Gruppo Campari’s sales and profits drop in Q1

Italian drinks group Gruppo Campari has seen its profits plummet nearly 50% in the first three months of this year due to difficulties in its key markets.

Gruppo Campari’s sales and profits have dropped in Q1

Announcing its financial results for the first quarter of 2014, Campari, producer of Wild Turkey Bourbon and Skyy Vodka, revealed that its pre-tax profits fell a steep 47.4% to € 20.7 million. Meanwhile, the group’s sales dropped 8.4% to €288.7 million.

The group has attributed the stark decline to “weaker shipments in March”, despite “consistently solid” performances in January and February.

Bob Kunze-Concewitz, CEO of Gruppo Campari, said that the results were affected by a slowdown in Russia “due to a less dynamic market and tightened credit control”, as well as shipment phasing in the US and the promotional effects of a late Easter holiday.

Campari also revealed that following Suntory’s $16 billion acquisition of Beam Inc earlier this year, the Japanese group would be terminating its distribution agreements in the US with Campari, a move which comes into effect in July 2014.

Concewitz did, however, note a “strong performance” for its aperitifs business and a “sustained positive performance of Skyy Vodka” in international markets.

“Going forward, whilst the political and macroeconomic context and forex outlook remain challenging for the remainder of the year, we expect our marketing initiatives to bear their fruits and continue to gradually strengthen the underlying business,” he added.

Sales of Wild Turkey Bourbon dropped 6.5%, affected by a weak trend in previously strong American Honey and the American Honey RTD in Australia.

Campari’s recent spate of acquisitions and new distribution deals has also affected the group’s profits to date.

In March this year, the firm acquired Canadian whisky producer Forty Creek Distillery for €120.5 million, and also purchased Italian bitters, grappa and liqueur producer Fratelli Averna for €104 million in April.

Gruppo Campari revealed full year sales of €1.52bn in 2013, a year it described as “transitional”.