Grupp CAMPARI Tasting life tgether fr many years t cme Deutsche Bank Glbal Cnsumer Cnference Paris, June 13 th 2017 1
Cntents Grupp Campari - Strategic pillars & pririties Psitined t leverage key industry trends - Aperl, the cntagius jy f life - Riding the wave f the Classic Ccktail culture - Russell s Reserve: ur answer t rising craft burbn - Bulldg Premium Gin 2
Grupp Campari: a success built n a fcused strategy Our key pillars A successful stry that started mre than 150 years ag built n a clear strategy cmbining rganic grwth with acquisitins Cntinuus sales mix imprvement via a strng fcus n ur high margin 6 Glbal Pririty Brands and key Reginal Brands in premium markets while dispsing lwer margin assets 50% ORGANIC GROWTH 50% EXTERNAL GROWTH Cntinuus leverage f ur enhanced distributin platfrm that benefits frm recent investments in rute-t-market start ups and strengthened n premise capabilities in established markets Cntinuus leverage f ur brand successful grwth mdels and experiential brand building tls glbally acrss the entire prtfli aiming at cntinuus imprvement f ROI n marketing investments Fcus maintenance capex t must haves and, in additin t prduct innvatin prjects, mve frward nly with capex prjects with shrt payuts and significant lng term saving pprtunities NET SALES CAGR 2006 2016: +6.4% EBITDA (1) CAGR 2006 2016: +6.8% Free Cash Flw CAGR 2006 2016: +9.7% Ttal Sharehlder Return CAGR 2006 2016: +20% (1) Adjusted 3
Cntinuus sales mix imprvement via utperfrmance f ur Glbal Pririties and key Reginal Brands Brand building is a key pririty Premium Glbal brands cntinue t generate utperfrmance Q1 2017 Net sales: 376.6 m Grup rganic grwth: +5.7% 12.00% 10.00% 8.00% 6.00% Histrical perfrmance f Glbal Pririties vs. Grup average Glbal Pririties (1) Grup average Rest f prtfli 18% (2) Lcal Pririties 12% Glbal Pririties 53% 4.00% 2.00% Reginal Pririties 17% (1) 0.00% FY 14 FY 15 FY 16 FY 17 Q1 (1) FY14 sales data fr Glbal Pririties excluding the Cinzan Prtfli which was mved t Reginal Pririties in FY15 after realignment f ur key brands (1) Key Reginal Pririties include: Bulldg Gin, Esplòn, Cynar, Frangelic, GlenGrant Averna, Brauli, Cinzan, Mndr & Riccadnna, Frty Creek (2) Including ther wn brands 9.5%, agency brands 6.5% and bulk & c-packing 2% 4
Cntents Grupp Campari - Strategic pillars & pririties Psitined t leverage key industry trends - Aperl, the cntagius jy f life - Riding the wave f the Classic Ccktail culture - Russell s Reserve: ur answer t rising craft burbn - Bulldg Premium Gin 5
Aperl will spread its range vibe and jy f cnnecting thrugh its quintessential scial signature drink Aperl Spritz while enhancing the emtinal bnd with cnsumers 6
Aperl: a success stry Ttal vlume evlutin CAGR 2004-2016: 16% Acquisitin by Campari FRANCE, SWITZERLAND, BENELUX, UK, NORDICS, SPAIN, CZECHIA, RUSSIA, USA, AUSTRALIA, BRASIL CHILE 30 MM L 6x ITALY, GERMANY, AUSTRIA 20 MM L 10 MM L 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 APEROL s internatinal expansin is allwing a gradual reductin f the cncentratin f vlumes in a few markets. First three markets f Aperl nw accunt fr 70% f ttal vlumes in 2016 vs 95% in 2011. We have high ptential markets where Aperl has barely scratched the surface, setting up huge grwth ptential fr years t cme 2011 2013 2016 Others (0.5%) Ptential (4%) Others (2%) Others (3%) Ptential (6%) Ptential (14%) Seeding (0.5%) Seeding (2%) Seeding (4%) Established (95%) Established (91%) Established (79%) Surce: Internal data shipments 2016 7
