Campari looks to Asia for acquisitions | Economic news
Mention Campari and most people will think of red bitters served with soda or as part of the classic Negroni cocktail.
They may not realize that the Italian aperitif is actually part of a much larger company that bears his name.
This company, Davide Campari-Milano, is now the sixth player in the global spirits industry behind Britain’s Diageo, Pernod-Ricard from France, Bacardi, based in Bermuda, Brown-Forman, based in the United States, and the US-Japanese combined Beam Suntory.
And he seeks to become bigger.
Bob Kunze-Concewitz, chief executive, told Italian newspaper La Stampa today that the company is aiming for more acquisitions – with high-end brands in Asia and the United States its main focus.
When asked if Campari is looking to get more activity in the area of mergers and acquisitions, he told the newspaper: “Yes. Campari has built a structure capable of handling higher revenues than our current ones. premium brands with particular attention to the United States and Asia. “
Campari has not been outdone in recent years when it comes to acquisitions. His last big deal came when, in April last year, amid the chaos of the pandemic, he took a controlling stake in 114-year-old champagne brand Lallier.
The year before, she bought the French rum brands Trois Rivières and Maison La Mauny and the mezcal brand Montelobos. This follows the acquisition in 2018 of the cognac brand Bisquit. Before that in 2017 came Bulldog gin and in 2016 there was the € 684m (£ 590m) buyout from the French owner of Grand Marnier Liqueur.
In all, Campari has made over 30 acquisitions over the past 25 years, helping it build an eclectic beverage cabinet that also includes Skyy Vodka, Wild Turkey Bourbon, Wray & Nephew White Rum, Glen Grant Whiskey. Scotch and Appleton Estate rum – as well as local Italian favorites, the aperitif Aperol and Cinzano, the vermouth brand whose 1970s television commercials with Joan Collins and Leonard Rossiter remain among the most beloved in the history of the British advertising.
One of its goals in this regard has been to reduce dependence on its domestic market, Italy, which, according to the latest financial results, now accounts for just 16% of global sales – the lowest in 161 years of company history.
Mr. Kunze-Concewitz’s comments will reignite gossip in the global spirits industry about which brands or categories of beverages Bacardi may target. He has previously indicated that he would be interested in doing more in the tequila category, currently the fastest growing spirits category in the United States, to augment the current Espolon and Cabo Wago group brands. Campari has also made it clear that he is sitting on a € 4bn (£ 3.5bn) war chest that he would be willing to spend on the bargain.
Yet it is his mention of Asia that has generated the most interest today.
Paola Carboni, analyst at Italian investment bank Equita Sim, told clients in a note: “This is the first time Asia has been mentioned as a possible target market for acquisitions.”
In fact, Campari has already dropped a much broader hint of its intentions in the region, having recently moved its Asia-Pacific regional headquarters from Sydney to Singapore – from where it believes it can more effectively target fast-growing Asian markets. .
However, despite being the company’s fastest growing market, Asia Pacific still only accounts for 9% of Campari’s global sales. Take out Australia, which represents 7% of the group’s sales, and it is obvious that the rest of Asia only represents a tiny part of the activity. Its sales in China actually declined in the last quarter.
The size of Campari’s war chest, as well as a recent restructuring of corporate voting rights that could unlock the ability to issue large amounts of shares as part of a takeover, has led to speculation. that something great is imminent.
Just Drinks, the online news, market intelligence and data provider, recently told customers: “This move has heightened speculation that this acquiring company may be on the verge of making an imminent purchase. On a grand scale. Past history suggests a penchant for a slightly dusty and neglected brand – franchises that can receive a new coat of paint and a push for renewed growth, such as Appleton Estate, Grand Marnier and Wild Turkey. “
He suggested that Cuervo, the world’s best-selling brand of tequila and owned by the Mexican billionaire Beckmann family, could be a possible target. She pointed out that Cuervo also owns other drink brands, such as Bushmills Irish whiskey, which could benefit from Campari’s marketing flair.
Cuervo was introduced to the Mexican stock market in 2017, making it potentially more vulnerable to a takeover, but the problem with the theory is that the Beckmanns, who have retained an 85% controlling stake, have been extremely reluctant. for sale in the past. Diageo, who previously had a marketing and distribution deal with the family, sought to buy the brand before that deal ended in 2013, but was rejected. His response was to acquire its own range of tequila brands, including Don Julio and Casamigos, with whom he had great success.
Any likely characteristic of any target for Campari is that it will be high end. The company launched a new division, called RARE, earlier this year for luxury brands. All of the leading spirits companies in recent years, notably Diageo, have noted the tendency of spirits buyers to ‘trade in’ and spend more on their favorite drinks and this is a trend that Mr. Kunze-Concewitz is keen to exploit. . He recently told investors that in the United States, the world’s largest spirits market, sales of value products fell 0.6% while those of high-end products rose 7.7% and those of so-called “super-premium” products by 9.7%.
All of this means that the number of assets being tracked by Kunze-Concewitz will likely be quite low – but that won’t dampen speculation.