Campari Q1 sales rise but Skyy struggles

Italian drinks firm Gruppo Campari saw organic sales grow by 2.2% in the first quarter of 2018, however its flagship vodka brand Skyy continued to decline.

Skyy vodka was impacted by a “negative performance” in the US during the first quarter

Total group sales grew to reach €336 million (US$398.9m) despite “emerging market softness and phasing effects”.

The company has a net financial debt of €938.7m as of 31 March 2018, following the proceeds from the sale of the Lemonsoda business, net of the acquisition of Bisquit Cognac and the purchase of own shares.

Geographically, the Americas posted organic growth of 2.9%, driven by “continued solid growth” of Grand Marnier liqueur, Wild Turkey Bourbon, Cabo Wabo Tequila and the double-digit growth of Aperol and Campari in the US.

The results “offset” the “negative performance” of Skyy vodka.

Sales in North, Central and Eastern Europe declined by 3.8% while Asia Pacific increased by 17.8%. Global travel retail net sales witnessed a “flat performance” off the back of a “tough comparison” with the same quarter in 2017.

The group’s global priority brands’ sales grew organically by 3.8%. Aperol “continued to outperform” with an increase of 22.8%, boosted by “continued sustained growth” in core markets – Italy, Germany, Austria and Switzerland, and “very strong growth” in the US, Brazil, Russia, UK, Australia, Spain and global travel retail.

Campari witnessed “positive momentum”, up 6.6% in the US, Jamaica, Spain and the brand’s core Italian market.

Skyy Vodka declined by 15.3%, impacted by a “negative performance” in the US, driven by the category’s “continued competitive environment” and the “weakness of the flavoured segment”.

Wild Turkey grew by 6.2%, driven by the US and Australian markets. Jamaican rums, including Appleton Estate and Wray & Nephew Overproof also struggled, dropping by 4.5% each.

“Profitability indicators showed a sustained organic growth, ahead of sales organic development, as they benefitted from a very favourable sales mix driven by the outperformance of the key high margin combinations by brands and regions, particularly Aperol, Campari, Grand Marnier and Wild Turkey in the core developed markets,” said Bob Kunze-Concewitz, chief executive officer.

“Concomitantly, on a reported basis, the overall growth rates were impacted by the forex effect as well as the divestments of non-core businesses. Looking into 2018, our outlook remains fairly unchanged and balanced in a still uncertain macro-economic scenario for some emerging markets.

“We remain confident in achieving a positive performance across key underlying business indicators, driven by the continued outperformance of the high-margin global and regional priorities in the core developed markets.”

Gruppo Campari reported total sales for 2017 grew to €1.82 billion (US$2.24bn), driven by key global brands including Aperol, Campari and Wild Turkey.