Italy's Campari eyes developing markets for growth
CANALE D'ALBA, Italy (Reuters) - With an eye on evolving tastes in developing markets, Campari is hoping to buckle a gin brand onto its belt as the sixth biggest player in wines and spirits pursues growth despite a downturn.
Campari, a nearly 150 year-old business which guards its secret recipe for Italy's well-known bitter red aperitif jealously, is looking to grow through acquisitions in emerging markets, like eastern Europe, Latin America and potentially Asia.
"There is a migration where the population passes from a drink of a lower level to a higher one, this is an interesting market," said Chief Executive Bob Kunze-Concewitz during a visit to the cellar for Campari's Enrico Serafino wines.
At the international level of the spirits industry, the most premium brands represent a strong profitability and growth.
"In Brazil, we're seeing consumers moving away from cachaca into more premium local brands," he told Reuters, referring to a rum. "In eastern Europe, China and India, you have western premium brands which are growing quite fast."
In its Italian home market, Campari -- which has doubled its turnover in the past five years to just under 1 billion euros ($1.56 billion) -- is benefiting from an "extended aperitivo", where younger consumers get together for a drink and food at a bar rather than going to a restaurant.
The Campari business began at a cafe in Milan when drinks maker Gaspare Campari invented the Campari aperitif -- made from an infusion of bitter and aromatic herbs, plants and fruit in alcohol and water -- some time between 1862 and 1867.
In 1976, the last descendant of the Campari family left the firm to Domenico Garavoglia, whose son Luca is chairman now.
The company has a portfolio of over 40 brands and is partly growing through acquisitions -- 12 in the last 12 years -- beginning when the sector was consolidating in the 1990s. It has a "war chest" of 600 million euros ($936 million).
Competing with top players like Diageo and Pernod Ricard, its cabinet contains a mix of several takes on the original Campari, Cinzano wines, Cabo Wabo tequila, Glen Grant whisky, Skyy Vodka -- as featured in the just released "Sex and the City" movie -- and a range of soft drinks.
But it does not have a gin brand, and has indicated it is interested in acquiring Plymouth Gin, a unit of Swedish spirit company Vin & Sprit, from the company's new French owner Pernod. Pernod expects to close its purchase of state-owned Vin & Sprit this summer, after winning an auction in March.
"Everyone knows we are present. We have a very good reputation ... we are quick and we do not have antitrust problems," Kunze-Concewitz said.
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Campari, which floated on the Milan stock exchange in 2001, posted a 6.9 percent rise in net profit in 2007 to 125.2 million euros ($195.3 million) on sales of 957.5 million euros ($1.49 billion).
Analysts say Campari has a good track record for acquisitions, investing some 1 billion euros in 12 years for buys including Glen Grant whisky, Skyy Vodka minorities and an 80 percent stake in Cabo Wabo tequila from singer Sammy Hagar. Continued...
