Italy’s Campari has made a significant stride into the brandy sector with the acquisition of the historic French cognac house, Courvoisier, from Beam Suntory for a whopping $1.2 billion.
This deal, the largest in Campari’s history, is a testament to the company’s strategic growth initiatives and diversification efforts under the leadership of Chief Executive Bob Kunze-Concewitz, who is set to depart next year.
For Campari, the purchase of Courvoisier, a top-four cognac brand, signifies a pivotal expansion into the brandy market, aligning with the company’s goal to fortify its position against industry giants like Diageo and Pernod Ricard.
Currently, Campari’s major business segments include aperitifs, bourbon, and tequila. While the company already owned the smaller cognac brand, Bisquit, and the well-known Grand Marnier, the acquisition of Courvoisier is a substantial step toward solidifying its presence in the spirits industry.
Bob Kunze-Concewitz expressed his enthusiasm, stating that “Christmas came early for Campari this year.”
The move is not just a financial gain but a strategic maneuver to enhance Campari’s foothold in key markets. Courvoisier’s strong presence in the United States, which accounts for 55% of its sales, aligns with Campari’s goal to boost market share in the U.S. Additionally, the acquisition offers transformational potential in the Asia Pacific region, particularly in China, a significant player in the cognac market.
The deal is anticipated to increase Campari’s net sales by approximately 9%, according to Kunze-Concewitz. He emphasized that the acquisition provides a rare opportunity to expand the company’s premium spirits portfolio and enhance production and bottling capacity in France, further consolidating its position as a global player in the spirits industry.
Campari plans to re-launch the Courvoisier brand, following a successful template used for previous acquisitions. Kunze-Concewitz expressed confidence in the company’s marketing model, stating, “With our marketing model, we can get this brand to perform at a really different pace.” The company anticipates that Courvoisier will contribute to a 2% increase in earnings per share.
Despite the optimistic outlook, Campari acknowledges challenges in Courvoisier’s recent performance. Sales at the historic cognac house declined by 33% in the 10 months leading to Oct. 31, attributed to slowing U.S. sales post-COVID peaks and the destocking process by wholesalers.
The acquisition, expected to be finalized next year, includes a potential additional earn-out of up to $120 million, payable in 2029. Campari plans to fund the acquisition through a mix of debt, cash, and equity or equity-like instruments. The company has secured a fully committed 1.2 billion euro bridge loan from a group of banks with a duration of up to 24 months, indicating its confidence in the success of this strategic move.
Beam Suntory President and CEO Greg Hughes emphasized their commitment to focusing on core strengths as they aim to accelerate global growth ambitions. The strategic realignment signifies a calculated move by both companies to capitalize on their respective strengths and pursue growth opportunities in the dynamic spirits market.