Aperl: the prduct Unique bitter-sweetness Aperl was invented in 1919 in Padva, created by the Barbieri Brthers, specialists in liqueur prductin since 1880 Aperl was launched behind the revlutinary idea f creating the lightest f liqueurs: an aperitif with an alchl cntent f nly 11% Aperl is an infusin f precius herbs and rts in a perfectly balanced cmbinatin Bright range in clr, Aperl has a unique bitter-sweet taste deriving frm a secret recipe that is guarded jealusly and has remained unchanged ver the curse f time Tw are the mstly recgnizable elements in its distinctive taste: the fresh and lively sweetness - given by the Oranges; and the unmistakable bitter tang - given by the Rhubarb 8
Aperl: key surces f vlume Aperitif grwth amng beverages Size: 246MM (9L Cases) Excl. Beer & Cider CAGR: 0.5% SPW Size: 191 MM (9L Cases) CAGR: 0.9% Radlers Beer Size: 21 BN (9L Cases) CAGR: 0.8% Vermuth Size: 20.7 MM (9L Cases) CAGR: -4.7% Spirit Aperitifs Size: 8.9 MM (9L Cases) CAGR: 3.8% Cider Size: 242 MM (9L Cases) CAGR: 6.0% Surce: IWSR, CAGR 2010-2015 9
Grupp Campari s labratry: testing the strategy ITALY De-seasnalisatin Using ur cre hme-market as a labratry, Campari can test the brand building strategy in real-time Gemarketing strategy via ftprint expansin: by creating cnsumer strnghlds in key cities, it frms the base f the Grup s brand building pyramid Key cities then establish relevant n-trade visibility, engage in barman educatins & Pint f Sale Gegraphical expansin mves the brand fcus int ther cities within the market, reaching new cnsumers in high ptential areas while grwing frequency in strnghlds The lab technique allws Campari t mnitr success, tweak and update the strategy accrding t new markets as well as delivering key sustained rganic grwth fr the brand which will be at different stages f maturity in ur glbal markets New ccasins Gegraphic expansin 10
The fundamental three-stage apprach t ur brand-building grwth strategy Ptential markets Seeding markets Established markets STRATEGY OBJECTIVE 3. Mve int new drinking ccasins and take share f thrat 3. New ccasins Italy Germany Austria Switzerland 2. Emtinal bnd build, create a rutine via lyalty & frequency 2. De-seasnalize the brand UK Spain France Australia Chile Czech Republic 1. Brand awareness, advcacy & gegraphical expansin 1. Build the n-premise, recgnitin, appreciatin ROW 1 7 years Time 11
Aperl: Per capita cnsumptin Aperitif grwth: lts f rm t grw barely scratching the surface ESTABLISHED MARKETS: Per Capita Cnsumptin 2016 POTENTIAL & SEEDING MARKETS: Per Capita Cnsumptin 2016 Italy 60.8 millin peple Germany 81.4 millin peple Austria 8.6 millin peple 0.23 litres 0.1 litres 0.2 litres CAGR 2013-2016: +3.1% CAGR 2013-2016: +3.5% +13.6 millin litres with Italy s PCC CAGR 2013-2016: +4.3% +300k litres with Italy s PCC Vs. U.S.A 325 millin peple Australia 24 millin peple France 66.8 millin peple U.K 65.5 millin peple 0.002 litres 0.02 litres 0.02 litres 0.01 litres CAGR 2013-2016: +24.5% +74 millin litres with Italy s PCC CAGR 2013-2016: +61.2% +24 millin litres with Italy s PCC CAGR 2013-2016: +40.2% +13.8 millin litres with Italy s PCC CAGR 2013-2016: +33.4% +14.4 millin litres with Italy s PCC If these cuntries alne achieved Italy s Aperl per capita cnsumptin in 2016, we culd add ver 133 millin litres t Aperl s vlume!!! Surce: Internal data 12
13
Riding the wave f the Classic Ccktail culture 14
