just On Call - Gruppo Campari avoids US vodka price war

The boss of Gruppo Campari has defended the company's decision not to offer discounts on its Skyy vodka brand in the US, despite competitors going "lower and lower”.

Speaking to analysts and investors today (12 March) as the company announced its full-year results, CEO Bob Kunze-Concewitz was asked about Campari's decision not to cut prices on its core Skyy vodka in the fiercely-competitive US vodka market. The Skyy portfolio currently represents 11% of the group's sales.

“Overall, there is a lot of discounting going on," said Kunze-Concewitz, "but we are keeping our price, while the competition is continuing to go lower and lower. We believe we are doing the right thing. We believe the solution for us is to go the other way around by building brand equity above the line.”

The company described the US performance of Skyy as “flat”, but noted that its lower abv Infusions Skyy range is showing “strong growth”.

Kunze-Concewitz said the company was keeping its shelf-space on Skyy in the US and increasing shelf space on its Infusions range, which includes Blood Orange and Dragon Fruit.

Asked about the Italian sector, the company's second-largest market behind the US, the Campari head said that, after a very good start to the year, “all hell broke lose" with the Eurozone crisis issue. But he added: “Consumer confidence is coming back, but it remains a volatile environment.”

On the aperitif Aperol, which represents 12% of group sales, Kunze-Concewitz said the brand was “on fire”, posting 38.9% organic sales growth in 2011. In Italy, Germany and Austria the brand is continuing to post double-digit growth. 

On Campari's plans for a new Wild Turkey bottling plant in the US, announced last month, Kunze-Concewitz confirmed this would open in “fall 2013”.