Campari Warns Inflation Will Weigh on Spirits Demand

Campari said on Thursday that it expects inflation tied to the Middle East crisis to weigh on spirits demand, but its chief executive said the company’s pricing should help keep its brands attractive to consumers who are watching their budgets.

Simon Hunt, Campari’s chief executive, spoke after the Italian spirits group reported a 2.9% rise in first-quarter organic revenue, a result that fell short of market expectations. Hunt said the miss reflected destocking in the United States and weaker in-store marketing activity in Europe as the company negotiated with retailers.

“We think there will probably be a further tightening of consumer spending,” Hunt said, referring to inflation linked to the war involving Iran that began at the end of February. Even so, he said Campari’s portfolio was positioned “to still be seen as good value by consumers.”

The company’s global travel retail business was hit hard by the crisis, with sales there falling 13.5%. Campari does not disclose the exact size of that segment.

Hunt said the biggest cost pressure so far has come from petrol and diesel used in logistics. He added that most of the company’s glass contracts are long term and include negotiated price ranges that he does not expect to be broken, though he said a prolonged war could change that outlook.

Last week, President Donald Trump said he was removing tariffs on whisky from Britain. Hunt said he did not expect a material effect on Campari because British whisky makes up only a small part of the group’s business.