Classic Ccktail culture Relish the classic ccktail revival N.1 Old Fashined N.2 Negrni N.3 Manhattan N.7 Margarita Wild Turkey 101 Campari Cinzan Bulldg Gin Wild Turkey / Russell s Reserve Rye Cinzan Esplòn Tequila Grand Marnier Campari Grup prvides premium spirits fr each f the TOP #10 mst served ccktails in the wrld N.4 Daiquiri Esplòn Tequila N.5 Gin Martini Bulldg Gin N.6 Whiskey Sur Wild Turkey 101 N.8 Sazerac Russell s Reserve Rye Grand Marnier N.9 Mscw Mule SKYY Vdka N.10 Mjit Appletn Rum Surce: DI Annual Bar Reprt: The Wrld's 50 Best Selling Classic Ccktails 2017 15
Classic Ccktail culture A superir premium prtfli t capture grwth Whiskey ccktails are the mst prevalent acrss bar menus 23% share Fllwed by Rum 16% share and finally Gin 15% share Campari Grup is riding the Classic ccktails revival wave with a premium prtfli Bulevardier Mint Julep Tm Cllins Mjit Wild Turkey 101 / Russell s Reserve Rye Campari Cinzan Wild Turkey 101 Bulldg Gin Appletn Special & White Surce: IWSR (USA data) 16
Grand Marnier Adding a distinctive and elegant tuch t the classic ccktails The new Grand Marnier drinking strategy will inspire and educate bartenders n the superir quality f the liquid, helping t recnnect with lder millenial cnsumers via a mdern way f drinking The Grand Lng Drinks The Grand Classics COLLINS The Refined Refreshment TONIC The Refined Refreshment SIDECAR The Distinctive Elevatin OLD FASHIONED The Elegant Tuch MARGARITA The Refreshing Sphisticatin MAI TAI The Premium Chice 17
Campari the celebratin f the classic ccktail with the glbal Negrni Week: 7,780 bars USA 3,006 Germany 949 Argentina 595 Canada 557 418 Greece Australia served! 321 U.K Spain and many mre 272 185 Frm 100 participating bars in 2013 t 7,780 bars in 2017 the classic Negrni is being enjyed glbally #utlets Grwth % 2013 2014 2015 2016 2017 100 1,367 3,533 6,040 7,780 +1267% +158% +71% +29% 18 Surce: Internal data
Russell s Reserve: ur craft burbn primed fr grwth 19
American Whiskey & burbn Trends in the American Whiskey categry The Burbn Categry is the secnd fastest grwing categry glbally There is strng grwth being generated utside f the Tp 3 Burbn markets Burbn s internatinal grwth driven by Classic Ccktails and Versatility Craft credentials drive Burbn s appeal fr Millennials arund the wrld Glbal surge in RYE interest American Whiskey cntinues t premiumise Surce: IWSR 2015 20
The American whisky categry cntinues t premiumise Our American Whiskey is als n a premiumisatin jurney Premiumisatin within the ttal American whisky categry (incl. burbn)* 1% 0% 4% 0.1% 52% 47% 42% 53% 2005 2015 Standard Premium Super Premium Ultra Premium Our American Whiskey prtfli cntinues t premiumise alng with the trend, with Craft brand extensins such as Master s Keep and Russell s Reserve MASTER S KEEP 17-year-ld burbn the distillery's ldest burbn in the US and Australian markets RUSSEL S RESERVE 1998 Exquisite small batch burbn, hnuring ne f the mst endearing father and sn distilling teams in the spirits industry, Jimmy Russell and his sn Eddy RUSSEL S RESERVE SINGLE BARREL RYE First single barrel rye with a 104 prf, barrel-aged Russell s Reserve. Legendary Master Distiller Jimmy Russell is respnding t increasing demand fr Rye Whiskey nt seen since prir t Prhibitin RUSSEL S RESERVE SINGLE BARREL RYE New packaging RUSSEL S RESERVE SINGLE BARREL BOURBON Russell s Reserve single barrel burbn, matured in American White Oak barrels and hand picked by ur master distillers was released acrss the US in early 2017 Premiumisatin Surce: IWSR 2015 21
