Campari benefits as U.S. drinkers get taste for spirits

By Elisa Anzolin

MILAN (Reuters) -Italy's Campari said on Tuesday demand for its spirits was holding up well in the face of rising prices and the industry was seeing more American drinkers switching from beer.

Campari, the company behind the Aperol spritz cocktail, reported a 9.6% increase in fourth quarter like-for-like sales, thanks to strong pricing and despite glass supply constraints.

That growth rate was more contained compared to the previous quarters, with group net sales up organically 16.4% in 2022 as a whole, to 2.7 billion euros ($2.9 billion).

"Markets are normalizing, they cannot always grow double digits... but we think we can outperform in all markets and in all categories," Campari CEO Bob Kunze-Concewitz told Reuters.

The CEO said he sees global demand growing despite inflationary pressures, especially in the aperitifs segment.

As a response, the group was planning robust supply chain investments to double overall production capacity in key aperitifs, bourbon and tequila categories.

The United States, the biggest single market for Campari accounting for 28% of its revenues, outperformed at the end of the year.

"October and November were weaker but December was stronger. The American scenario is very positive, because the spirits industry is gaining market share at the expense of beer," Kunze-Concewitz said.

"The consumption of cocktails at home has now normalized ..but on-premise consumption is growing by double digits," he added.

The group said that inflation remained a challenge despite some signs of easing, but it is confident it can preserve "the current operating margin on sales at the organic level".

Adjusted operating profit in the last quarter was up 7.6% on a like-for-like basis, with input cost inflation almost fully offset by positive pricing initiatives. It was up 19% on the same basis over the year.

Shares in Campari closed down 1%. A Milan-based trader said that results were broadly in line with analyst consensus.

Jefferies analysts said the flattish margins expected for 2023 were a negative factor but already expected and pointed out the continued growth momentum as a positive element.

Campari is proposing a full year dividend of 0.06 euros per share, unchanged compared with the previous year.

($1 = 0.9384 euros)

(Reporting by Elisa AnzolinEditing by Keith Weir)