Campari will buy Courvoisier Cognac, a US-Japanese spirit group Beam Suntory. The deal is valued at $1.32bn. Global sales of this drink are stuttering.
The deal will be the largest acquisition for the Italian spirits group. Leading cognac producers reported a decline in sales due to a slowdown in consumer demand. Courvoisier, owned by LVMH, is the world’s fourth largest cognac producer after Hennessy and Remy Martin.
Campari’s chief executive Bob Kunze Concewitz said the downturn is “temporary”. “We are very bullish about the medium- and long-term prospects of the brand”, he added.
He added, “It is better to purchase a high-end house in this market.”
Cognac was the drink that many Americans chose during Covid-19 and when bars reopened following restrictions being lifted. However, demand has declined.
“This year, cognac players are having a problem. There was scarcity due to the pandemic so distributors built up stock. . . “The macro-scenario crisis affected the consumption, and distributors had large stocks,” Kunze-Concewitz said. “But people are short-sighted. . . “Despite the current decline in sales, cognac is much more popular in the US than it was prior to the pandemic.”
The US accounts for 60% of Courvoisier’s sales. This acquisition, which was made by the Garavoglia Italian family, will allow the Milan listed group to expand its business across the Atlantic. It is a strategic priority.
Kunze-Concewitz stated that it would strengthen Campari’s position both in the UK and Asia-Pacific, where the demand for cognac has been growing.
This is the 28th acquisition during his tenure, and it aims to improve Campari’s position on the market in the luxury and aged spirits segments. Kunze-Concewitz said that the opportunity was “once in a life time”. He announced earlier this summer that he will be retiring from his position in April, after 16 years.
This is the Italian group’s seventh acquisition of a French spirits producer since 2016. Campari stated that the deal will increase the distilling infrastructure and bottling capacity of the Cognac region.
Courvoisier is part of an existing portfolio which includes Bisquit cognac, and Grand Marnier a liqueur that is made from several types of cognac. Kunze-Concewitz stated that Courvoisier is expected to account for 8 percent of the total group sales in the future. This is much higher than Bisquit, which currently accounts for 1 percent.
Campari also has brands like Skyy Vodka and Wild Turkey Whiskey, Bulldog Gin and Aperol. These are the two most important aperitifs in the world, and they’re the key ingredient for the famous Spritz.
Kunze-Concewitz stated that Wild Turkey’s Bourbon “was totally unpopular” when it was acquired by the group, but this has changed. According to company data, sales of the whiskey brand have tripled since 2009.
The market capitalisation for the group is currently EUR11.9bn, but its share price fell by a fifth from its peak two year ago. Globally, drinkers have cut back on their spending due to rising prices and an deteriorating economy outlook.