Craft revlutin in American Whiskey Craft revlutin driving innvatin The cntinued demand fr CRAFT BRANDS bradens the attentin n the US whiskey categry Craft brands appear t prmise an experience f cmplexity, sphisticatin and high quality key values that Russell s Reserve cnveys f British millennials are prepared t pay mre fr craft dark spirits 53% 50% 75% (vs. 26% fr Gen X & Bmers) f Australians aged 25-35 are interested in the stry and heritage f alchlic brands (vs. 29% fr aged 35+) f American millennials believe craft alchl brands are higher quality than big brands (vs. 37% fr Gen X & Bmers) CRAFT BEER CRAFT SPIRITS Innvatin 21% Vs. 3% Craft beer began as a niche trend, yet nw takes up 21% f value share in the USA. Whereas craft spirits accunts fr just 3% value share in the USA: there is rm t grw The demand fr Craft authenticity has driven the need fr innvatin within brand prtflis Innvatin will be used t reinfrce ur quality credentials and brand stry as we match the demand fr Heritage, Stry, Prductin methd, quality nn-mixable liquid t be enjyed neat r n the rcks Our American Whiskey innvatin territries must: Be in the premium t super premium segment Be limited editins and brand / stry led Build trust and cnfidence in the brand Be quality liquid t be enjyed neat r n the rcks Prvide diversificatin and uniqueness Surce: IWSR 2015: USA value share 22
Russell s Reserve capturing the spirit f craft with Russell s Reserve Burbn Russell s Reserve Russell s Reserve cntinues t grw in its tw key markets, the US (95%) and Australia (4%), backed by the surge in demand fr high quality, craft burbn burbns Packing & Pricing evlutin Russell s Reserve is a premium, craft burbn: hand-crafted, small-batch, individually bttled, authentic and Kentucky-spirited burbn A range f fferings under the Russell s Reserve prtfli ffer distinctive tasting ntes as the cnsumer s desire fr high-quality and discvery becmes greater: 10 year ld Burbn with a rich caramel & vanilla taste with smth finish Single Barrel Rye, delivering pepper, vanilla and tbacc flavurs Single Barrel burbn, guaranteeing maximum flavur frm a unique persnality f tffee & vanilla 6 year ld Rye, delivering a smth, crisp taste 1998-2004-2008 2008-2015 2015 c.$18 c.$23 c.$30 c.$39 Russell s Reserve has been given a premium makever, harking back t the imagery f classic craft burbn bttles, appealing t all: frm explratry millennials t whiskey cnnisseurs alike Cupled with the updated packaging, the price pint evlutin f Russell s Reserve has increased and nw yields a premium price, reflecting the quality f the liquid 23
Russell s Reserve Primed fr grwth Net Sales grwth: Russell s Reserve CAGR Net Sales 2012-2016 : +46% CAGR Vlumes 2012-2016 : +33% 40 K cases + Grupp Campari leverages its capacity t innvate and develp craft cncepts Sustainable grwth in Craft brands thanks t ur unique distillatin capabilities 10 K cases + 2012 2013 2014 2015 2016 24
Premium craft burbn Whiskey Barns: classic recipes rebrn Mre t cme... Bnd & Lillard Kentucky Straight Burbn Old Ripy Kentucky Straight Burbn 25
26
Bulldg gin: t be the game-changer in the gin categry. D what Abslut did t vdka and Patrn t tequila 27
Icnic Style Made fr the Mdern Age Versatile & Distinctive 28
