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Interview, Part One: Gerry Ruvo, Chairman And CEO, Campari America

December 20, 2013

San Francisco-based Campari America represents about one-fifth of total sales for Italian parent Gruppo Campari, and in the first nine months of 2013, it remained a key growth engine for the company, posting a 3.7% sales rise on double-digit growth for the Wild Turkey franchise and the increasing momentum of the Campari brand. In the opening round of this two-part interview, Campari America chairman and CEO Gerry Ruvo discusses strategies to combat the increasingly price-competitive conditions in the U.S. vodka market with its core Skyy brand, as well as the ongoing success of Skyy’s flavored Infusions.

SND: The Skyy franchise was flat in the U.S. over the first three-quarters of the year, with the results affected by shipment timing. How is the outlook for the core vodka?

Ruvo: Skyy’s core unflavored label continues to do well in the U.S. and is growing exceptionally well in foreign markets. Within the U.S., the brand is outpacing the unflavored category, which has become more and more of a commodity game as many of the top players battle it out for shelf space by pulling the price lever. Skyy’s resiliency in this tough marketplace says a lot about not just the sweet spot we occupy in terms of pricing, but also the quality in the bottle and our American heritage. The Millennial consumer is very interested in authentic American brands. You can’t build a brand on price alone. It simply isn’t a winning formula. That’s why for 2014 we’ll be laser-focused on brand-building for Skyy with a new advertising agency, new marketing campaigns and refreshed packaging.

SND: How are the flavored Skyy Infusions trending currently? Do you detect any of the “flavor fatigue” some observers have referenced?

Ruvo: While the overall flavored vodka category has slowed to mid-single digits in the U.S., Skyy Infusions continue to post strong double-digit results. This year we launched Infusions Moscato Grape, which was our most successful flavor launch to date and is one of the top performing flavors for the year in the entire category. Wild Strawberry has also exceeded our expectations. Our strategy for Infusions has been firmly based on consumer and bartender insights. Our research revealed that today’s consumers are much more interested in flavor profiles coming from the likes of Whole Foods, Trader Joe’s and local farmers markets. Nothing in our research showed consumers wanting to linger in the candy aisle. That’s why we’ve favored fresh fruit and spice profiles, rather than sugar-sweet, artificially-flavored confections, which are now seeing a sharp dive in sales. We’re advancing this idea again with the recent launch of Vanilla Bean and Georgia Peach.

SND: How is the overall climate in the on- and off-premise spirits markets as we enter the holiday selling season?

Ruvo: The off-premise continues to be the workhorse for the industry as we make this slow, steady climb out of the tough economic times that started five years ago. The resilience in the off-premise has served us well, as it’s one of the strongest selling channels for our bigger brands like Skyy and Wild Turkey. We’ve been seeing an uptick in the on-premise all year as well. We expect that to continue through the holidays and into 2014.

Campari America – Top Ten Brands1
(thousands of nine-liter case depletions)
Brand Type 2011 2012 Percent
Change4
Skyy 2 Vodka 2,754 2,805 1.8%
Wild Turkey Bourbon 522 536 2.7%
Carolans Liqueur 346 353 2.1%
Wild Turkey
American Honey
Liqueur 227 286 25.7%
Frangelico Liqueur 118 118 0.4%
Midori Liqueur 91 93 1.4%
Flor de Cana Rum 81 89 9.6%
X-Rated Fusion Liqueur 87 77 -11.5%
Espolon Tequila 53 75 42.4%
Campari Liqueur 57 66 15.6%
Total Top Ten3 4,337 4,498 3.7%
1 Appleton rum, which joined the portfolio this year, is estimated at 150,000 cases
2 includes Infusions
3 addition of columns may not agree due to rounding
4 based on unrounded data

Source: The U.S. Distilled Spirits Market, Impact Databank Review & Forecast

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