Grand Marnier will be Camparis sixth global brand

Grand Marnier will be Campari's sixth global brand

Yesterday, Gruppo Campari announced plans to take over Marnier-Lapostolle in a deal worth US$761.4m. In the notes that followed, analysts have hailed the deal not only for the geographical boost it will offer Campari, but also for the group's addition of a sixth global brand to its spirits stable, in Grand Marnier (the other five are Campari, Aperol, Skyy vodka, Wild Turkey whiskey, and Appleton rum).

Marnier-Lapostolle – What has Gruppo Campari bought for US$760m? - Click here for the facts

Nomura's Ian Shackleton calls brand Grand Marnier "unique" in its position as a Cognac-based orange liqueur. "The Grand Marnier price point is on average 20% to 25% ahead of the major competitor, Remy Cointreau's Cointreau brand," he writes today. "We think new management will be able to reignite volume growth."

Global footprint

Alongside its initial stake acquisition, Campari will take control of the worldwide distribution of Marnier's spirits portfolio, which comprises a range of high-end Cognacs under the Grand Marnier name as well as the namesake liqueur brand. The distribution deal takes effect from 1 July until the end of 2021, then will be renewed in consecutive five-year blocks after 2021.

"In the US, the three-year agreement with LVMH has already ended," adds Shackleton. "In European markets, distribution is mainly with Diageo."

Grand Marnier sells largely in North America and Western Europe. In fact, almost 90% of Paris-headquartered Marnier-Lapostolle's profits come from mature markets, according to Shackleton, meaning less exposure to volatility than peers who rely on emerging markets.

Of those mature markets, the US accounts for 60% of total group sales at Marnier. Following completion of the acquisition, the US will become the Campari's largest individual market.

"We believe the deal makes sense from a strategic perspective," says Stirling. "Grand Marnier fits well within the overall Campari portfolio, with its strong brand equity, premium positioning, and geographic exposure."

Looking forward, he adds: "Considering the business is higher margin than the overall Campari portfolio, we expect the EBIT contribution to be closer to 10%."

 Campari has worked hard in recent years to break reliance on its home market of Italy. Yesterday's announcement makes the company more of a world player than an Italian one.

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