Sales are up 21% for Campari Australia in 2020, as off-premise sales boom and consumers embrace “staycation” experiences.
Reported global sales for the nine months to September 30, 2020 were valued at €1.28 billion, down from €1.30billion in 2019 as a result of the “active and challenging” nature of the COVID-19 pandemic.
Organic sales fell by 11.3% in the first half of 2020 due to on-trade restrictions enforced as a result of the pandemic, however Campari posted 12.9% growth in the third quarter of 2020 as measures eased around the world.
In Australia, sales for the nine months to September 30, 2020 were valued at €70.4 million, up from €60.2million. The results were driven by continued strength in Wild Turkey RTDs, Wild Turkey bourbon, American Honey, Campari, Cinzano Vermouth, The GlenGrant and Espolòn.
Chief Executive Officer Bob Kunze-Concewitz said the growth in Australia was “very positive” in the off-premise market.
“[There was a very nice acceleration in Q3, [it] was mostly the bourbon portfolio and ready-to-drink leading the way,” he said.
Australia bucked global declines in major brands. Overall, The GlenGrant recorded a negative performance of -26.7% in the period. This was mainly due to the decline in
the travel retail channel, which was particularly impacted by the effects of COVID-19, as well as sales in the United States, Italy and South Africa, the latter as part of the change in route-to-market strategies.
It was a similar story for Wild Turkey, with Australia continuing to be Campari’s biggest export market for the brand. However, the portfolio showed a reduction of -4.3% globally in the period due to the core US market, affected by the ongoing destocking activity, as well as Japan, which was impacted by destocking carried out by the group ahead of the planned change in the region’s route-to-market structure.
Espolòn sales go through the roof
Espolòn recorded a sales boost of 29.8% in the first nine months of 2020, with the third quarter up 131.6%.
Kunze-Concewitz said Campari’s supply chain had “really been dancing on nights this year, trying to ensure we supply the market”.
“We don’t think we have any supply issues, but clearly the strong demand across the category is not helping reduce the price of agave which remains flat,” he added.
The first bottles of Espolón Tequila were shipped globally in 1998, with Campari snapping up the brand in 2009.
Tequila sales have been soaring during the pandemic. Jose Cuervo reported last week that its global sales were up 62% in the third quarter, to 2.3million cases.
The staycation effect
The Group said its business performance during the third quarter of 2020 benefitted from the progressive uplift of restrictive measure after the lockdown was imposed in all countries starting from the end of the first quarter, leading to a recovery in consumption thanks to the ‘staycation effect’.
This effect temporarily impacted the Group’s aperitifs business in particular in its peak summer season in core on-premise markets, notably the Italian market supported by favourable weather conditions, while home spirits consumption continued in off-premise skewed regions.
“Whilst the ongoing effect of the COVID-19 pandemic is still active and challenging, many markets have restrictive measures, we’ve continued to benefit from a recovery in Q3 driven by the increased consumption in consumers’ home countries, where they spent their holidays rather than traveling abroad,” said Kunze-Concewitz.
He said consumers in Western countries were getting into the habit of making cocktails themselves and offerings them to their guests.
“I think that is here to stay I think for the years to come,” Kunze-Concewitz noted. “That’s a real positive of the pandemic and we’re even starting to see some of that in Italy.”
But he said that as the on-premise reopens, as seen by Q3, there has been “very big growth in that channel”.
“We expect that once the pandemic over that the new normal will be overall quite positive with a strong on-premise returning as well as the at-home spritz and spritz cocktails taking market share from other alcohol categories,” he concluded.
The outlook for the rest of 2020
“Now looking at the remainder of 2020, we believe that it will marked by uncertainty due to the evolution of the pandemic, the restrictive measures which are being reintroduced by the governments of many affected markets are expected to potentially generate an adverse effect on consumption in the on-premise channel,” Kunze-Concewitz said.
“The trend of which remains obviously highly unpredictable, particularly during the key holiday season at year-end.
“For all you know, we might have a staycation effect there too, but impossible to predict at this stage.
“We will continue to leverage strength and resilience of our brands, our business model, as well as strategy, ensuring that it is strongly positioned and ready to accelerate the growth as soon as consumers can resume their habits in the on-premise.”