Campari 2015 sales up 6.2% despite ‘weak’ Russia

Italy’s Gruppo Campari notched up reported growth of 6.2% in 2015, in spite of “increased weakness” in Russia and Nigeria.

Gruppo Campari has reported 6.2% reported sales growth for 2015

Global full year sales reached €1,656.8 million, with group net profit up 36.1%.

The drinks group’s “Global Priorities” brands, comprising Campari, Aperol, Skyy, Wild Turkey and the Jamaican rums, was a star performer, registering organic sales growth of 8.2%.

“We delivered very positive results across all key performance indicators in 2015. In particular, results were sustained by very favourable organic growth, accelerating in the last part of the year, notwithstanding the increased weakness in some emerging markets (Russia and Nigeria), due to a difficult macroeconomic environment,” said CEO Bob Kunze-Concewitz in Gruppo Campari’s full year financial report.

“At the same time, we achieved a very positive progression in operating margins with a further improvement in the fourth quarter. We achieved the results thanks to the consistent execution of our growth strategy which drove a continuous improvement of sales mix by brand and market, in line with the Group’s objectives.”

Sales by region

The Americas region, which accounts for 42.3% of total group sales, saw overall growth of 14.3%. This was driven by a favourable exchange rate impact, the disposal of some distribution agreements, and the 2014 Forty Creek acquisition. The US alone (22.1% of total group sales) saw a positive organic performance of +3.7%, thanks in part to the “continued double digit growth” of aperitif brands Aperol and Campari.

Sales in the challenging Brazilian market increased 1.4% in organic terms, as business accelerated in the fourth quarter ahead of the excise duty increase.

Canada, where Campari started a direct distribution operation from 1 January 2015, registered organic growth of 9.7%.

Southern Europe, Middle East and Africa – plus Global Travel Retail – accounted for 31.7% of group sales in 2015, and posted an overall growth of 4.0%. Italy saw sales decline -0.2%, despite “very solid” 4.8% gains for the Aperol brand, while travel retail experienced a “temporary slowdown”.

The region’s other countries reported an 11.2% increase in organic sales, driven by strong growth in Spain, France and South Africa.

North, Central and Eastern Europe (18.9% total group sales) saw sales fall -5.6% overall with an exchange rate effect of 1.7% as a result of the devaluation of the Russian rouble. Russia itself saw sales plummet 41.4%, however the German market recorded overall organic growth of 3.2%. The region’s other markets saw “positive” organic growth of 11.6%, driven by Aperol, Campari, Cinzano vermouth, SKYY and Wild Turkey in the UK, and the aperitifs and whiskies in Central and Eastern Europe.

Asia Pacific now accounts for 7% of total group sales, and reported 7.2% overall growth in 2015. Australia notched up organic growth of 6.8%, with the other markets recording 5.4% gains.

Sales by brand

Heading the Global Priorities brands, Campari saw organic gains of 6.1%, thanks to “continued double digit growth” in Argentina, the US, Spain, Jamaica, Canada and the UK.

Aperol gained 11.8% in organic terms, driven by Italy, the US, France, UK and Spain, plus “seeding markets” Australia, Brazil and across Eastern Europe.

Skyy was a weaker performer in comparison, recording organic growth of 2.9%, while Wild Turkey shot up 8.8% thanks to a “very positive” performance in the US, Australia and Japan.

The Jamaican rums – comprising Appleton Estate, J. Wray and Wray & Nephew Overproof – shone with organic sales of 15.8%, driven by the “core” markets of the US, Jamaica, Canada, the UK and Mexico.

Highlights from the Regional Priorities brands include 4.8% organic gains for Glen Grant single malt Scotch, and mammoth 35.0% organic growth for Espolòn Tequila. Vermouth brand Cinzano however fell -13.6% in organic terms, “entirely driven by Russia”.

2016 forecast

“Looking forward, with respect to the macroeconomic environment, we expect the volatility in some emerging markets and the recent devaluation of Group’s key foreign currencies to continue during 2016. Simultaneously, we are confident to achieve a positive and profitable development of the business, driven by the growth of high-margin global priority brands (particularly the aperitifs, the American whiskies and the Jamaican rums), and by the positive performance of strategic markets for the Group,” continued Kunze-Concewitz

“In particular, we expect to continue to positively exploit the growth potential of our brands and markets thanks to consistent investments in brand building, the positive contribution from innovations as well as a continued leverage of the Group’s strengthened distribution platform and business infrastructure.”

Earlier this year, Gruppo Campari announced Campari UK as the new trading name for its UK subsidiary, formerly J Wray & Nephew.