The Italian group saw a recovery in its second quarter

The Italian group saw a recovery in its second quarter

Gruppo Campari may be toasting its domestic market this week, as Q2 results showed a healthy bounce-back versus Q1, but the US and Germany look like replacing Italy as the flies in the company's ointment.

With Easter this year falling into the second quarter, the three months to the end of June were always going to provide comfort after a tough first quarter for the international drinks companies. Campari was no exception.

But, the group was also circling easy comparatives in Italy this quarter, with heavy destocking after legal changes to payment terms took hold. Subsequently, the country, which accounts for 28% of group sales, delivered an 11.2% sales rise in Q2 and an 8.7% lift in the half-year.

While CEO Bob Kunze-Concewitz tried on Tuesday to temper any over-enthusiasm for Italy's full-year performance, analysts at Nomura believe the future still bodes well. "For H2, we expect a slower dynamic, with some reversal in Q3 and some poor weather in northern Italy in the summer," Nomura says in a note to clients. "However, for full-year 2014, we still expect robust revenue growth (+4%)."

The blackspots in the quarter moved to the US and Germany, with the former seeing Campari's Skyy vodka and Wild Turkey Bourbon struggle. These may be just temporary blips in the US, according to Nomura. "For Skyy, a new marketing campaign is due to start in Q3 and innovation is planned for Wild Turkey in H2," the note continues. "As a result, we expect a turnaround in H2, with Americas revenue (US is c.50% of Americas) back into good growth." Be warned, however, that higher A&P spend could damage the bottom line.

As for Germany, Campari's dispute with one of its retail customers last year has resulted in a hangover, while the Aperol brand has lost ground to the competing brand, Hugo. "Despite some optimism with Q1 results (from Germany), there does not appear to be a renewed recovery," flags Nomura. "Organic revenues in H1 at -6.0% were in line with Q1 (-5.7%), despite the help from the later timing of Easter."

After more than its fair share of struggles in recent times, then, this week's bright dawn for Campari still requires work if the group is going to enjoy a long, hot summer.