Competitive pricing and bad weather hits Campari

02 March, 2018 by Andy Young

Gruppo Campari has reported a slight drop in sales in Australia, with the company highlighting competitive pricing and bad weather as causes of the drop.

Overall the group reported a strong performance with sales up 5.2 per cent to €1.8bn and EBITs of €380.5m, up 8.7 per cent and an adjusted group net profit of €233.4m, up 17.5 per cent.

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Bob Kunze-Concewitz, Campari’s Chief Executive Officer, said: “We achieved a strong performance across the key indicators in full year 2017, consistently delivering on strategy thanks to our focus and disciplined execution. In particular, over the past three years we delivered positive margin momentum, expanding our gross margin by nearly +600 bps on sales, on a cumulative basis, the combined result of the healthy organic expansion of +270 bps driven by sales mix and accretive m&a initiatives.

“This achievement enabled us to fuel accelerated investments in brand building and distribution enhancing initiatives for future growth and, at the same time, expand our EBIT margin ahead of sales growth by +190 bps in the last three years on a cumulative basis, of which +80 bps in organic terms.”

Looking ahead into 2018, our outlook remains fairly balanced in a still uncertain macroeconomic scenario for some emerging markets. We remain confident in achieving a positive performance across the key indicators into 2018, driven by the continued outperformance of the high-margin global and regional priorities in the key developed markets.

“Importantly, in line with our ongoing focus on the company’s core business, we have launched a series of projects aimed at improving the efficiency of our operations in some key markets, among which the relocation of our US head office from San Francisco to New York City, and the optimization of manufacturing operations in Brazil.”

In Australia the group reported a 0.6 per cent decline, which came despite a “positive momentum throughout the second half of the year”. That positive momentum helped Campari to recover “after the slow start to the year due to poor weather conditions.”

The group said: “The positive trend in Aperol, GlenGrant and Espolòn, up double-digit, and SKYY was more than offset by the weakness in Wild Turkey ready-to-drink, due to the persistent competitive [pricing] pressure in the category, and a decline in co-packing sales.

The company also highlighted a couple of strong brand performances in Australia, saying: “Espolòn grew by +57.9 per cent, benefitting from the continued double-digit growth in the core US market (+57.1 per cent) and a positive development in new markets for the brand, such as Australia, Russia, Italy and Canada.”

Also, “GlenGrant registered positive growth of (+10.1 per cent), particularly driven by France, South Africa, China, Australia, and Global Travel Retail”.

Aperol remains the group’s largest brand and it saw 19.5 per cent growth in the year and Australia now represents 4.8 per cent of Campari’s total group sales.