Campari Q1 sales hit by Italy’s on-trade closure

Aperol owner Campari Group saw organic sales fall by 5.3% in the first quarter of 2020 due to the closure of bars and restaurants in Italy during the pandemic.

Total group sales reached €360.2 million (US$391m) during the first three months of 2020 as a result of the impact of the Covid-19 crisis on the Italian firm.

Campari Group said it witnessed an “extremely strong start” in January and February, however its performance was affected by the Italian market from March. Organic sales in Italy plummeted 24.4% as the country’s on-trade channel closed in March.

Campari expects its performance to be “more impacted” during the second quarter and the start of Q3 – “the peak season for the high-margin and on-premise skewed apéritif business”.

The negative impact is expected to decrease during the rest of the year as countries gradually lift restrictive measures, Campari said.

Campari Group CEO Bob Kunze-Concewitz said: “Inevitably our business is facing short-term headwinds. As a highly agile organisation, we are taking rapid actions to mitigate costs and preserve liquidity whilst remaining focused on our long-term strategic agenda.

“To this extent, we are accelerating programmes in digital transformation and e-commerce to further strengthen our digital capabilities across the entire organisation. We are continuing to execute our M&A [mergers and acquisitions] strategy focused on long-term brand building. Last, but quite importantly, our financial profile remains very solid.

“Looking at the long-term, we remain confident of the positive consumption trends and growth opportunities of our business.

“We will continue to leverage the strength and resilience of our brands and business, ensuring we are strongly positioned and ready to accelerate our growth as soon as the consumer demand normalises.

“As a committed and long-term brand builder, we will remain focused and highly engaged in the on-premise opportunity with our distinctive brand portfolio, firmly convinced that the out-of-home social experience and conviviality will remain essential to consumers’ lifestyles.”

Market performance

Geographically, organic sales in the Americas fell 0.9%, with the US growing by 1.1%. Sales in Southern Europe, Middle East and Africa dropped by 23% due to the “sizeable decline” in Italy, which dipped 24.4% as the country’s on-trade channel closed in March. Campari said the on-trade accounts for 70% of Italy’s net sales in 2019. France fell by 41.6%, while the global travel retail market declined by 18.9% due to falling shopper traffic numbers amid the pandemic.

The North, Central and Eastern Europe cluster grew 6.6%, with a slight decline in Germany at 0.3%. The UK grew 38.3%, driven by Wray & Nephew Overproof rum, Magnum Tonic Wine, Appleton Estate rum and Campari.

Asia Pacific sales grew 3.5% with Australia registering an 18.2% increase as a result of “strong sales” in the off-trade channel, despite a “weak start” to the quarter, which was hit by wildfires.

In terms of brands, ‘global priorities’ fell 4%, with Aperol and Campari “flattish” due to the Italian market. Aperol fell by 0.2% and Campari grew by 0.3%. Excluding Italy, the brands registered increases of 22.1% and 9.3%, respectively.

Grand Marnier liqueur fell 10.8%, while Skyy vodka dropped by 4.7%. Wild Turkey Bourbon dipped by 12.8% with its core US market impacted by destocking ahead of a postponed packaging redesign. The Jamaican rum portfolio rose by 3.7%, boosted by the core US market, the UK and Canada.

‘Regional priority’ brands fell 7.9%, with a “positive performance” from Espolòn Tequila, which grew 10%. The ‘local priorities’ segment declined by 7.2%.

Last week, Italy outlined plans to ease lockdown restrictions implemented to stem the spread of coronavirus – including reopening bars for takeaway services.

Go to Source
Author: Nicola Carruthers {authorlink}