What is Growth Strategy and Future Prospects of Campari Group Company?

The company is integrating advanced technologies like Microsoft 365 Copilot to streamline employee workflows. This AI integration is projected to save employees approximately 2 hours per week on routine tasks.

Innovation extends to production and supply chain management, with a multi-year program focused on energy efficiency and decarbonization initiated in 2020.

In 2024, production sites generated around 3.5 GWh of on-site solar power, marking a 63% year-on-year increase. This growth is attributed to investments in photovoltaic systems across multiple countries.

The company is committed to achieving net-zero emissions by 2050 or sooner. Key targets include reducing greenhouse gas emissions intensity from direct operations by 55% by 2025 and 70% by 2030, based on a 2019 baseline.

These initiatives underscore a dedication to sustainable growth through the adoption of new technologies and a strong focus on environmental responsibility.

The embrace of digital tools like AI aims to boost employee productivity and foster continuous skill acquisition within the organization.

Campari expects low-single-digit sales declines in Q1 2025 due to the timing of Easter. An improving sales trend is anticipated in the latter half of the year.

The company plans to increase its advertising and promotion spending to a range of 17-17.5% of sales in 2025, supporting its brand portfolio growth.

The acquisition of Courvoisier is set to be integrated into organic growth calculations from May 2025. This brand contributed €75 million in net sales in 2024.

Campari maintains its medium-term forecast of returning to mid-to-high single-digit organic growth once the macroeconomic environment stabilizes.

Improvements in gross margin are anticipated from sales growth, a positive sales mix driven by aperitifs and tequila, and efficiencies in the cost of goods sold.

Strategic initiatives are projected to deliver a 200 basis point benefit in overhead costs relative to net sales by 2027, enhancing the company's overall financial outlook.

Campari estimates that 25% U.S. import duties could result in a negative annual effect of €90-100 million. An initial impact of around €35 million is expected from March 2025 for imports from Mexico and Canada, a concern not fully reflected in the 2025 outlook.

The acquisition of Courvoisier, valued at US$1.32 billion, has added to financial pressures. This is compounded by a slowdown in Cognac sales and Chinese trade barriers, increasing the company's net debt.

Campari's net debt rose to €2.377 billion by the end of 2024, with net debt representing 3.2 times the group's basic profit. This ratio further increased to 3.4 times in Q1 2025, indicating growing financial leverage.

To address financial strains and other challenges, a corporate restructuring is underway, potentially including a 10% global workforce reduction, approximately 500 jobs, with 100 in Italy. This aims for more efficient resource allocation and accelerated growth.

The global spirits industry is experiencing weakening demand, prompting major players to adjust sales expectations. Campari also faced supply shortages in its rum portfolio in 2024 due to a hurricane in Jamaica.

Despite these headwinds, management, under new CEO Simon Hunt, remains confident in delivering long-term sustainable outperformance. This confidence is based on leveraging the brand portfolio and investments in route to market, systems, and supply chain.