‘Germans still trying luck with Aperol copycats!’ Gruppo Campari CEO explains sales slump


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'Hope runs eternal for the German consumer and they’re still trying their luck with the copycats – so that influences us.' (Bob Kunze-Concewitz, Gruppo Campari CEO)
'Hope runs eternal for the German consumer and they’re still trying their luck with the copycats – so that influences us.' (Bob Kunze-Concewitz, Gruppo Campari CEO) caught up with Gruppo Campari’s CEO Bob Kunze-Concewitz on the the phone yesterday, following the spirits giant’s 2013 results announcement noting problems for Aperol in Germany and Wild Turkey in Australia.

BEN BOUCKLEY:“A quick question on Aperol. It’s obviously an important product for you and you signal weak sales in Germany. If I think back around 18 months I believe – correct me if I’m wrong – you were delisted in a major German retailer.

“Is that playing through in terms of problems for the brand, or are consumers simply fed up with the Aperol Spritz cocktail?” ​(Global sales of Aperol rose 10.6%, but were weak in Germany.)

BOB KUNZE-CONCEWITZ, GRUPPO CAMPARI CEO:​“No, no. We were delisted, but we got back in last year on a promotional basis. We were hit by three things – one was the delisting, two was in the off-premise by a significant attack of copycats – copies of the Aperol brand.

“Roughly 50 copies, including private label, which while they’re not able to deliver the same product quality, they are significantly discounted versus Aperol. And hope runs eternal for the German consumer and they’re still trying their luck with the copycats – so that influences us.

Too many Hugos leave headache...

“Last but not least – this fad that started about 18 months ago (and at least in the on-premise seems to be fizzling out) which is for a new cocktail called the Hugo – essentially a spritz with elderflower syrup.

“This is quite a sweet concoction – it became very, very popular and cannibalized on-premise volumes of Aperol. We’re recovering on on-premise with Aperol – but a lot of private labels and minor brands have flooded the German market with ready-to-serve Hugos that retail at €2-3.

“So that’s still a little bit of a headache in the off-premise.”

BEN BOUCKLEY: “You talk ofimpact on Australia due tocompetition in the bourbon category. How is this playing out on the ground? Compare it to North America where we’re seeing a resurgence in brown spirits. What precisely is the problem with Australia and with Wild Turkey, which is growing well in North America?

(Australia group sales fell 6.1% organically, with weak shipments for Wild Turkey, which grew double digit globally).

BOB KUNZE-CONCEWITZ​: “The issue is less with the category and specific brands – it has more to do with the current psyche of the Australian consumer. Consumer confidence in how some of the key players in the bourbon and bourbon RTD market are reacting to that.

“If you look at the macro-economic KPIs of Australia – actually GPD is growing, unemployment is low, so consumer confidence should be high. But if you really dig deeper and you into it, and this is impacting not just us but across FMCG, then you see that consumer confidence is weak.

“I think the weakness in demand for raw materials in emerging markets, particularly China, and the strength of the currency is clearly impacting the consumer psyche.

‘We don’t agree with aggressive Australian discounting’

In that context, you have large players in bourbon and the bourbon RTD market – Australia is normally the No.2 market in the world – and they’re trying to compensate the negative impact of the spirits market and the decrease in consumption by taking market share from competition.

“And they’re doing that by discounting their products aggressively. We don’t think it’s the right thing to do for the brand equity – so we’re responding much more from a brand-building standpoint, via advertising, new campaigns, as well as innovation – but not from a price standpoint.

“One thing to clarify is that we’re actually outperforming the market average – both in bottled bourbon and RTD products.”

Yesterday, Gruppo Campari inked a circa. $125m deal to acquire what Kunze-Concewitz described as a "hidden gem"​ - Canadian whiskey firm Forty Creek Distillery.

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