Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Campari is to buy Courvoisier Cognac from US-Japanese spirits group Beam Suntory in a deal valued at $1.32bn as global sales of the drink stutter.
The deal, which will be the biggest acquisition by the Italian spirits group, comes as leading cognac makers reported a slump in sales amid slowing consumer demand. Courvoisier is the fourth-largest cognac producer globally after LVMH-owned Hennessy, Rémy Martin and D’Ussé.
Campari chief executive Bob Kunze-Concewitz told the Financial Times the downturn was “temporary” and “we are very bullish on the medium and long-terms prospects of the brand”.
“It’s better to buy such a premium maison in this market,” he added.
Cognac was the drink of choice for many Americans during Covid-19 lockdowns and as bars reopened after restrictions lifted, but demand there has now declined.
“This year cognac players have a problem because there was scarcity during the pandemic, so distributors built stock . . . inflation and interest rates rose and players increased the prices, the macro scenario crisis affected consumption and distributors ended up with large stocks,” said Kunze-Concewitz. “But people have a short memory . . . cognac in the US is now a lot more popular than it was before the pandemic, in spite of the [current decline in sales].”
Sixty per cent of Courvoisier’s sales come from the US and the acquisition will help the Milan-listed group, controlled by Italy’s Garavoglia family, expand across the Atlantic, a priority for its strategy.
Kunze-Concewitz said it would also strengthen Campari’s position in the Asia-Pacific region, where demand for cognac is growing, and in the UK.
The acquisition marks the 28th during his tenure and aims to strengthen Campari’s market position in the aged and luxury spirits segments. Kunze-Concewitz, who announced earlier this year that he would be retiring in April after 16 years at the helm, said it was “a once in a lifetime opportunity”.
It is also the seventh acquisition since 2016 of a France-based spirits producer by the Italian group. Campari said the deal would lead to increased distilling infrastructure, bottling and warehousing capacity in the Cognac region.
Courvoisier will be part of a portfolio that already includes Bisquit cognac and Grand Marnier, a liqueur made of several types of cognac. Kunze-Concewitz said Courvoisier alone was expected to make up 8 per cent of the group’s total sales in the future, much more than Bisquit’s current 1 per cent.
Campari’s portfolio also includes brands such as Skyy Vodka, Wild Turkey whiskey and Bulldog gin as well as the flagship red-orange aperitifs Campari and Aperol, the group’s largest label and the main ingredient of the famous Spritz long drink.
Kunze-Concewitz said that when the group acquired Wild Turkey “bourbon was totally unpopular, but that changed”. The whiskey brand’s sales have increased threefold since the takeover in 2009, according to the company’s data.
The group currently has a market capitalisation of €11.9bn but its share price has fallen a fifth since its peak two years ago. Drinkers globally have dialled back on spending amid rising prices and a deteriorating economic outlook.
Additional reporting by Madeleine Speed
Read the full article here
