Member Info for cefncribwr

Some brave souls out there! Drastic Dave hasn't delivered his medicine yet, which surely could include a dividend cut and a sale of some brands. And those brands were bought at prices which may look a bit fancy in today's declining market. Caveat emptor!

The OBR said alcohol receipts were expected to fall by 5.1% next year to £12 billion before rising gradually as duty rates increases. The quantity of alcohol sold is expected to fall by 6.4 % this year with levels flattening from 2027-28. The OBR said the fall reflected weaker spending, shifting habits and demographic changes. It cited evidence of a growing trend towards moderation and the rising popularity of low and no- alcohol alternatives, as well as lower drinking rates among younger adults.

Alcohol duty would presumably affect UK sales only, so that would limit the effect on profits, despite being unwelcome news. That 1664 low looks like it might be breached before long. I may be wrong, but the fundamentals and momentum are not great at the moment. Anecdotally, I saw some students full up their trolley with multi packs the other day........of Diet Coke and Seven Up....

It will be interesting to see how Wednesday's budget will affect the share price. The Daily Telegraph is forecasting a 4pc increase in alcohol duty from February.

"The move would push up the cost of a bottle of red wine by around 15p and a bottle of gin by around 45p, according to industry estimates.

A bottle of Prosecco would go up by 13p, a four-pack of lager by 7p and a four-pack of cider by 4p. The price of a bottle of Scotch whisky would go up by 47p".

Suspending the dividend for, say, 2 years could actually be beneficial in that it could help to materially lower net debt. However, the reality is that the share price would crash, which would mean no share price related bonuses for senior personnel.........

I suspect the dividend would need to be halved for the share price to drop to £10.........possible but seemingly unlikely.

From City AM

Chancellor Rachel Reeves is considering an increase in taxes on alcohol in line with a higher reading of inflation in a repeat of last year’s Budget, according to reports.

Reeves could hike duties by the retail prices index (RPI) inflation rate in a bid to raise more cash to fill an estimated £30bn fiscal hole and build a larger headroom, LBC has reported.

Duties went up by 3.6 per cent last year, in line with RPI inflation, pushing up the price of wine bottles and gin by up to 54p.

Frankly, nearly all investment managers fail to beat the trackers, so I'm not alone. Even fewer private investors beat the trackers. I think it's reasonable to pass on that message.

.....looks like a dead cat bounce.........

....low price for the day was 1664.

Like Nick Train, who has been buying on the way down!

Sorry, but for what it's worth, it's stated as being $4.99 per share on AI, not £4.99.

If the dividend were to be cut, there's not much to prop up the share price. AI reckons the book value is £4.99 a share. DYOR.

That scenario is only possible if the dividend is halved......not an impossibility......

A very dangerous punt, I'd have thought. There's a budget later this month and there's a danger of increased alcohol levy., just to add to the uncertainty.

The old adage suggests that profit warnings come on threes - very unscientific, but there's a danger of further profit warnings to come.

There's a huge danger that alcohol stocks could go the same as tobacco stocks - 'sin' stocks with low or zero growth and a whopping dividend to prop up the share price. If that happens, the current share price could look high in a few years.

Fair point! I suppose I miss stock selection, as I used to do it a lot, but not successfully. Also, this is a fascinating share in that involves changing demographic and generational habits in relation to alcohol.

I also have reservations about Motley Fool but they say they say this morning that the dividend is only covered 1.7 times. Is this true?

Motley Fool advises caution this morning based on growth prospects, yield and yield cover. Surely the danger is that the yield settles at about 6pc to compensate for limited growth prospects, as happened with Hargreaves Lansdowne shares when they fell from grace. If that happens, aren't we talking about a price of about £13? DYOR.