I would like to say how much I enjoy the e-mails from Langton Capital on a daily basis. I use the newsletter as an ideal way of keeping me up to date with what is going on financially in the drinks industry.
Tenanted pub company
DGE Q3, Just Eat, trading, soft drinks, slot machines & other:PREMIUM EMAIL – PLEASE DO NOT FORWARD: A DAY IN THE LIFE: Sometimes phrases help you to illustrate a few concepts, for example, I might say ‘they cut off his head but they gave him a biscuit’ and that helps to highlight a number of things. Firstly, false equivalence. There’s good news and there’s bad news but these are hardly equivalent. The biscuit might be tasty but the head-chopping is a more substantial down downer. At least it is to most people. Secondly, timing. The statement is unclear. But a biscuit whilst your head is attached to your shoulders is one thing whilst, if it’s thrown in the basket to keep your head company after the latter has departed your body, that’s quite another. And thirdly, linked to number one above, there’s scale. False equivalence would encompass losing a tenner and finding a fiver but being gifted a chocolate digestive before (and even more so after) your head has been cut off is on a logarithmically different scale. Anyway, don’t know why that came into my head. On to the news: PUBS & RESTAURANTS: Trading: GCA has reported that the sunny weather has been positive for long drinks with beer and cider sales sharply better. In the week to 26th April, it reports that cider sales were up 12.7% with soft drinks up 8% and beer sales 2.7% better. Spirits were still in negative territory at minus 2.4% and wine sales were worse at minus 5.9%. in the next week, ending 3rd May, CGA reports that cider sales were up as much as 43.2% with beer up 15.1% and soft drink sales up by 8.5%. Spirits sales were in nominal growth of 1.8% with wine still negative at minus 3.1%... • CGA reports that ‘On Premise suppliers and operators have enjoyed double-digit drinks sales growth as consumers flock to beer and cider in the warm weather.’ It says that total drink sales were up by 2% in LFL terms in the week to 26 April and up by 12% in the following week. • CGA reports that ‘coming on the back of a solid March, the latest run of growth means drinks sales have now been in year-on-year growth for ten of the last 11 weeks.’ It adds that ‘trading subsided briefly after Easter, with some consumers watching their spending in the aftermath of the long Bank Holiday weekend. But as the sunshine set in across many parts of Britain, daily sales rocketed by between 13% and 30% on every day from Sunday 27 April to Friday 1 May.’ • Rachel Weller at CGA says ‘after a challenging start to 2025, the prolonged good weather has made for a very good Spring for On Premise drinks sales. Full pub gardens and terraces have delivered a bumper April for LAD categories and soft drinks, and with the sunshine continuing and another Bank Holiday approaching, May could well be an even stronger month.’ • CGA cautions, however, that ‘disposable incomes are finite, and many people will be watching their spending—but it’s clear that when the sun shines, drinking out remains a top priority for their leisure time.’ Drivers of drink: Japanese major Asahi has reported that alternative uses for time such as gaming, video streaming and social media have had a greater impact on alcohol consumption than concerns over health amongst Gen Z consumers... • Asahi CEO Atsushi Katsuki says the rise of digital entertainment platforms has impacted demand for alcoholic drinks. He says ‘alcohol used to occupy a much bigger share of people’s entertainment and joy.’ The FT reports the CEO as saying ‘in the past 10 years, the number of entertaining things has grown including gaming, so I believe alcohol’s share of fun, enjoyment and happiness has decreased.’ Demographics: The FCA has reported that as many as one in 10 UK adults have no savings whatsoever. This leaves them exposed to financial shocks and, as such, spending levels can be volatile and subject to sharp reversal. The FCA goes on to say that around a quarter of the UK adult population has ‘low financial resilience’. Soft drinks: Carlsberg Britvic’s Soft Drinks Review 2025 concludes that, as regards the on-trade, ‘soft drinks is one of the strongest performing sub sectors for the UK’s licensed operators. It says this sector has grown by 0.6% to £4.6bn on volumes down 5.6%. The review ‘reveals the challenges the industry is facing; a decrease in the number of pub visits, which has dipped by 1.7% to 1.15 occasions a week and an increase in demand for “quality” when they do visit’. It says this highlights ‘the importance of providing elevated experiences and a sense of occasion...’ • The Soft Drinks Review ‘shines a light on the growing numbers of people using alcohol moderation tactics, with a third (32%) opting for water between alcoholic drinks when they’re on a night out ’most’ or ‘all of the time’’. It adds, unsurprisingly, that this is ‘a strong opportunity for soft drinks, suggesting that huge value can be unlocked by tapping into the category.’ • Regarding the on-trade in general, Carlsberg Britvic reports ‘the industry is facing its fair share of challenges: people are going to the pub less and they’re continuing to cut down on alcohol, which accounts for 85.1% of the pub trade’s revenue, a whopping £26.6bn.’ It adds ‘in addition to this, overall drinks sales through licensed venues have dipped by 0.7% to £31.2bn on volumes down 3.4% in 2024.’ • Carlsberg Britvic VP Sales On-Trade says ‘big nights outs are being redefined; they don’t necessarily lead with a focus on alcohol. Instead, consumers are increasingly looking for venues that offer the right experiences. And they’re prepared to shop around to get it. As a result, the competition is fiercer than ever. We’re seeing venue choices widening and the likes of gastropubs and ‘competitive socialising’ venues-think escape rooms, axe throwing, digital darts and virtual driving simulators-continuing to grow in popularity.’ • Aside from an improved soft drinks menu, Carlsberg Britvic suggests that licensees should ‘offer experiences that go beyond alcohol and food: Live entertainment, events and themed menus can all help lure people to pubs and bars for evening drinks, as can the development of wider and more sophisticated soft drinks menus.’ COMPANY NEWS: Spirits giant Diageo has reported Q3 numbers saying that it saw ‘strong Q3 organic net sales growth’ and adding that it is ‘on track for [the] full year with sequential improvement in H2.’ The group reports that net sales for the third quarter increased by 2.9% to $4.4bn, with ‘positive organic growth partially offset by unfavourable foreign exchange and disposals’. The company says that ‘organic net sales were up 5.9% in the quarter, with organic volume up 2.8% and positive price/mix of 3.1%.’ the company adds that its ‘performance in the quarter was supported by favourable phasing which we estimate contributed c.4% of Q3 group organic net sales growth, mainly from North America and to a lesser extent Latin America and Caribbean, and is expected to reverse in Q4....’ • Diageo says that ‘all regions delivered positive price/mix except Asia Pacific where continued consumer downtrading and adverse market mix impacted net sales.’ It is reiterating its full year fiscal 25 guidance for organic net sales and operating profit. • The group says ‘we expect to sustainably deliver c. $3bn free cash flow per annum from fiscal 26, increasing as performance improves. This is supported by a c.$500m cost savings programme, which will enable both reinvestment in future growth and improved operating leverage. We expect to return to well within our target leverage ratio range of 2.5 - 3.0x no later than fiscal 28 providing us with a lot more flexibility, and which will also be supported by appropriate and selective disposals over the coming years.’ • CEO Debra Crew says ‘in the third quarter we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal 25.’ She says ‘we also reiterated our organic operating profit outlook for fiscal 25, including the impact of tariffs based on what we know at this time.’ • Ms Crew adds ‘we continue to believe in the attractive long-term fundamentals of our industry and in our ability to outperform the market. We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery.’ She says that the group’s Accelerate programme will ‘ensure that we are well-positioned to deliver sustainable, consistent performance while maximising shareholder returns; even if current trading conditions persist.’ • Re the longer term outlook for fiscal 2026, the company says ‘we continue to expect to deliver positive operating leverage, with organic profit growth ahead of organic net sales growth.’ It says that it will share more details at the full year numbers on 5 August. Prosus has today officially launched its recommended all-cash offer to buy Just Eat Takeaway at €20.30 per share. It points out that the price ‘represents a premium of 63% to the Company's closing share price on 21 February 2025, and a 49% premium over the 3-month VWAP.’ It adds that the offer is ‘unanimously recommended by Just Eat Takeaway.com’s management board and supervisory board’ and the Acceptance Period runs from 20 May 2025 to 29 July 2025.... • Just Eat will hold its EGM to discuss the offer on 8 July 2025 and completion is expected before the end of the calendar year. Prosus adds that, if it ‘obtains 95% or more of JET's Shares, it will initiate statutory Squeeze-Out proceedings and may elect to implement the Asset Sale.’ • It adds that it if ‘obtains between 80% and 95% of the Shares it intends to implement an Asset Sale and Liquidation to acquire full ownership of the JET business. The Offeror may only implement the Asset Sale if approved at the EGM.’ Fabricio Bloisi, CEO of Prosus adds ‘Europe is at a pivotal moment to create a new generation of AI-powered tech champions, and this transaction is a unique opportunity to lead that transformation. With Prosus’s strong technical and investment capabilities, combined with JET’s leading brand position in key European markets, I’m confident this deal will create tremendous value for our customers, drivers, partners, and shareholders.’ • And Jitse Groen, CEO and Founder of Just Eat Takeaway.com, says ‘the launch of the Offer marks an important milestone in the transaction process. We are excited about the future and the opportunities this brings and recommend that our shareholders tender their shares and vote in favour of the resolutions at the upcoming EGM.’ • Just Eat says that its management and supervisory ‘boards believe that the Offeror has made a compelling offer representing an attractive cash premium to the Shareholders, as well as favourable non-financial terms and commitments in respect of deal certainty. The Boards unanimously conclude that the Transaction is in the best interest of JET and promotes sustainable success and the sustainable long-term value creation of its business, taking into account the interest of all of JET’s stakeholders.’ Sir Harry Solomon is reported set to sell shares in Lola's Cupcakes, which now has 45 sites, including concessions and vending machines in train stations. The brand was founded in 2006 by Victoria Jossel and Romy Lewis. City broker Shore Capital is thought to be handling the sale. The FT reports that ‘Richard Caring is in advanced talks to sell a significant portion of his UK hospitality empire — which includes the Ivy restaurants chain and London private members’ club Annabel’s — to an entity controlled by the powerful Abu Dhabi royal Sheikh Tahnoon bin Zayed al-Nahyan....’ • It says that talks ‘which have been ongoing for some time and intensified in recent weeks — may result in a deal that could exceed more than £1bn, according to people with knowledge of the matter.’ This would ‘mark a partial exit for Caring.’ Champagne strikes. Staff at a number of LVMH’s Champagne houses have gone on strike amid fears of job cuts. Staff at G.H Mumm and Perrier-Jouët, owned by Pernod Ricard, are also taking industrial action. NEOS Hospitality has confirmed that ‘Kuda’ in Clifford Street, York, which was formerly The Gallery, will reopen this month after a refurbishment following its closure on March 29. Cava in the US has outperformed a number of other casual diners and has turned in 10.8% year-over-year growth in Q1. Bloomberg reports that Starbucks Corporation is considering a sale of a stake in its China business. HOLIDAYS & LEISURE TRAVEL: The Daily Mail reports that Olga Polizzi, daughter of patriarch Charles Forte, is set to continue the expansion of her hotel empire. The BBC reports that theme park operator Flamingo Land is set to be given permission by the Scottish government for a controversial holiday park development at Loch Lomond, overturning the decision of the national park authority. The FT reports that tougher US border controls are prompting a rethink when it comes to business travel decisions. It says that ‘with Donald Trump back in the White House, many corporate executives, academics and government officials in Europe and elsewhere are approaching trips to the US with a level of caution more often associated with higher-risk jurisdictions such as China and some countries in the Middle East.’ Union Unite has said that a strike at Gatwick Airport, which could have disrupted half-term travel, has been called off. The government is pushing for a deal with the EU to allow UK passport holders to use EU e-gates at airports. OTHER LEISURE: The Guardian reports that ‘slot machine companies are targeting Britain’s poorest neighbourhoods and channelling the proceeds to billionaire-owned overseas corporations.’ It says that ‘the number of slot machine shops has risen by 7% since 2022’ and adds that ‘venues are disproportionately concentrated in Britain’s most-deprived areas.’ Meanwhile, four Premier League clubs have been warned by the Gambling Commission that they risk prosecution over their relationship with an unlicensed gambling business that is advertised by the teams.... • The BBC reports that ‘Bournemouth, Fulham, Newcastle, and Wolves - plus Burnley who have earned promotion from the Championship for next season - are all sponsored by betting websites run by TGP Europe.’ It adds ‘the company surrendered its British licence after an investigation found it had failed to "carry out sufficient checks on business partners" and breached "anti-money laundering rules"’. FINANCE & MARKETS: The CBI has called for the UK to ‘build bridges’ with the EU. It says that the current agreement is ‘no longer fit for purpose’. Moody’s has cut its rating for US debt saying that ‘successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.’ Rightmove reports that asking prices for British homes rose by 0.6% in the month of May. It says this was likely due to the 14% rise in new properties coming to the market. Sterling mixed at $1.3299 and €1.1895. Oil higher at $65.07. UK 10 year gilt yield unchanged from Friday at 4.65%. World markets better on Friday but Far East down today & London set to open around 29 points lower as at 6.30am. RETAIL WITH NICK BUBB: Today’s News: Apart from the usual flurry of share buyback announcements, there is no retail news out today, although back on Friday the hyper-active Frasers made a couple of announcements, one that CEO Michael Murray has joined the Hugo Boss supervisory board (as had been planned a while ago) and the other that, further to the announcement made on 26 November 2024, it had completed the acquisition of Holdsport in South Africa, ‘following the satisfaction of customary regulatory conditions’. Saturday’s Press and News (1): On Saturday, in terms of the front-page headlines, the Times led on an interview with the Prime Minister ("Starmer hails Brexit reset"), whilst the Guardian led with an interview with the Chancellor ("UK on path to deeper EU relationship, says Reeves”). The Financial Times went with the news that the pharmaceutical firm that makes Ozempic, Novo Nordisk, has fired its chief executive, whilst the Telegraph ran with “Hands off ISAs, banks tell Reeves”. The Prime Minister is prepared to make a U-turn on his plans to cut winter fuel payments, according to the Daily Express ("Finally some sense"), whilst the Daily Mail wailed that “Parking fines could rocket by 75%”. And... if you’re wondering what nonsense the wretched and discredited Boris Johnson wrote in his Daily Mail Saturday column, he claimed that “On Day One in office Starmer made a colossal goof for which we're all paying the price. It's time to bring back Rwanda”. Saturday’s Press and News (2): In terms of Retailing news in Saturday’s papers, the finals on Friday from the big landlord Land Secs got some coverage in both the FT (“Landsec plots £2bn sales amid office rent rise”) and the Times (“Landsec more at home with residential assets”). The Times also chose to illustrate the brief news that Frasers’ boss Michael Murray has joined the Board of Hugo Boss with a photo of the Brazilian supermodel Gisele Bundchen...The FT also had an article about the results from the luxury group Richemont (“Richemont rules out big price increases on luxury goods despite US tariffs”) and a big feature on the controversial handling of its Russian business by the Zara fashion chain owner, Inditex (“Inditex’s unorthodox Russia departure leaves it primed for frictionless return”). The Telegraph highlighted the continuing problems of M&S with its cyber-attack (“Marks & Spencer admits employees’ personal data was stolen by hackers