Health warnings on alcohol are an alert to investors too

{"text":[[{"start":8.5,"text":"Few purveyors of alcohol will be toasting the new year. "},{"start":11.804,"text":"Just three days in to 2025, the US surgeon-general was advocating labels to warn drinkers of the link to cancer. "},{"start":18.584,"text":"This time next year, Ireland will be health-labelling its drinks. "}],[{"start":23.119999999999997,"text":"The sector has little to be merry about in any case. "},{"start":26.299,"text":"Abstinence is in vogue, at least in swaths of the developed world. "},{"start":30.141999999999996,"text":"The ranks of US adults aged 18-34 who have “ever” drunk an alcoholic beverage has fallen from 72 per cent to 62 per cent over the past two decades, according to Gallup polling. "},{"start":40.497,"text":"As if lower sales are not headache enough, tariffs mooted by US president-elect Donald Trump stand to erode earnings. "}],[{"start":47.849999999999994,"text":"This starts to smack of structural decline. "},{"start":50.71699999999999,"text":"So far, the weak Chinese consumer — quaffing a tenth of Pernod’s net sales — and a natural slide from the Covid-inspired boost, had all the hallmarks of a cyclical downturn. "},{"start":60.53399999999999,"text":"Share prices and valuations duly crumpled. "},{"start":63.276999999999994,"text":"UK-listed Diageo, with shares off by a tenth last year, looks relatively unscathed beside France’s Pernod Ricard, nearly 30 per cent, and cognac maker Rémy Cointreau’s 40 per cent. "}],[{"start":null,"text":"

"}],[{"start":75.31,"text":"Reflecting a deeper fall, expect analysts to scratch earnings estimates lower — if companies don’t beat them to the punch and do so at upcoming quarterly results. "}],[{"start":83.96000000000001,"text":"Introducing tougher regulations can do serious damage to earnings. "},{"start":87.96400000000001,"text":"Big Tobacco turned to vapes as part of its efforts to offset clampdowns on conventional cigarettes, but regulators followed suit and vapes went up in smoke. "},{"start":95.894,"text":"Marlboro maker Altria wrote off virtually its entire $12.8bn investment in Juul before exiting. "}],[{"start":103.16000000000001,"text":"Still, the beauty of beer goggles is the ability to see the glass half full. "},{"start":107.83900000000001,"text":"Drinking follows classic rules: most is done by the minority. "},{"start":111.66900000000001,"text":"In developed markets about 60 to 90 per cent of alcohol is consumed by the top 20 per cent of drinkers, according to Bernstein. "},{"start":118.89900000000002,"text":"These hardened souls are far less likely to be deterred by warnings. "}],[{"start":null,"text":""}],[{"start":123.00000000000001,"text":"Big tobacco also offers a handy playbook. "},{"start":125.97900000000001,"text":"Cigarette manufacturers doubled down on less-rich countries, where rules are laxer. "},{"start":130.697,"text":"Philip Morris International in 2005 went so far as to buy clove cigarette maker Sampoerna in Indonesia, where smoking rates approach double those of the US. "},{"start":139.43900000000002,"text":"In the past decade, PMI’s annual net revenues have only shrunk meaningfully twice. "}],[{"start":145.28000000000003,"text":"Distillers and brewers have not been slouches. "},{"start":148.10900000000004,"text":"Many rushed to China and other places where burgeoning middle classes were coming of age in the noughties. "},{"start":153.07700000000003,"text":"They have also picked up non-alcoholic beverages such as Seedlip, gaining exposure to teetotallers. "}],[{"start":158.73000000000002,"text":"Those only go so far. "},{"start":160.70900000000003,"text":"Economic malaise makes China a poor prop. "},{"start":163.42700000000002,"text":"Unlike vapes, non-alcoholic drinks won’t attract regulatory wrath, but presumably consumers will at some point question why they are forking out alcoholic prices for fancy pop. "},{"start":172.894,"text":"Investors have been warned. "}],[{"start":174.56,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/187444-1736241207.mp3"}