$ Millin USD Bulldg Lndn Dry gin The wrld s fastest grwing premium gin* Gin categry is 53.9 millin 9l cases in 2015, grwing by 2.4% Spirits categry grwth by vlume 2015* Malt Sctch 6.1% Burbn 4.2% Premium (& abve) gin if apprximately 13% f ttal gin vlumes at arund 6.7 millin cases Tequila American Whisky 2.6% 4.1% Accrding t IWSR, super premium gin has grwn exceptinally in the last 10 years, with a ten-year CAGR (2005-2015) f 30.3% Gin Glbal Spirits Av. 0.4% 2.4% US Gin Spirits Grwth Ttal Revenues $ Millin (USD) Eurpe (especially Spain & UK), Nrth America (especially the US) and Australasia have all driven the verall categry 700 600-5% Value & Standard +8% Premium & High-end -4% -3% -3% -4% While majr players perfrm well, new independent and craft distillers have grwn dramatically in respnse t grwing interest in bth the gin categry and the craft trends 400 300 200 100 +8.5% +1.5% +3.5% +4% +4% +5% YY change Value & Standard YY change Premium & High-end 500 0 2010 2011 2012 2013 2014 2015 2016 Surce: IWSR 2015, DISCUS, Citi Research 29
Bulldg Lndn Dry gin acquisitin ratinale: frm agency t wn brand t fully explit its grwth ptential Purchased in February 2017, Grupp Campari has the pprtunity t cnslidate its presence as a key player in the attractive super premium gin categry via super-premium wn brand Premiumise Grupp Campari s wn brand prtfli, driving richer prduct mix, an increase in n-premise (particularly in the US where we are strengthening ur capabilities) as well as Duty Free enrichment Increase critical mass in selected internatinal markets with recently established rute-t-market platfrms such as Spain Fully cmpliment fferings already within Grupp Campari s prtfli: the third part t the Wrld s #2 ccktail, the Negrni (Gin, Campari, Cinzan Red Vermuth) Allws a full cmpliment t ther classic gin-based ccktails such as Gin Martini, Tm Cllins, Gin Fizz and f curse, Gin & Tnic Surce: IWSR 2015 30
Bulldg Lndn Dry gin A premium-craft gin ffering which is easily mixable and versatile fr emerging trends Net sales breakdwn (2016 Actual) 2% 2.5% 2% 2% 6% (thers) Spain Belgium 3.5% 29% Duty Free USA 6% 8.5% Germany UK 9% 19% Italy Brazil Netherlands Australia 10% BULLDOG s high accessibility as a quality, premium mixable-gin is due t the liquid: high citrus ntes and a lw juniper taste prfile allws BULLDOG t be easily mixable and versatile fr recent emerging cnsumer trends: Explrers Driving Emerging Trends Tp Lng Drink serves that verindex vs. stragglers Awareness f types f ccktails. The Explrer indexed vs avg. ccktail cnsumer Surces: IWSR 2015, CGA Mixed Drinks Reprt, Oct 2016 31
Bulldg Lndn Dry gin A premium-craft gin ffering which is easily mixable and versatile fr emerging trends Brand psitining: Premium craft ffering BULLDOG Gin: n ther gins within the pleasure-need state Hendrick s PREMIUM Tanqueray Ten STIMULATION PLEASURE SKYY Abslut SOCIAL Pint f Difference Bmbay Pimms Martin Miller s Tanqueray Aperl Spritz TRADITIONAL Plymuth Beefeater Seagram s MODERN IMPRESS Hennessy Glenfiddich Baileys TRADITION Traditinal Gin lcatins Grdn s COMPETENCE COMFORT FUNCTIONAL AFFORDABLE Surces: IWSR 2015, CGA Mixed Drinks Reprt, Oct 2016 32
We had a lt mre t say tday, with many ther fantastic brands t discuss... Tequila Bitters NET SALES CAGR 2014-2016: +28% COMBINED NET SALES CAGR 2014-2016: +12.5% 33
THANK-YOU Thirsty yet? Fr additinal infrmatin: Investr Relatins - Grupp Campari Phne: +39 02 6225 330; Fax: +39 02 6225 479 Website: http://www.camparigrup.cm/en/investrs E-mail: investr.relatins@campari.cm WWW.CAMPARIGROUP.COM 34