CATEGORY 'LESS CONCENTRATED' THAN JAPANESE AND IRISH RIVALS

Canadian whiskey has stellar global growth prospects: Campari CEO

By Ben BOUCKLEY contact

- Last updated on GMT

Bob Kunze-Concewitz, CEO of Gruppo Campari
Bob Kunze-Concewitz, CEO of Gruppo Campari

Related tags: Scotch whisky

Gruppo Campari CEO Bob Kunze-Concewitz says Canadian whiskey has major global growth prospects, as his firm signed a US $125m deal to acquire a ‘hidden gem’ in Forty Creek Distillery.

The CAD $185m deal mark Campari’s first move into a ‘growing and attractive’ market (Canada) and Kunze-Concewitz said it also strengthened its hand in its core US market.

Reflecting on the future for Canadian whiskey, Kunze-Concewitz (pictured) said the category was almost as big as bourbon in the US – with circa. 16.5m nine-liter case sales, 8% of the nation’s spirits market.

It's almost as big as the bourbon market. As you all know well, there's a big resurgence in brown spirits and especially North American whiskies, and this will add significantly to the appeal of our portfolio in this key market,”​ he said.

That said, the US and Canada account for around 90% of global volumes. “I do think though with the increased interest in brown spirits and whiskey in general, we're seeing increased interest in Japanese whiskey, Irish whisky. I'd expect Canadian whiskey to follow as well," ​Kunze-Concewitz added.

'Canadian whiskey is in a different space - we have a hidden gem!'

Asked if he saw Canadian Whisky becoming a major player on the global stage in the near future, Kunze-Concewitz said: "Over the mid- to long-term, yes...Irish whiskies and Japanese whiskies are already in very firm hands - they're pretty concentrated categories. Canadian is in a different space, and with Canadian we really saw the opportunity to acquire a gem."

Turning to Forty Creek Distillery itself, Kunze-Concewitz said it had regularly been one of the fastest, if not the fastest-growing company in the Canadian spirits industry.

“Roughly 62% of its sales come from Forty Creek Whisky, which is the fastest-growing Canadian whisky in Canada, and is extremely well-positioned in the high-growth US market,” he said.

"Currently, the Canadian business is four times as big as the US business on this brand. If you look at industry norms, it's usually the other way around with the US being eight times as large as Canada. So in the mid to long-term there's significant upside here,” he added.

As avery profitable brand with a high margin (above the group average), ​Kunze-Concewitz said the Forty Creek deal would be profit accretive for Gruppo Campari from year one.

“Strategically there are many benefits from it. It increases our critical mass in two key markets - Canada and the US - combining with our existing platform in Canada we'll be able to create our own distribution platform, our own in-market company, slated to become operational in 2015,” ​he said.

"We have a hidden gem of a brand...it's a great deal for us,” ​Kunze-Concewitz added. (Forty Creek will sit alongside bourbon brand Wild Turkey in the Gruppo Campari portfolio, and the latter posted 15.6% global growth in 2013).

Aperol hits the skids in Germany

Today Gruppo Campari reported full year sales of €1.524bn (up 1.7% in organic terms) and net profit of €149.8m (-4.4%).

“We've had a satisfactory year in terms of results - positive organic change, with an acceleration of organic sales growth throughout the year,”​ Kunze-Concewitz said.

"We started the year as you know, quite negatively, promised we would invert that situation in the second half of the year and we've promptly delivered. We've grown by 6.4% in Q4, more than Q3, and ended the year up 1.7% from an organic net sales standpoint."

Good performance in the Americas and Russia - the former in particular - underpinned this growth, he said, with close to 36% growth.

This helped offset a German weakness, "where we expected Aperol to affect overall numbers, as well as weakness in Australia where competition in the bourbon/RTD market is having quite an impact".

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