The consensus view: the US spirits industry is seeing post-Covid ''normalisation'' After a period of abnormally strong spirits growth during the pandemic, US spirits volumes are now experiencing a temporary decline as the industry settles at a new ''normalised'' base. The current ''normalisation'' in sell-out trends is being amplified at the distiller level as distributors also adjust their inventories. This, in summary, is the consensus narrative, and a convenient one for the industry. With this report we outline why we believe normalisation (from a sell-out perspective) was complete in 2022 and the current volume declines are therefore more of a cause for concern. BNPP Exane view: Normalisation should have been completed in 2022 In the 5-years preceding the pandemic (FY14-19) US spirits industry volumes grew at a c.+2.9% CAGR (average of IWSR, Discus, NABCA). While US spirits volume growth in 2020 and 2021 was indeed unusually strong, we find that over the latest 3-year period (FY19-22) the US spirits industry volumes have also grown at a c.+2.9% CAGR. The c.-1% decline in 2022 should then, in-theory, already have brought the industry back in-line with historical trend. The ''normalisation'' narrative is convenient, but may not be true We view the prevailing post-Covid ''normalisation'' narrative as a convenient one for the industry, but perhaps not one that is actually true. We believe that weak YTD sell-out trends (we estimate a c.-1% YTD industry volume decline) reflect a decline below trend, not to trend. While near-term (FY23) destocking risks feel appropriately reflected in consensus / share prices, the possibility of further material destocking or anything more structural is likely not. Conclusion: we continue to approach the US spirits industry with some caution In conclusion, we struggle to explain what is driving the YTD below trend decline (elasticity?) and hence continue to approach the US spirits industry with some caution. Within the...