Lower Industry View to In-Line Amid Persistent Uncertainty Over Demand and Costs

Weak demand in Japan & abroad is persisting longer than we expected, and the risk of higher costs tied to the Middle East now extends into F12/27, raising uncertainty over our scenario for reaccelerated profit growth & stock rerating. But with valuations already low, pessimism need not be overdone. Downgrading industry view from Attractive to In-Line: Demand conditions are weaker than expected, both in Japan and abroad, while the Middle East situation has driven new cost increases, raising uncertainty around the timing and likelihood of our previously anticipated scenario for a reacceleration in profit growth for the broader industry and a stock rerating. In Japan, heightened consumer price sensitivity and the ongoing downtrend in volumes continues to pose the risk that any benefits from price hikes could be cancelled out. Globally, structural weakness in alcohol demand in mature markets has come into focus. Rising raw material, packaging, and logistics costs stemming from the situatio