Good day and thank you for standing by. Welcome to the Sustainability and Responsibility Conference Call. At this time, all participants are in Please be advised that today's conference is being recorded. A listen only mode. I would now like to hand the conference over to your speaker today, Julia
We're hosted today by Vanessa Wright, our VP for a listen to sustainability and responsibility at the global level and Conor McQuade, our Chairman and CEO for the Irish Distillers Business.
On behalf of Pernod Ricard, I'm delighted and proud to be here to share the strong progress we've made on our 2,030 Sustainability and Responsibility S and R Strategy Good Times From A Good Place. This strategy was launched 2 years ago in cognac with key board members, top management, including our lead independent director listen and core business partners as part of the group's Transform and Accelerate road map. Back then, we talked to you about the importance of our comprehensive Grain to glass strategy and have since then provided you with regular updates on our actions. Today is another such occasion. Our vision at Pernod Ricard is to be cretes de conviviality.
And for us, it's all about how we do business, about how we do business in the right way As a sustainable and responsible company, it's also about the power of bringing human connections, bringing people close together in a meaningful way listen to unlock the magic and to strengthen what we do collectively. We believe that by working closely with others, we can learn listen only mode. We can improve by challenging each other and we can innovate by trialing solutions together, a listen together with our employees, with farmers, with producers, with suppliers and of course our consumers as we're created a conviviality. So it's by adopting a multi stakeholder approach. Before I talk about our progress, a quick reminder.
Our good times from a good place strategy is fully embedded into every part of our business. Listen. It's built around 4 key pillars with more than 30 commitments linked to the material risks of the business, a addressing our consumer needs and using the guiding beacons of the United Nations' Sustainable Development Goals. Let's
take a look.
A listen. We bring good times from a good place. We aspire to create a more convivial world, a A world without excess. Our products take their character from the land where they were grown. We nurture every terroir a and its biodiversity and respond to the challenges of climate change to ensure quality ingredients now and for generations to a listen.
Conviviality is about sharing warmth, care and respect for people everywhere. We increase diversity and fairness for all our people and empower people across our supply chain. A listen. We share a world of finite resources. We minimize waste at every step by imagining, producing and distributing our products and a very good position in ways that optimize and help preserve natural resources.
Our products bring people together a listen and serve a valuable role in society. We fight alcohol misuse in society by taking action on harmful drinking a
listen.
Listen. Nurturing terroir is our first pillar. Listen. All of our brands come from nature and take their identity from the land where they're grown, from the terroir, as we say in French. A listen.
Terrawa is actually more than just the land. It evokes an identity, a culture, a community and a sense of belonging. Listen. Our core business is inextricably linked to well functioning ecosystems in these terroirs, a global web of nature, if you like. And any degradation a listen only mode.
Of these has a direct impact on our natural ingredients we depend on to produce high quality products for generations to come. So it's vital listen for us to strengthen our agricultural supply chains to ensure business resilience and to future proof our iconic brands. So what have we been doing? We've been mapping our terroirs so that we know where all our natural ingredients come from. And as part of this, identifying the most pressing sustainability issues attached to those areas, such as water, pollution, biodiversity or social issues.
We've identified and mapped 57 priority terroirs, those that represent a high volume or a link to an iconic ingredient. They represent over 94% of our annual spend. Listen. Let's take a look.
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listen. We produce and source over 100 ingredients from more than 65 countries a listen to our iconic brands. This includes key ingredients such as wheat, barley and a variety of grains, cane and a Beet, grapes and agave and other flavoring ingredients that give our products their unique taste, coffee, coconut, star anise, a listen. It's important that we work with local communities in our terroir to safeguard and a
listen only mode.
Listen. But it's not enough just to identify risks and issues. We need to take action to protect and nurture this precious natural capital. So what actions are we taking? Well, we're adopting a holistic regenerative agricultural practices listen to help with carbon sequestration, water retention and biodiversity enhancement, developing new initiatives, a listen.
Let's hear from Conor McQuade, the CEO of Irish Distillers listen about what they're doing.
At Iris Distillers, we recognize the need to deepen and strengthen relationships with our spring barley growers, a listen to one of the key ingredients for making whiskey. Now our distillery in Middleton is located in a part of Ireland where the crop is largely grown. And as such, some of our suppliers are also our neighbors. Listen. Now in 2020, we devised a tailored sustainability program which financially incentivizes farmers to grow spring barley sustainably a listen and deliver additional environmental benefits on their farms.
