Campari “Eventually” Looking to Offload Local Brands

Dear Client:

Campari’s global sales in 2018 were negatively impacted by exchange rate and perimeter effect, but sales in the US (which now accounts for 26% of the company’s total sales) were up 4.4% for the year. The US results were driven by double digit growth of Espolon, Aperol and Campari, offsetting the decline in Skyy.

Aperol was up a whopping 74% in the US, which is now the brand’s third largest market by value and fifth largest by volume. The company attributes much of the high growth to the marketing activations in New York and Los Angeles.

“Clearly, our experiential marketing activations, which were focused on the East and West coasts have worked quite nicely, and we will be looking forward to significant new driving up the volume on that this year,” said Campari chief Bob Kunze-Concewitz on this morning’s earnings call.

The brand Campari also reported strong growth, ending the year up 28% in the US, driven by the popularity of classic cocktails like the negroni. “This momentum will continue going forward,” said Bob.

A few other standout brands for the year:

  • Wild Turkey grew 5.7% in the US, driven by marketing support from the Matthew McConaughey campaigns and premium line extensions and offerings such as Wild Turkey Longbranch, Russell’s Reserve and Master’s Keep Revival.
  • Grand Marnier was up 6.1% in the US.
  • The Jamaican rums grew by mid single digits in the US driven by Wray & Nephew Overproof and Appleton Estate.
  • Espolon was up just over 30% in the US.

Then there’s Skyy, which Bob referred to as the “only blemish on our track record.” Indeed, the big vodka brand was down 11% for the year in the US, largely impacted by destocking activity, competitive pressure and reduced innovation, according to Bob. And that destocking will continue to impact Skyy’s results in the US for the first six months of 2019.

Though, Bob noted there’s a gap between consumption (flat), depletions (-5%) and shipments (-11%). The company expects that gap to close and for depletions and consumption to be roughly flat in 2019 and for shipments to improve but still down in the low single-digits.

When asked about M&A activity, Bob said: “On the M&A pipeline, I mean there’s always a pipeline, but we’ve turned more selective over the years so we’ll see what happens.”

As for brand disposal, Bob said they’re “eventually looking to offload a few local brands,” more specifically, about 5% of the local portfolio which includes Campari Soda, Crodino, Cabo Wabo, Brazilian brands among others. But, “I don’t think this is the best time to do that, and with regard to agency brands, we’ll look at them on a one by one basis and decide whether it makes sense for us to keep them or not.”

Looking ahead, Bob said: “We remain confident in achieving a positive performance across the key underlying business indicators in 2019, driven by the continued outperformance of the high-margin global and regional priority brands in key developed markets.”

THE FAMILY COPPOLA DETAILS PLANS FOR RECENTLY-ACQUIRED OR VINEYARD

Late last year, The Family Coppola made its first investment in Oregon, acquiring Vista Hills Vineyard in Oregon’s Dundee Hills in the Willamette Valley AVA [see WSD 10-22-2018]. Now the company has rebranded the property as Domaine de Broglie – A Francis Coppola Wine.

The brand name was inspired by Louis de Broglie, who received the 1929 Nobel Prize in Physics. The brand’s first releases include three estate vineyard clonal designated pinot noirs including 2017 Pinot Noir Dundee Hills Block C-Clone 777, 2017 Pinot Noir Dundee Hills Block G-Pommard Clone, and 2017 Pinot Noir Dundee Hills Block B-Clone 114.

The company has also opened a new tasting room at the vineyard, which showcases items related to Louis de Broglie and his work as well as themed with memorabilia from the 1966 film Is Paris Burning?, per a release.

“Our excitement continues to grow as we spend more time within the respected Dundee Hills region,” says ceo and winemaking chief Corey Beck. “The Family Coppola is committed to the community long-term and we’ll continue to prove our dedication through meaningful connections, philanthropy and high-quality winemaking.”

WSD BRIEFS:

TWE LAUNCHES 19 CRIMES BEER. Treasury Wine Estates has officially expanded its 19 Crimes wine brand to include craft beer, launching an IPA, pilsner and lager this month in the test market of Ohio. You may recall, TWE announced it would be entering the beer space last month [see WSD 02-15-2019]. “We know that our 19 Crimes wine lovers also highly index as consumers of craft beer,” says TWE cmo Michelle Terry. “There is so much opportunity with this brand, and our retailers and customers have been asking us to expand into other alcohol beverages.” 19 Crimes beer will feature the same augmented reality labels as the wines and will retail at about $13 per six-pack. The beers will be more widely available by the end of this year.

DRY CREEK VINEYARD NAMES NEW NATIONAL ACCOUNTS DIRECTOR. Dry Creek Vineyards has hired Brad Bartram as national accounts director. Brad has nearly 25 years of industry experience under his belt, most recently working as fine wine strategic account manager at Delicato Family Vineyards. In his new role he will be responsible for the national off-premise accounts business, as well as the regional wholesale business in Arizona, Colorado and New Mexico. He will report to director of sales John Doxon.

O’NEILL VINTNERS & DISTILLERS EXPANDS PARTNERSHIP WITH YOUNG’S. O’Neill Vintners & Distillers has inked an expanded distribution agreement with Young’s Market to represent the Robert Hall brand in California, effective April 1, per a release. Young’s also handles O’Neill’s portfolio in WA, OR, ID, AK, WY and HI. “Young’s is a key strategic partner in the West, and we are delighted to consolidate 100% of our portfolio with them in California,” says O’Neill chief sales officer Mark Federighi.

NAPA VALLEY VINTNER JOHN SHAFER DIES AT 94. We regret to report that Napa Valley vintner John Shafer, Shafer Vineyards founder, died on March 2 at the age of 94. John moved to Napa Valley in 1973 with the purchase of a vineyard at the base of the Stags Leap palisades, producing his first wine in 1978. He was instrumental in designating the Stags Leap AVA, and was very involved in philanthropy. His son Doug is the current president of Shafer Vineyards. John is survived by his daughter Libby, sons Doug and Brad, 13 grandchildren and one great grandchild. The family has requested that anyone who wishes to celebrate John’s life make a donation to Ole Health, VOICES or Napa Valley Wildlife Rescue, per a release.

Until tomorrow,
Sarah

“I’d rather regret the things I’ve done than regret the things I haven’t done.” – Lucille Ball     

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