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Campari ‘world’s best-performing spirits stock’
“We’re pleased” says Gruppo Campari CEO Bob Kunze-Concewitz, following the “sound growth” across all key performance indicators for the company in 2016, with sales up 4.2% to €1.7 billion and other key financial indicators beating analysts’ estimates.
The outlook for 2017 remains “fairly balanced”, says Gruppo Campari CEO Bob Kunze-Concewitz
Campari is now the sixth largest spirits group in the world and Kunze-Concewitz reckons that since the company joined the MIlan stock market in 2001 it is “the best performing spirits stock in the world in terms of shareholder returns.”
So what’s next?
“We continue our journey,” he says in an exclusive interview with the drinks business. By that he means that over the medium term the family-controlled company expects half of its growth come from organic growth with the other half fuelled through acquisitions – Campari has made 26 since 1994, the latest of which is Bulldog gin.
After last year’s purchase of Grand Marnier and the recent acquisition of Bulldog, Kunze-Concewitz plays his cards carefully about future targets. “You can never predict a deal. It’s not like shopping in a supermarket,” he says, the implication being that it depends on what is available.
But after pulling out of still wine, Campari has plenty of financial scope should something attract it. It’s debt is less than three times earnings before interest and tax (EBIT) and in 2016 free cash flow jumped by 21.6% to €243.2m.
Kunze-Concewitz is unwilling to talk categories for potential deals but says he sees no gaps in the portfolio. He is clear, however, that future acquisitions will continue the pattern of enhancing critical mass and generating extra access to “geographies”.
Here Grand Marnier is a clear pointer. After just six months in the Campari portfolio, Grand Marnier has helped to turn the US into Campari’s biggest and most profitable market, with 25% of the group’s total sales.
Later this year the brand will be relaunched and given extra impetus (along with the rest of the portfolio) by a wider relationship with Southern Glazer’s Wine and Spirits (SGWS), the largest US wine and spirits distribution company.
From today (March 1 2017) 14 new state markets will be handled by SGWS in addition to the 27 it covers already. “Our US market is most encouraging,” says Kunze-Concewitz and it is clear that he expects solid organic growth from it.
After just six months in the Campari portfolio, Grand Marnier has helped to turn the US into Campari’s biggest and most profitable market
Similarly, he is targeting expansion in South Africa via the launch pad of Campari’s own company there. This will be a continuing pattern with the eventual objective being to distribute and sell the portfolio through wholly-owned subsidiaries around the globe.
But Kunze-Concewitz is less enthusiastic than some of his rivals about Asia, which accounts for just 7% of total sales, largely in the more mature markets of Australia, New Zealand and Japan. Of China he says that “imported spirits only account for 0.5% of the market” and that he is much more interested in “leveraging the developing market for aperitifs” [such as Aperol and Campari] in South East Asia.
“China’s palate will transform and develop over time”, he says, implying that the country is not high on his action list.
Indeed, emerging markets accounted for no more than 22% of Gruppo Campari’s global sales in 2016, a proportion that will increase comparatively slowly as “the key is to advance in existing markets”.
The outlook for 2017 remains “fairly balanced”, says Kunze-Concewitz. “Uncertain political environments in developed markets and challenging emerging economies may affect consumption trends and currencies, yet the group remains confident it will continue delivering a positive full year top and bottom line performance.”
One of those “uncertain political environments” is the UK, where Gruppo Campari has enjoyed enormous growth over the past couple of years. In 2016 sales soared by 47.4% thanks to the continued successful development of Aperol, Campari, the Jamaican rums, Bulldog and Wild Turkey Bourbon.
But Kunze-Concewitz declines to comment about Brexit. “I only deal with what I can control,” he says.
Read more:
CAMPARI POSTS 4.2% GROWTH TO €1.7BN IN 2016