These include initiatives to enhance biodiversity, including, for example, Leaving uncultivated margins, installing beehives or maintaining hedge growth in a manner that supports wildlife. We are delighted to have a very strong uptake last year with more than 200 suppliers signing up and we will continue to work with them to further develop this scheme.
A listen. Other great examples are with Martel cognac and Moom and Perijouet Champagne, where we've partnered with world renowned expert in agroecology, listen. Sebastien Romijois to run pilots with farmers who've been working with us for more than 10 generations. We are trialing a bit. Listen.
Following people starts with all our employees. A listen. At Polo and Rico, we strongly believe in blending performance with conviviality. And our last biannual employee survey, I say, showed 88% of our employees a listen. We felt highly engaged or engaged, and we believe conviviality is a key driver of this.
Diversity and inclusion or better balance, as we call it, listen. It's crucial for our company to mirror the broad spectrum of our consumer base. To strengthen this further, we've announced the launch of a new D and I roadmap, a live without labels, which includes a global D and I council made up of senior leaders, partnerships with external thought leaders listen and specific leadership training adapted to local D and I challenges as well as initiatives to create a mindset of true conviviality, one of tolerance, equity and inclusion for everyone. We've also been using the power of our brands to promote a more inclusive world. A good example of this is the Ballantine's There's No Wrong Way campaign.
A listen. Get a job. A job. Something you love. Something that pays the bills or whatever.
But you know, work. Work at a a listen. Go out and dance. Dance how they dance. A listen.
Dress cool, dress wherever, dress any way you want, post your life, host someone else's life, be someone else or delete your account, do your thing, a listen. Do their thing, his thing, her thing, call it your thing, anything. Drink it their way, drink it your way, a listen
only mode.
A listen. Stay true to who you are. And when you do, there's no wrong way to look, to feel, to move, to laugh. When you do, a listen.
We've also made steady progress on gender balance. Pernod Ricard is committed to having a gender balanced top management team by 2,030. And we've gone from 19% of women in top management roles listen to 26% in the last 5 years. Globally, women now represent 37% of our workforce. Listen.
I also want to touch on equal pay as we have a 2022 target. We measured it globally and it was only about 2%. A listen. Ever since then, we've been reducing it. And what about externally?
Well, we've developed a free Bar World of Tomorrow training course listen to help the bar community be more sustainable as they come back. And we're happy to share that this has been adopted by the Marriott, a listen to Hilton and Relay and Chateau Hotel Chains as part of the training path for their bartenders globally. In addition to this, we formed a strong partnership with the Sustainable Restaurant Association and Net 0 Now listen and we're signatories with Coca Cola of their net zero pubs and bar initiative to help the U. K. On trade become net 0.
We've also worked with the SRA to create an innovative online audit tool to help bars assess their level of sustainability a bit. We're looking to see how we can roll this out globally. A listen. Circular making is about how we imagine, produce and distribute our products in a listen in the right way. To do this, we apply our 5 R's framework for all stages.
Of course, this is all linked to carbon emissions, where our principle is always to start with reduction. We've already reduced the carbon intensity of our industrial operations by 1 third since 2010. Listen. And I'm pleased to announce today that for Scope 102, which is direct CO2 emissions from energy consumed by production sites a And indirect emissions from the energy purchased by our production sites, we're accelerating this target From 30% reduction to net 0 by 2,030 at the latest. Listen.
I'll now hand over to Conor to talk a bit about what Irish Distillers is doing to help with this reduction.
Listen. As you've just heard, the group has decided to accelerate its ambition to reach net zero carbon in its own operations by 2,030 at the latest. This is the right thing to do and we are looking forward to playing our part in realizing this ambition. For us at Iris Distillers, this will mean implementing a carbon 0 roadmap for Middleton Distillery listen to tackle Scope 1 and Scope 2 in a phased approach. In the first phase, we'll focus on improving energy efficiency, notably by replacing our current boilers with highly efficient boilers.
The second phase will recover heat from our distillation process, Allowing us to reuse the recovered energy and substantially reduce our gas usage. And finally, in our 3rd phase, We will replace the remaining fossil fuel usage with renewable fuels such as biogas. Now with regard to Scope 3, having recently mapped our carbon footprint, listen. We know that 75% of our emissions are currently in our supply chain. So there is a lot of opportunity here and we are already working with our partners areas such as dry goods supply, transport and logistics to tackle Scope 3 emissions.
