Campari notes ‘solid’ sales despite volatility

Wild Turkey owner Gruppo Campari recorded a “solid” sales increase in 2014 despite “volatility” in emerging markets and fierce price competition in the US.

Sales of Campari grew 9.8% during the year as consumer interest in cocktails continued

The Italian drinks group posted organic sales growth of 3.4% to €1.56 billion in its full-year financial results today.

All regions demonstrated growth for the company during the year, particularly the Americas (4%), Italy (3.5%) and the rest of Europe (3.2%).

The acquisitions of Canadian whisky distillery Forty Creek and Italian bitters group Fratelli Averna – for a combined total of €237 million – during 2014, contributed largely to a net profit loss of 13.9%.

However, the merge of Averna into Campari’s portfolio was celebrated for a 3.5% sales increase in the Italian market, which accounts for more than a quarter of the group’s sales, despite the acquisition only completing in June.

In the US (20% of sales), Campari recorded slight organic growth of 0.9% as both Skyy vodka and Wild Turkey Bourbon sales were “soft”. The group’s Jamaican rum portfolio, Appleton Estate, along with its Aperol, Campari and Cabo Wabo Tequila, showed “positive progression”.

Meanwhile, in Russia, the group bucked category trends and delivered 11% growth which was attributed to strong performances from its sparkling wine portfolio, and “triple-digit” increases of Wild Turkey and Aperol.

In terms of brands, both Campari and Aperol delivered strong results (up 9.8% and 11% respectively) as development in new international markets and consumer interest in cocktails continued.

Skyy Vodka grew by a modest 1.3%, driven by international markets (down 0.8% in the US); Wild Turkey contracted by 3.2% due to price competitiveness in flavoured expressions; and Appleton Estate, Wray & Nephew and Coruba rums grew 4.4% driven by demand in the US.

Bob Kunze-Concewitz, CEO of Gruppo Campari, argued that the results are “in line with expectations”.

“Thanks to the acceleration of organic sales growth and the strong accretion in gross margin in the fourth quarter, organic EBIT pre one-off’s was flat on a full year basis,” he said. “This result was achieved despite enhanced advertising and promotion spending and significant investments in new route-to-markets.

“Looking forward, we expect that the volatility in some emerging markets and the price competition in some core regions for the group will continue also in 2015, thus limiting the visibility at this stage.

“However, we expect the business overall and margins to be positively impacted by the positive performance of the top five spirit franchises, in particular the aperitifs business, the rum portfolio and the American whiskies, also thanks to the positive contribution from acceleration in innovation.”

He added that Gruppo Campari will benefit from the Forty Creek and Fratelli Averna acquisitions, as well as new routes-to-market and production investments in the next year.