Europe stunts Campari's 9-month growth

12 November, 2012

Gruppo Campari has seen only moderate growth so far in 2012 after a heel-dragging performance in Europe tempered advances in emerging markets.

The Italy-headquartered group said sales for the first nine months of the year  stood at € 931.6 million following +4.8% growth (organic growth +2.2%) and pre-tax profits of € 175.7 million (+0.8%).

The Americas (35.2% of total group sales) posted an overall growth of +10.1%, with an organic increase of +6.0%.

Brand building in the US (22.7% of total group sales) saw an organic increase of +10.0%, driven by the Wild Turkey and Skyy franchises, Carolans, Espolón, Cabo Wabo and Campari.

Sales in the Rest of the World (10.4% of total group sales), including Global Travel Retail, grew by +22.1% overall, with a positive organic change of +13.4%.

Sales performance was strong in Australia, Japan, China, South Africa and Nigeria.

Down-trading markets included Italy (30.4% of total group sales), which recorded a total change of -1.3% and organic performance of -1.9%.

The group’s home-market performance was in part due to a disappointing third quarter of 2012, which was hit by a “sudden change in trading conditions and consumption trends in September”.

Sales in the rest of Europe (24.0% of total group sales) decreased by -0.7%, driven by a negative organic performance of -1.7%.

Organic performance was driven by contrasting results across the region: Germany registered a decrease of -9.6% whilst Spain and France were negatively impacted respectively by the economic crisis and an excise duty increase.

Aperol registered a negative organic performance of -0.6% thanks largely to down-trading in Germany, Skyy sales achieved organic growth of +9.4%, Campari decrease 0.9%, Wild Turkey grew +20.2%, American Honey grew by +43.7%, Glen Grant -3.8%, while Cinzano vermouths registered organic growth of +3.2%.

Net financial debt for the group stood at €608m, a reduction on the €637m of 31 December 2011. 

Bob Kunze-Concewitz, chief executive officer: “Results in the first nine months 2012 were impacted by a sudden change in September of consumption and trading conditions in Italy, poor trading in the high seasonal summer period in Germany and a less favourable macro-economic environment in other Western European markets. On the positive side, we saw improving trends in Brazil, and achieved continued positive momentum in North America, thanks to heightened focus on brand building activities, and in Asia Pacific, where we are consistently outperforming the local market.

"Looking at the highly seasonal Q4 and the beginning of next year, we expect trading conditions in Italy to remain volatile. Consumer confidence in Italy will continue to be adversely impacted by high unemployment, higher taxation and increasing political uncertainty whilst the recent implementation of some legislation, which introduces restrictions affecting commercial relationships, is likely to generate trade destocking.

"On the positive side, we expect continued positive momentum in North America and Asia Pacific, improving performance in Brazil and Germany and a return to normal trading conditions in Russia. Despite the tough economic environment in Western Europe we remain committed to brand building and exploiting opportunities in the key brand market combinations and will heighten our focus on cost optimisation opportunities. For the medium term, we expect our strong ‘long’ aperitifs franchise to overcome short term adverse economic conditions in Italy and Europe and to maintain our positive momentum across categories in the rest of the world.”

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