Fueled by robust pricing and strong performances from its aperitifs, tequilas and bourbon, Campari reported 10.5% organic growth in its first nine months of FY 2023, though that news was tempered by weaker results in Q3, the company reported during its earnings presentation today.
The Italian spirits group reported less-than-expected organic growth of 4.4% in the third quarter, which the company attributed to a normalization of the market, outsized results from the same period last year (+18.6% in Q3 2022), and extreme weather conditions across key European markets, in particular Italy. The group still fared better than other global spirit companies hurt by slowdowns in the U.S. and China, but flagged dips in the U.S. and other markets like Jamaica. Quarterly net sales reached $784.70 million.
All regions reported organic growth, with the Americas still accounting for 44% of sales as the largest contributor. The U.S., the group’s largest market, grew by 4.9% in the third quarter, reflecting high comparables and market normalization following pandemic surges (+30.2% in Q3 2022). Sales were largely driven by Espolòn, Aperol, Russell’s Reserve and Appleton Estate, which offset the destocking effect during the first half of the year of Grand Marnier, down 21.8%.
Aperol delivered strong growth (+23.3%) across all markets in the first nine months of the year, with positive momentum continuing during the peak summer season despite poor weather, boosted also by pricing and strong consumption, particularly in Germany. The Q3 performance was positive overall (+9.0%) but in the core U.S. market barely compares to last year’s +110.3% growth in Q3.
Campari delivered growth of 9.2% in the nine month period despite a softer Q3 (+1.8%), due to poor weather conditions in European markets and weakness in Argentina, Nigeria and Jamaica. The group highlighted its 11th global Negroni Week and the participation of 79 markets and over 11,800 bars, a +17% increase versus the prior year.
“Strong brand momentum” continued for Wild Turkey into Q3 (+8.0%) thanks to a positive performance driven by main markets U.S., Australia, Japan and South Korea as well as GTR, with sustained outperformance of high-margin Russell’s Reserve.
The Jamaican rum portfolio grew 7.8% overall, driven by the U.S. and the U.K. due to continued premiumization of the Appleton Estate brand.
Espolón continued its rise in the U.S. (Q3 +32.4%) driven by both volume share gain and positive pricing.
On the other hand, SKYY vodka registered a Q3 decline largely driven by Argentina and the U.S. The group recently added two new expressions to its Infusions portfolio: an Infusions Agave Lime, making a play for the agave and lime-flavored cocktail styles seen in RTDs, and an Infusions Espresso which partnered with supermodel Winne Harlow.
CEO Bob Kunze-Concewitz remained optimistic about the remainder of 2023, expecting topline performance to reflect the strength of the company’s key brands and the normalization of volume growth.
“In the medium term, we remain confident to continue delivering strong organic topline and margin expansion leveraging mix improvement as well as input cost inflation easing,” he added in a statement.
For 2023 Campari confirmed the group’s full year guidance of a flat organic margin for EBIT-adjusted earnings, as the adjusted operating profit declined to €161 million ($170 million), hit by a negative currency effect.
Concluding an 18 year-run with the company, Kunze-Concewitz announced last month he will be stepping down from the Italian spirits company in April 2024. The transition comes after the company recently increased shareholders’ voting rights, a move which may carve a path toward making a big acquisition as the group seeks to compete against larger rivals like Pernod Ricard and Diageo.