Aperol Maker Campari Enters a Transition Year Amid Industry Woes

Italian spirits giant Campari Group, the maker of popular aperitifs like Aperol and Campari, has announced that 2025 will be a "transition year" due to cyclical headwinds and a global trade dispute that is hampering the beverage sector. The company, which reported a 2.5% drop in adjusted earnings for 2024 on an organic basis, is now expecting moderate growth in organic revenue for the first half of 2025, with an improving trend expected in the second half of the year.

Campari Group's new CEO, Simon Hunt, who joined the company in January 2025 following the resignation of Matteo Fantacchiotti, is facing a challenging time for beverage brands due to trade tensions in key markets. The company estimates the potential impact of tariffs on imported goods into the U.S. from Mexico and Canada to be around 35 million euros ($36.7 million) starting from March 2025, before any mitigation actions, which are currently being assessed.



Despite current woes, Campari Group expects a gradual return to mid-to-high single-digit organic net sales growth in the medium term and in a normalized macroeconomic environment, before the impact of potential tariffs. The company booked sales of 3.07 billion euros for 2024, up 2.4% organically compared with the prior year. Net profit dropped 39% to 201.6 million euros due to more moderate sales growth and business investments.

Campari Group's new 'Houses of Brands' operating model is expected to have a positive impact on its long-term financial health and growth prospects. This new structure, which includes the House of Cognac & Champagne, the House of Aperitifs, the House of Whiskey and Rum, and the House of Tequila, aims to focus on premiumisation and global category profit and loss responsibility. By creating these houses, Campari Group is seeking to enhance its brand portfolio, improve resource allocation, and drive sustainable growth.

Campari Group's cost containment measures, including the global restructure and workforce reduction, may have both positive and negative impacts on its competitive position in the spirits industry. While these measures could help improve operational efficiency and focus on high-growth areas, they also carry risks, such as the potential loss of institutional knowledge and negative impacts on employee morale and productivity. The ultimate effect on Campari Group's competitive position will depend on how effectively the company manages these challenges and implements its strategic plans.

Looking ahead to 2025, investors can expect the following trends:

1. Low Single-Digit Organic Growth: Campari Group now expects net sales organic growth for the year to be in the low single digits, indicating a potential recovery in sales.
2. Premiumization and Portfolio Streamlining: The group will focus on premiumisation and accelerate its portfolio streamlining by disposing of non-core brands, aiming to improve the group's overall financial health and sustainability.
3. New Houses of Brands: The group's new operating model is expected to drive long-term growth by enhancing the brand portfolio, improving resource allocation, and better managing global category profit and loss.
4. Courvoisier Integration: The integration of Courvoisier is progressing, with the brand's strategic assessment and way forward expected to be ready by the end of 2024 for a launch in 2025. This acquisition is anticipated to contribute positively to the group's performance.

In conclusion, Campari Group's 2.5% drop in adjusted earnings in 2024 can be attributed to various factors, including macroeconomic weakness, poor weather conditions, and soft category dynamics. The group's switch to a 'Houses of Brands' operating model and cost containment measures are expected to have a positive impact on its long-term financial health and growth prospects. As the company enters 2025, investors can expect low single-digit organic growth, premiumisation, portfolio streamlining, and the successful integration of Courvoisier to drive its recovery and long-term success.