EMs: The environment in several EMs still remains challenging, in particular in

Source: J.P. Morgan estimates. Source: J.P. Morgan estimates.

Table 1: European Beverages organic sales growth, calendarized

Mixed margins dynamics

Table 3: European Beverages organic EBIT growth, calendarized

RM inflation seeing further acceleration (JPM Commodity tracker September

Source: J.P. Morgan estimates and Bloomberg Finance L.P.

Earnings: clear divergence in EPS momentum

Table 4: European Beverages adjusted EPS growth, calendarized

Valuation divergence at the highs

Figure 19: Indexed subsector share price performance ytd

Bevs MSCI Europe Staples Brewers Spirits Soft Drinks

Source: Bloomberg Finance L.P., J.P Morgan estimates

Figure 27: JPM European Beverages valuation table

https://www.jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with

J.P. Morgan Equity Research Ratings Distribution, as of October 02, 2021

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