Listen. For Scope 3, our aim is to reduce our overall intensity by 50% by 2,030, in line with the science based targets. To achieve this, we'll work with all of our suppliers, both in agriculture and packaging. So now turning to packaging and waste. Listen.
For this, we brought forward our ban on all single use plastic promotional items from 2025 to 2021. This includes things like festival cups, plastic bags and balloons. So by June this year, We will have eliminated more than 70,000,000 items from our business. Our commitment is to have 100% a replayable, reusable, compostable or bio based packaging by 2025. Let's take a look
a meeting. Developing new more sustainable packaging solutions to further minimize waste and our overall carbon footprint. A listen. We're reducing the weight of our bottles and increasing their recycled content as Well as looking at ways of reducing carbon emissions in the making process. We're removing plastic
We're also proud to be reusing bottles collected from bars and restaurants. Panarika India is reusing around 10% a listen of all the glass it uses for packaging its products, which is equivalent to about 60,000,000 bottles. Listen. For water, we've reduced our use by 23% in 2010. And our affiliates are currently developing their own water reduction roadmaps so that we can reduce further by 20%.
We also have strong water replenishment programs in countries identified as high risk. A listen. Pernod Ricard India is a great example of what can be achieved. They recharge 1.2 times more groundwater than they would withdraw for business operations, which makes them a net water positive company. Another example is Mexico, where we've worked with beer listen and the industry leaders to restore a protected area through reforestation, infrastructure repair and community education, listen, all of which have helped to relieve pressure from the Santiago River Watershed.
Listen. Our 4th pillar relates to how we market our products and how they're enjoyed in the right way. A listen. As created a conviviality, we are all really clear that there's no conviviality in excess and that we all have an important role to play in combating alcohol misuse and promoting responsible drinking. And that really starts with all of us at Pernod Ricard.
Listen. We're all ambassadors for responsible consumption. And as part of this, we've developed a mandatory e learning a listen only mode on alcohol and responsible drinking for all employees. Also, all our marketing commercial teams a listen. You must complete an e learning on the code for commercial communications.
Today, we are proud to contribute to more than 150 a listen. Global and local programs in more than 58 countries, working in close collaboration with industry, governments and local partners. Key to this is ensuring that they are evaluated to demonstrate impact. For more than 12 years now, we've been supporting the responsible party Make Good Times Unforgettable initiative, an efficient position. And our ambition is to reach 3,000,000 young adults physically by 2,030 and more than 30,000,000 digitally over the next 2 years.
Listen. We've also partnered with Unitar, the United Nations Institute For Training and Research to support the auto sobriety training program a listen to prevent drink driving. This is a comprehensive e learning course, which is also complemented by practical exercises. We are piloting this in South Africa and the Dominican Republic and plan to roll it out to 8 countries in the next 2 years. As a member of the International Alliance For Responsible Drinking, IARD, We're working with other key players in the industry, online retailers and delivery companies on a new set of standards to ensure that our products are not sold or delivered to minors.
Our brands also developed their own campaigns. Last year, Absolute launched a listen. It's Sex Responsibly campaign and this was followed by 3 other executions: Mix Responsibly, Vote Responsibly and Love Responsibly. These campaigns combined reached approximately 80,000,000 consumers and generated 90% positive sentiment in the U. S.
Here's another example from Irish Distillers, which I will let Conor introduce. Listen.
I ask all of my colleagues at IRIS Sicilis to be advocates for the responsible enjoyment of our products. And as such, We are focused on making sure that our employees have the necessary tools and skills to become ambassadors for responsible hosting. We also need to reflect and amplify this message through our brands and our corporate communications. Our most recent campaign took into account the current situation with COVID encouraging people drinking at home to do so responsibly. With this campaign, we reached over 60,000 people.
Let's take a look.
A a listen.
We strongly believe in sharing what we do in a clear and apparent way and are proud of our consistent scores by ratings agencies. We've also been recognized by UN Global Compact listen as a lead for our contribution towards achieving the SDGs, one of only 40 companies globally a listen only wine and spirit company. We know it's a journey and we have a way to go. We hope that today has given you a strong insight listen to the progress we've made so far and more importantly, the level of commitment and drive by everyone at Pernod Ricard. Listen.
