just On Call - Gruppo Campari eyes premium cachaça growth
Gruppo Campari to up marketing spend on Sagatiba
Gruppo Campari plans to market its new cachaça brand, Sagatiba, more strongly in Brazil to take advantage of emerging demand for premium drinks in the country.
Campari said today (4 August) that it has acquired high-end Sagatiba from its founder, Marcos de Moraes, for an initial US$26m. Cachaça is the best-selling spirit in Brazil and the Italian drinks group hopes to leverage its existing distribution base in the country to capitalise on rising disposable incomes.
Currently, premium cachaça constitutes only around 1% or 2% of the 85m-case cachaça market in Brazil, Campari's CEO, Bob Kunze-Concewitz, told just-drinks on a media call for the company's half-year results.
Campari has been bottling and distributing the brand since March last year, and Kunze-Concewitz told just-drinks that the company's initial plan is to "step up marketing on the brand".
The group sees a general premiumisation trend in Brazil's drinks sector, as consumers' disposable incomes rise.
In cachaça specifically, this is a view shared by others. Vitória Cavalcanti, director of external affairs for cachaça maker Engarrafamento Pitú, said in a recent just-drinks/IWSR report on the category: “The main companies and brands are working toward building the value of their products and creating new segments of cachaça by introducing new packaging, wood aging and premium products."
The report, published last year, said that Sagatiba was gaining a strong presence in "trend-setting bars and restaurants" across Brazil's main cities.
Campari said today that Sagatiba, which was founded in 2004, has increased volume sales by an average of 21.6% annually since 2005, reaching 112,000 nine-litre cases. Exports are also a potential avenue for Campari, given its global reach. Around one third of Sagatiba production is already exported, with sales in 36 countries, as well as travel retail.
Elsewhere across Campari's business, the group reported a strong set of half-year figures. Net profits for the six months to the end of June increased by 8.7% to EUR75.3m (US$107.4m). Net sales jumped by 14% to EUR589.1m, while operating profits rose by 19.6% to EUR136.9m.
Wild Turkey Bourbon and Aperol led the line for the drinks group with strong double digit rises. Brazil underlined its position as an increasingly important market for the company by helping to drive a 7.5% sales increase on the firm's namesake brand.
On the group's results call, Kunze-Concewitz told just-drinks that success with the Campari brand is "the fruit of many years of hard marketing work".
The company confirmed to journalists on the call that it is still on the lookout for acquisitions, having previously said that it could spend between EUR300m and EUR400m.
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