in cyber-attack on supermarket”). Sunday’s Press and News (1): On Sunday, the front-page headlines were mixed, but the new EU deal was a big focus: the Sunday Telegraph led with the Prime Minister's defence of his upcoming expected deal ("PM insists deal benefits UK"), whilst the Observer dedicated its front page to a photo of the PM embracing the European Commission leader Ursula von der Leyen (“Kiss and make up: Britain’s new deal with Europe”). The Mail on Sunday, however, wailed "Brexit? What Brexit?", describing the upcoming meeting with the EU as a "surrender summit", whilst the Sunday Express went with a warning from Nigel Farage ("Betray Britain at your peril"). The Sunday Times' lead story was that the Ministry of Defence will establish a new ‘Home Guard’, to protect power plants and airports from terror attacks. Sunday’s Press and News (2): On Sunday, in terms of Retailing news in the papers, the main Business story in the Observer was the rather old news that the Shein IPO has been delayed until the autumn (“Shein to delay listing as tax-free loophole closed”), whilst the Sunday Times and Sunday Telegraph both led their Business sections with the Poundland sale process (the headlines were “Poundland set to be sold - for a pound” and “Poundland rescue may cost thousands of jobs”, respectively). The main Business story in the Mail on Sunday was a preview of the M&S finals (“Defiant M&S set to raise divi despite cyber chaos”) and the Sunday Times also had an article about M&S’s continuing stock problems (“M&S apps allow staff to scan for shortages”). Sunday’s Press and News (3): In terms of the Economics comment columns in the Sunday papers, we give our usual shout-out to the column by David Smith, the Sunday Times Economics correspondent (headlined “The Bank makes mistakes but must stay independent”), in which he noted that ‘It took time before the Tories backed independence; some still do not’. Today’s Press: According to the invaluable Guardian press email summary, the front-page of the Guardian itself today flags the late-breaking news that Joe Biden has an ‘aggressive form’ of prostate cancer, but the headline lead story is “Talks on reset of UK-EU relations go ‘down to wire’ before summit”. “Labour revolt over Brexit betrayal” is the Telegraph’s take on that, while the Times has “EU’s fishing demands pose late threat to deal”. “PM risks Brexit vote ‘betrayal’” claims the Daily Mail under the heading “Starmer’s surrender summit” and the Daily Express highlights Tory leader Kemi Badenoch’s message: “PM is hellbent on selling out our Brexit freedoms”. The i runs with “Cheaper food and boost to trade - as UK agrees to follow EU rules in today’s big Brexit reset” and there’s a very similar headline for that story in the Financial Times (“Fisheries, food and youth mobility take EU-UK trade talks down to the wire”), but its splash story is on a very different topic: “Boutique lenders power post-Covid upswing in blank-cheque Spac deals”. BDO High Street Sales Tracker: The weekly BDO High Street Sales Tracker for medium-sized Non-Food chains gets a lot of focus, because… it is the only weekly (as opposed to monthly) guide, that’s publicly available, to what’s happening to Non-Food Retail spending. Unfortunately, it is focused on relatively upmarket/small Fashion retailers and underplays “big ticket” household spending (although it includes a few Homewares and Lifestyle retailers) and the survey’s approach is statistically flawed. However, the latest surveys have been painting a less bright picture since Easter, with Online sales under pressure... in w/e May 4th Total BDO LFL sales were only 0.3% up, whilst in w/e May 11th Total BDO LFL sales were down by 3.3%. News Flow This Week: As we head towards another Bank Holiday weekend (and skool half-term next week), there’s plenty of news around this week to distract us from the coverage of the Chelsea Flower Show on TV. Tomorrow brings a Greggs update and the Topps Tiles interims, plus the Deliveroo AGM. On Wednesday we get the much-awaited M&S finals, as well as the JD Sports finals/Q1 update, the Currys pre-close update and the Greggs AGM. Thursday brings the British Land finals and the Pepco/Poundland interims, whilst the monthly GFK Consumer Confidence index and the ONS Retail Sales figures for April are both out first thing on Friday. |
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