To reinforce this, we've created a new Board Committee on SNR led by Patricia Barbizet, our Lead Independent Director, which will be key in pushing our commitments further. We also have very committed employees and we value their voices and actions and believe that many have great ideas to help improve our business. So we've launched the Good Challenge, a global search for the best employee SNR ideas. Listen. The global winner will be announced in September.
For us, sustainability is interwoven into every part of our business. And we know that if we want to continue to bring good times in the future from a sustainable point of view, Then we need to bring them from a good place, a place of shared value, innovation, partnership and care, a place of conviviality. Thank you very much. And now we'd like to invite you to our Q and A.
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listen. Your first question comes from the line of Edward Mundy from Jefferies. A listen.
Hi, afternoon. Thanks so much for the presentation. I've got 3 questions, please. First is around some of your innovation around the lower ABV strength on Ballantyne's, your Ballantyne's Lite. I appreciate it's quite hard to launch innovation in the current environment, But I'd be interested in any sort of early feedbacks from some of your key stakeholders, including the consumer, customers and also regulatory authorities.
Listen. The second is around e commerce. I think you mentioned that IR is working alongside The most prominent e commerce and delivery platforms, could you talk a little bit about how you raise standards on a online alcohol delivery when you control the front end, not necessarily the back end. And then the third is really around Sort of a distinction between beer, wine and spirits. So I think there isn't much distinction from a public health community perspective, but it does feel like spirits is unfairly taxed a I mean, how do you think about opportunities for equalization in taxation versus other alcohol?
Listen.
Okay. Thank you, Ed. Just to first, in terms of your question about Valentine's Light. So as you know, we launched this a little while ago in Spain. And at the same time, we also launched Beefy to Light as well.
Valentine's Light is 20% ABV. The results so far are in line with our expectations, I would say. Also to support this, we've launched a new advertising campaign in Spain that's called half an ad, a But all the characters. So that's in line with the Ballantine campaign, which is around Stay True. There's no wrong way.
But as I said, so far, We're seeing some very good results. Similarly, if I might add with BPHEETALYTE, which again was launched as a more of a trial in Spain a And it has been very successful in terms of engagement. I think it's reached something like 3,000,000 through YouTube and 4,000,000 on Twitter. A listen. And as a result of that, it's now also been launched in Portugal.
Listen. So that's to answer your first question. In terms of your second question, yes, as you know, we're working with IR in terms of making sure that we're putting in place a different mechanics for the future in terms of how we make sure that we, I would say, enhance safeguards and security measures so that miners are unable to buy our alcohol beverages online and also to make sure that alcohol is not being delivered a listen to miners as well, global online retailers and delivery platforms. So we're really united with our best stance possible a
listen. According to the public health community, there isn't much distinction between beer, wine, a Spirit to not drink advantageously in certain markets relative to other alcohol. I mean, how do you think about opportunities for
a listen. You said, I mean, for us, there isn't really or shouldn't be that the overall short term risk of excise tax a When we look at it, the for example, with the U. S. Administration, their tax Proposals have more broadly focused on other pieces of tax reform, and the U. S.
Are obviously focused on recovery, including the hospitality industry. So a listen. Thus, it seems that it's a significant tax increase at the state level have not materialized. For us, It should be looked at the difference between beer and wine and should Be treated the same in terms of, alcoholic beverages.
Great. Thank you.
A listen. Your next question comes from the line of Laurence White from Barclays. Please go ahead. Your line is now open.
A listen.
Hi, Vanessa, Connor and Judah. Thanks very much for taking the questions. 3 for me, if that's okay. On the water risk, a listen. Do you think there's any part of the business that's most at risk of water shortages?
Obviously, we've seen a few droughts In recent years in South Africa and Mexico, which have made the press, are there any of your production facilities do you think would be at risk of a listen. Or real risk of droughts? And then secondly, on your gender equality targets, what practices are you putting in place to make sure you try and achieve those Target's agenda balance. And what have been the most effective initiatives that you have employed so far? Thank you very much.
Okay. So the first one on water. We've obviously identified when we look at our different countries Which areas are higher risk than others? And actually, if we look at the different countries, then actually sitting in low risk Our 76 sites, which count for 89% of consumption, Significant is more like 10 sites with about 6%. And high risk is about 7 sites, which is 5%.
