Ocean freight challenges and their knock-on effects continue to be a headache for Wild Turkey RTD sales in Australia, Campari Group revealed in its first quarter 2023 sales results.

Globally, reported net sales for Campari Group were €667.9 million, up +24.9% on a reported basis. There was organic growth of +19.6%, benefitting from previous year’s price increases as well as some temporary effects including some shipment phasing and the early Easter calendar.

Aperol delivered strong double-digit growth (+43.6%) despite the tough comparison base (+71.9% in Q1 2022), benefitting from a resilient consumer environment, particularly in the on-premise.

Sales in Asia Pacific (8% of total Group sales) grew organically by +14.5%. Australia grew +5.1%, driven by Aperol and
Wild Turkey bourbon, while Wild Turkey RTD sales temporarily declined due to what Campari described as “the trade reactions after last year’s supply constraints”.

CEO Bob Kunze-Concewitz told analysts: “The blotch is, obviously, Wild Turkey RTD in Australia, down 1.3%, where we’re showing temporary weakness due to some temporary, let’s say, issues with our key customers there.

“We lost promotional slots and we’re regaining them one at a time as we speak.”

Issues with Wild Turkey RTD supplies and sales were first flagged in quarter four of 2022.

“We were very affected by poor weather conditions as well as significant ocean freight constraints, which impacted in particular the availability of the Wild Turkey ready-to-drink business,” Kunze-Concewitz said at the time.

“As you know that’s about two-thirds of our total Australian business. So clearly, that was quite meaningful.”

Campari Group said that overall it had delivered a “very solid start to the year, in a small quarter, with continued strong sales performance and positive brand momentum especially in aperitifs, tequila and bourbon in a resilient consumer environment, particularly in the on-premise”.

The opportunity for tequila in Australia

Campari’s lead tequila brand Espolòn grew strong double digits (+62.4%) in quarter one, thanks to a very strong momentum in the core US market (+66.9%), driven by consumer demand and strong growth in the smaller international markets.

During the analysts call, Kunze-Concewitz was asked if he saw the opportunity to boost tequila sales in markets such as Australia.

“Tequila is starting to become, I think, a global phenomenon,” Kunze-Concewitz said.

“Consumers are yearning for it. I think key driver there is more the Paloma and the Margarita, it’s slightly different than in the US. But we, like all the other players, currently were constrained and the volumes are mostly going to the US and hopefully, this will start improving in the second half and then improve significantly more at the beginning of next year.”

The outlook for 2023

Campari said: “Looking at the remainder of 2023, we remain confident about the positive business momentum across key brands and markets thanks to strong brand equity as well as strength in the on-premise. Concomitantly, in the current volatile macro-environment we confirm the guidance of flat organic EBIT-adj. margin in full year 20231.

“Whilst inflation on input costs is showing initial easing effects, margin trends are expected to show pricing effects increasingly entering in the base over the course of the year, alongside sales mix evolution and a normalisation in volume growth. In addition, in the remainder of the year the forex trend is expected to reverse mainly due to weakening USD dollar.

“Meanwhile, we continue to pursue our growth strategy in Asia Pacific by further strengthening our route-to-market
capabilities for continuous brand focus enhancement. Particularly, we decided to accelerate the acquisition of majority
stakes in our local commercial JVs in Japan and New Zealand, via an early exercise of call options, triggering their
inclusion in our direct distribution network.”