MILAN (Reuters) – Campari is testing selling Aperol in China as the Italian spirits group looks to its photogenic orange-flavoured aperitif to revive sales hit by the coronavirus pandemic.
Campari’s CEO Bob Kunze-Concewitz poses during a photo call of “The Legend of Red Hand” short movie in Milan, Italy, January 30, 2018. REUTERS/Massimo Pinca
“The test started a few weeks ago and will last until the first quarter of next year,” CEO Bob Kunze-Concewitz told Reuters on Monday, adding trials were taking place in more than five of China’s biggest cities.
The bright orange aperitif, the main ingredient in the Aperol Spritz cocktail, has driven Campari’s growth in recent years, proving particularly popular among drinkers who post pictures on social media sites.
However, the company’s growth was brought to an abrupt halt in the first quarter of this year by the coronavirus pandemic, with underlying sales falling 5.3%. Aperol’s sales dipped 0.2% after 20.5% growth in 2019.
In many countries, drinkers have switched to Aperol Spritz from beer, the company says. And now it aims to achieve the same in China by pitching Aperol as an Italian life-style product that consumers might have tasted on European holidays.
“Beer substitution has been a big source of demand for Aperol and China is a huge beer market. That’s why we strongly believe in the opportunity to develop Aperol in China,” Kunze-Concewitz said in an interview.
Last year, Campari’s sales in China accounted for less than 1% of a total turnover of 1.84 billion euros ($2.08 billion).
With bars and restaurants in its traditional markets shut to contain the coronavirus outbreak, the group has been expanding its online business and digital marketing.
On Friday, it agreed to buy 49% of e-commerce wines and spirits company Tannico.
In the United States, Campari’s biggest market, so-called off-premise sales surged between 50% and 60% year-on-year in April and May, offsetting the fall from restaurants and bars, Kunze-Concewitz said.
The same happened in Canada, Australia, Germany and northern Europe.
However in Italy, Campari’s second biggest market, a rise in e-commerce and supermarket sales was not enough to offset the closure of food and drink outlets, meaning the worst impact of the virus pandemic on the company will be felt in the second quarter – traditionally the peak for aperitif sales.
“The coronavirus will have a bigger negative impact on our business in the second quarter, even if consumption in the last months was encouraging,” Kunze-Concewitz said, adding Campari would not issue any 2020 financial guidance due to the coronavirus uncertainty.
($1 = 0.8844 euros)
Reporting by Francesca Landini; Editing by Mark Potter