And those sites are mainly Australia, India and the U. S. Listen. But as you heard earlier, in terms of India, we've been making really significant progress. And actually, Pernod Ricard India is water positive a listen.
Through a number of different initiatives that we've undertaken, 200 plus, I would say, in terms of recharge structures, farm ponds, dams, tanks, a Harvesting and efficiency and also some initiatives working very much hand in hand with regenerative agriculture. A listen. So whilst it is one of the risks in terms of country, actually, there are significant a programs in place. Similarly, in Australia, where there are a number of different programs, including water probes across vineyards to monitor a bit. So the 3 countries really in terms of the high risk of those 7 sites in Australia, India and the U.
S. A listen. And then on gender, Around gender, we have an initiative or part of how we're operating. So if in 2011, it was 29%. A It's 37%.
Of course, that's much more of a challenge in terms of in a Divertically on that. The Board of Directors also is very balanced. It's 45%, 2015. Also external recruits in very senior positions, including the Chairman and CEO of Absolutin. Listen.
I wonder actually if I could hand over to Conor, who could perhaps just tell us.
Yes. Thank you, Vanessa. Just to complement your answer, I think Change in mindset and the opportunity to workshop that across the organization was very well received. And I think it had a tangible impact in pushing our agenda listen. As we would want to see it happen.
We're balanced now at an Irish distillers perspective. And if we go down into the organization, both at Band E, a Band D, we're absolutely fifty-fifty. And actually in Band C, we're slightly skewed to the female gender. So a listen. We believe we've made significant progress in that regard.
And I suppose one of the tangible initiatives that we would have put in place of late is really to facilitate that return to work a both from a parental leave and a maternity leave basis, but also just to foster that sense of the that stressful period when post a listen. Returning to work having had a child, that there's flexibility in the working day, that there's flexibility in the working week that people can come and go a listen and attend to some of those additional challenges that you experienced in those early days, in those early months of being a parent. So just fostering that environment and that collective a sense of awareness across the team is really what we've done.
Understood. Thank you very much.
A listen. Your next question comes from the line of Trevor Stirling from Bernstein. Please go ahead. Your line is now open.
Vanessa, Connor and Julia. Three questions on my side, please, on the agriculture and carbon agendas. So the first one is Vanessa, you mentioned that any Bulk commodities such as grain neutral spirits or perhaps some bulk grain in some geographies. Do you think you're going to end up going down the certificate process? So that's one first question.
Second question probably more for Conor. Conor talked about getting to net 0 in the distillery. And clearly, thermal is the big challenge. You mentioned biogas as your chosen solution. Have you considered things like electrode boilers and hydrogen?
What is it that made you decide that biogas was the best solution? And final one, maybe going back to you, Vanessa. When you think about Scope 3 emissions and distillate cognac, How are you going to work with them to reduce their carbon emissions?
Listen. Okay. So thank you. So for agriculture and carbon, obviously, as you say, Scope 3, and I think we will acknowledge that, that is Particularly challenging piece around 36% in packaging, 29% in raw materials and twelve listen. We need to work with all our suppliers, both for dry goods, but also as you said, that's Firstly, it's working directly with all of those by sustainable agricultural practice, some of which I touched upon earlier.
So Obviously, the reduction of pesticides, lower impact of CO2, fertilizer, more Sequestration of carbon in soil. And also, the ones where we don't have a direct contact with, for example, in India, where we're not necessarily directly in contact. It's really following through that supply chain and getting as close a listen. To agriculture, but also to packaging as well, where we've organized a series of seminars to bring together All of our large suppliers so that we can discuss and try and find solutions. And that's exactly what they're doing in Martell with all The generations of the wine growers that they work with to really try and find strong solutions for the future and try and pilot different ways of doing that.
A And if in some cases, that's not direct, then to try and reach them via those routes and to have some time together in terms of a bit of a discussion and learning to try and improve upon that. The biogas, I think, if I hand over to Conor on that one.
A listen. Yes. Good afternoon, Trevor. I suppose we've been fortunate from a Jemisin perspective that we've been on such a growth trajectory For the last 30 years, and obviously, that's been accompanied with a significant level of investment in the distillery. Since 2010, we've invested about 100,000,000 a listen.
