Campari has registered a strong organic growth in Australia during the current off-premise skewed market, with sales up 18.7%.
The result was driven by “very strong” Wild Turkey RTD sales as well as Wild Turkey Bourbon and American Honey. Campari and Espolon also grew by double digits off a small base.
CEO Bob Kunze-Concewitz said during an earnings call: “Australia on a full semester basis was up 18.7% this following a weak start to the year, you’ll remember January and February were impacted by bush fires. We have an overall great performance across the portfolio.”
He also noted there was “very strong growth” for Wild Turkey in its “second largest market Australia”.
Globally, Campari reported sales of €768.7 million, an organic decline of -11.3%. On a reported basis, total change of -9.4% after a positive perimeter effect and a slightly negative exchange rate effect.
EBIT was €130.4 million, an organic decline of -30.8%, against a tough comparison base, largely due to COVID-19 impact, hitting in particular the high-margin and on-premise skewed aperitif business.
With the bulk of on-premise skewed markets being affected by COVID-19, Campari Group’s business performance was particularly impacted during the second quarter, the peak season for the high-margin and highly on-premise skewed aperitif business. Nevertheless, strong brand sell-out momentum in the off-premise continued across key markets, although shipments remained below positive consumption trends due to destocking.
Looking at the remainder of the year, with regards to the organic performance, Campari said that while the COVID-19 impact will continue to affect, in particular, the beginning of the third quarter, the negative impact is expected to lessen with the gradual lifting of the restrictive measures across markets, based on the current visibility.
Moreover, shipments are expected to progressively catch up with the positive sell-out trends once the destocking activities are completed at wholesaler level.
“The half year 2020 can certainly be characterized as an extraordinary period, and the overall scenario in the short-term still appears to be uncertain with regards to the extent and timing of the economic recovery in the context of the gradual lifting of the restrictive measures,” Kunze-Concewitz said.
“Nevertheless, we continue to experience solid consumption trends for our brands across key markets, although shipments are temporarily impacted by destocking, in particular, in the US market. While we will continue to undertake all the necessary actions to contain the effects of the pandemic on the business in the short-term, we remain focused on pursuing our long-term strategy, via the acceleration of our programs in digital transformation and e-commerce, remaining focused on our M&A strategy and leveraging the strength and resilience of our brands and organisation for future profitable growth.”
At-home cocktail trend
Kunze-Concewitz said Campari had identified that “something important” was happening in the off-premise that pointed to spirits taking further share from beer.
“The consumer has identified that they can actually make themselves rather good cocktails at home,” he said.
“Consumers have experienced that they’re able to prepare themselves a Negroni or even Aperol Spritz or an old fashioned or what have you. We have done really a lot a lot marketing wise to educate the consumer and make it as easy as possible for them.”
“We’ve seen an acceleration on Campari since then because we’ve been hammering on the message no Negroni without any Campari and clarifying to consumers that a Negroni is built around the Campari and it’s also not that difficult to make at home. So, I think this trend will last for a while.
He predicted the off-premise opportunity for cocktails taking share from beer will continue moving forward. However, he was equally positive about the future of the on-premise.
“We also think that mid to long term there’s absolutely no reason why the on-premise shouldn’t come back. I mean, if you look at the Spanish flu, the on-premise came back. If you look at the Hong Kong flu in the 1960, 1970 the on-premise came back. Any of the major global financial crises, the on-premise came back. So it will come back. And I think it will be much more dependent on progress science does in the area of really medical relief and vaccines as opposed to any other reason.”