August 1, 2018 / 10:12 AM / 14 days ago

Growing taste for Aperol 'Spritz' lifts spirits at Campari

MILAN (Reuters) - Strong demand for Campari’s (CPRI.MI) bright orange Aperol liqueur in Europe and also the United States helped to boost sales and profitability for the Italian drinks group in the first half of the year.

FILE PHOTO: An illustration photo shows a bottle of Campari displayed in a wine shop in Nice, France, March 15, 2016. REUTERS/Eric Gaillard/File Photo

Campari’s “aperitif” Aperol has been benefiting from a renaissance for cocktails and a preference for lower alcohol drinks among young consumers.

Aperol, once a niche product sold mostly in northern Italy to make the Spritz cocktail, has become one of the group’s best selling products. Its sales rose 24.7 percent in the first half of the year.

FILE PHOTO: Bottles of Aperol liqueur are seen in a lounge bar in Milan, April 12, 2016. REUTERS/Stefano Rellandini/File Photo

The liqueur continued its solid performance in its traditional markets, including Italy and Germany, and enjoyed a strong growth also in the United States, where the drink is a newcomer on bar counters.

Aperol and other high-margin brands, such as Grand Marnier and Campari, helped the Milan-based company to partially offset negative impacts from currency swings and the sale of some non-core brands. Campari is the deep-red bitter liqueur used to make the cocktail Negroni.

Group sales rose 5.4 percent on an organic basis in the first half, while gross profit came in at 471.9 million euros ($551 million), with a margin on sales of 60.6 percent, up from 58.4 percent in the first half of last year.

In contrast, sales of Campari’s SKYY vodka brand continued to decline, especially in the United States, where the drink is expected to suffer also in the next few months.

“Looking at the remainder of the year, the net sales organic growth is expected to be driven by the continued outperformance of the key high-margin global and regional priorities in core developed markets, with the exception of SKYY (vodka brand),” the Milan-based company said in a statement.

Campari also said SKYY would continue to be negatively impacted by further destocking in the United States. Total SKYY vodka sales were down 11.1 percent on an organic basis in the first half. The company also warned about a negative impact from a rise in agave prices, a key ingredient for tequila.

Shares in the Milan-based group were up 1.8 percent at 1135 GMT to 7.34 euros, just off a record high posted on July 25.

“The stock rose strongly in the last month, so, even if the group has confirmed the outlook for this year, some investors are taking profit,” a Milan-based analyst said.

Editing by Jane Merriman

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