Into our infrastructure. And then over that time, obviously, the S and O agenda has been to the forefront of our thinking. So that has brought about a 30% reduction in energy consumption Per unit of production, a 33% reduction in water consumption and a 46% reduction in Scope 1 a bit. Carbon emissions. So the challenge now is for us to close the remaining gap.
And as I alluded to in the video, the first port of call is obviously the efficiency of The infrastructure that is remaining are aging. And our first protocol obviously is the boilers that need to be reached the end of their natural lifespan and they will be replaced obviously a by energy efficient boilers. And thereafter, there's a series of heat recovery technologies that we're very clear on how that a The one that we would prefer to work with and use. So that would be Phase 2 of what we would seek to do to get to carbon neutrality. And then the final phase is that remaining that sort of difficult piece at the end.
And biogas is one area that we're exploring. And the reason we're drawn to that is that potentially it's a use of one of the byproducts of the distillation process. So again, it could close the loop from a circular making perspective, But it's not to the exclusion of some of the other technologies that you mentioned, such as hydrogen, and we are exploring them and working with a listen to people who have some innovating concepts and thoughts as to how that could potentially be of use to us. So we're not close to the outside world. We're certainly not close to the opportunity a listen to work with others to bring those new innovative thoughts to the table.
But as it stands at the moment, our roadmap does get us to carbon neutrality a And it does so with the use of those known technologies that we're going to work on.
Wonderful. Thanks very much, Connor and Vanessa.
Listen. Thank you.
Your next question comes from the line of Richard Weidt again from Kepler. Please go ahead. Your line is now open.
A listen. Yes. Thanks for the presentation and thanks for the questions. I have 2, please. First of all, you mentioned that glass is the main form of packaging and the percentage of Returnable packaging is limited in spirits.
So how can Pernod Ricard improve the recovery rates of a Packaging and is this a major topic in government regulation? And then the second question I have is On some of the circular packaging innovations you announced earlier this year for brands like Absolut and Bee Peter. So how quickly Do you expect these initiatives to be rolled out? And what is the consumer reaction to these new packaging types?
A listen. Yes. So thank you. In terms of glass packaging, as you rightly said, so 90% of Our packaging is glass, which is infinitely recyclable. But of course, we're working with suppliers to see how we can link to several things.
One is obviously about reducing the weight, We're quickly increasing the recycled content and also finding ways to see how we can make sure that we're aware We're part of the Ellen MacArthur Foundation, which, of course, focuses on plastics, but also on glass packaging, too. Firstly, which means that from the very beginning, when we're designing and creating packaging, we have those in mind So that we're trying to make sure that we're reducing the weight of the glass and the packaging from the very beginning. Many of our brands, as you saw from the presentation, have already reduced the weight. And also, for us, a Hugely important is around the recycled content. So when you look at Absolute, for example, the recycled content is 50%.
But of course, what we're doing is working with suppliers to see how we can continually improve that. It's also about how we make sure that we can a Reuse as much as possible. So for example, in India, as you probably heard from the presentation, a listen. We have pickers who are collecting empty bottles in cafes and restaurants and bringing them back to the site after they're washed by third parties. So That's about 30,000 tonnes a year, 10% of all glass.
So that's one example. But of course, hugely importantly and one of our targets a and see how we can improve upon recycling for the future. And I think it's true to say that it varies Quite significantly from one country to another. So for example, we know in the U. S, the recycling rate for glass is very low.
And we know it's also a big challenge because there's a difference in infrastructures in different countries. So that's something we've looked at. We've identified 10 countries We're starting to work with to see how we can identify what is currently being done and then how we can help to put in place, probably with other partners, obviously, a listen. Some new initiatives for the future. A And sorry, second question.
In terms of circular packaging and some of the new products that you mentioned, so the absolute a Paper bottle. We're trialing that. And so far, that's very successful. So we're Seeing in terms of timing, when we're going to roll that out. In terms of the consumer reaction, listen.
I believe that some social listening will be done in terms of the consumer reaction on that, But it's a bit too early for the time being to give you feedback on that. In terms of beef The feedback so far and the response from consumers has been very strong, both for the BC to light, but also a listen. Where we've reduced and removed some of the plastic caps.
A listen. Great. Thank you.
Your next question comes from the line of Alicia Fowry from listen. Please go ahead. Your line is now open.
