Campari Confident Pricing Will Retain Consumer Value Amid Inflation Pressures
Campari's Strategy and Market Performance Amid Global Economic Challenges
Impact of Inflation and Middle East Crisis on Spirits Demand
MILAN, May 7 (Reuters) - Inflation stemming from the Middle East crisis is expected to limit demand for spirits, but Campari’s pricing should mean consumers still consider its brands good value, the Italian group’s CEO told Reuters.
Campari's Q1 Results and Contributing Factors
CEO Simon Hunt was speaking after Campari reported on Wednesday a 2.9% rise in first-quarter organic revenue, falling short of market expectations.
Destocking in the United States
Hunt said the miss versus consensus was driven by destocking in the United States, while in Europe it reflected ongoing negotiations with retailers, which led to less marketing activity in stores.
European Retail Negotiations
"We think there will probably be a further tightening of consumer spending," he said, referring to inflation caused by the Iran war that began at the end of February.
But he said Campari's portfolio was well positioned "to still be seen as good value by consumers".
Effects on Global Travel Retail and Operational Costs
Decline in Travel Retail Segment
The Middle East crisis resulted in a 13.5% decline in the group's global travel retail segment. Campari does not disclose the precise size of its travel sales.
Rising Logistics and Glass Contract Costs
"At this stage, the biggest area of cost we are seeing is coming through in petrol and diesel costs in terms of logistics", Hunt said.
"Most of our contracts on glass are longer term and most contracts have a range that we have negotiated," he said, adding he did not anticipate those ranges "being broken", although a prolonged war could change the situation.
International Trade Developments
Tariff Removal on UK Whisky
Limited Impact on Campari Group
Last week U.S. President Donald Trump said that he was removing tariffs on whisky from Britain. Hunt said he did not foresee "a material impact", given UK whisky was only a small part of the Campari group's business.
(Reporting by Elisa Anzolin; editing by Barbara Lewis)