Thank you. Two questions from me. One is, listen. Does Pernod see an opportunity to push responsible consumption or other a listen to ESG initiatives through the rise of RTD consumption and sort of seltzers and these sort of a higher growth segments, sort of portion controlled segments. And then the second question is a bit broader.
I'm just curious, Vanessa, how you interact with the executive team. And with the Board, you mentioned that the committee that has oversized of ESG, how do you interface a listen throughout the year. And in particular, I'm curious about how Pernod determines which a very busy position. Okay. I might take that one first actually and work back.
Listen.
Okay. I might take that one first actually and work backwards. Thank you for that. So actually, when we built the strategy, we built that obviously a With a huge number of people throughout the business, including particularly the operations function. And when we rolled out and launched the new strategy, we meeting.
We've brought it out with a very strong governance plan, both at a senior level, but also within throughout the organization. So Firstly, if I just talk about that level. So in terms of we have SNR leaders in every key country around the world who We worked directly with and of course, all of those affiliates have their own senior steering committees Basically, mimic what we set up. So the first one was in January. So we have 2 a year And once or twice the full report to the full board.
We also meet with the COMEX a listen at least twice a year. We have a senior steering committee, which was originally twice a year and has now a Become 4 times a year, so we're meeting every quarter. And that, I would say, is really a very strongly decision making forum. A listen. So it's really not a show and tell.
It really is strongly for decisions. And then we also have task forces linked with every single one a listen to our targets and an owner and leader of every single one of those targets. And we're also interacting a listen. With Patricia Barbizet, obviously, at the Board level, but also more frequently than that. And just in terms of reporting, obviously, we're reporting all our affiliates report to us on an annual basis and then that's audited externally by Deloitte.
A listen.
Yes. Thank you.
In terms of the work and you've Seeing that there's been an increase in that on low or no. As far as we're concerned, a listen. It's as if being alcoholic or not. For us, it's about how you consume, not what you consume. And I guess it's actually to the point one of the first questions.
A Strong beer can actually be a higher ABV than a cocktail with a spirit in it. So for us, in terms of Low or no. We look at consumption behaviors rather than product categories. For us, that's about really about education overall. But we do see low and no as an opportunity in the 7 part of the innovation agenda, which is obviously driven at a brand company level in a bit.
In terms of future thinking, in terms of the brands and what their consumers are looking for, for the future. So it's really driven by
a
a listen. Listen. We do have a question from the line of an Edward Munday. Please go ahead. Your line is now open.
Hi. Thanks for taking the follow-up and actually my dog is not going to bark this time around. Listen.
Just a
question on sort of the costs and the benefits of all these initiatives. I mean, clearly, this does involve any additional cost, but on the other hand, there should be some savings as you make things more efficient and streamline certain functions. Could you just talk in the broader terms around how you think about the pros and cons from a financial perspective of all these initiatives? Listen.
Sure. Well, just to start in saying that, obviously, the budget is spread, as with objectives, across the entire business in CapEx, in a listen to the marketing and operations in HR. And actually, for us, of course, there is cost. But for us, it's about we see sustainability as a necessary investment, and it's about a They're doing it's part of doing business. And actually, probably, the cost of not being sustainable a bit higher in the long term in terms of perhaps government regulations and consumer pressures and brand imaging brand images and all those other aspects.
A And also probably that brands not resonating with consumers from an ESG perspective potentially could be losers of sharing in the future. Of course, it does, in some cases, require additional investment, particularly when we're talking about topics like carbon reduction, but most of that is already in the CapEx, the €400,000,000 that we used for replacement of equipment in distilleries. And of course, when we're replacing, we make sure that we replace with better and more efficient. And then in other cases, it's really a win win with examples like the single use plastic elimination, a Which both improves environmental footprint, but also reduces costs. So for us, a lot of it is also about in a mindset and changing business processes rather than pure finances alone.
It's also about reallocating resources. A listen. And we see that whilst it's difficult to measure any kind of uplift in brand equity at this stage, We do think increasingly that that's definitely the case where consumers are really looking for brands that in a really embed into themselves ESG principles.
Great. Thanks.
Listen. Thank
you very much. I believe that brings our call to a close. Thank you very much, Ladies and gentlemen for your time, and thank you to Vanessa and Connor for hosting us this afternoon. Please Stay safe, enjoy the entree responsibly, and I hope we can all meet face to face soon. Thank you.