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Interview, Part 2: Campari’s Dubau On Craft Trends, Pricing And Potential Acquisitions

April 28, 2015

In this second part of our interview with Jean-Jacques Dubau, Gruppo Campari’s managing director for North America talks spirits industry pricing battles, the challenge of pinning down craft trends and the possibility of future acquisitions.

SND: After adding brands like Forty Creek whisky and Bulldog gin to your stable recently, do you see any other significant holes to fill?

Dubau: We’re in a good position with our portfolio, but I don’t exclude acquisitions. Any acquisition would have to fill a precise need in our strategy. I’d consider products that would give us leverage with the on-trade. That’s where it would make the most sense. Sometimes they don’t need to be giant brands. You can also base a good business on smaller brands, once you have the pricing right, if you can build a partnership with bartenders and have your product become a point of reference. There are some categories that are still poised to burst: Tequilas and Mezcal for example.

SND: How do you see the trend toward craft spirits affecting Campari’s business and the market in general?

Dubau: One current challenge is to understand what the future will be for craft. The spirits market is growing by low single digits overall. If more players continue to enter the spirits category, we could see dilution of market shares. People sometimes speak of the parallels between craft breweries and craft distilleries, but it’s important to remember that it’s more complicated to develop a distillery, especially in the whiskey business, where you have to plan years in advance.

SND: What other challenges are on your radar looking ahead?

Dubau: We want to stay out of the pricing battle. In 2014, we saw some competitors taking price, but also saw people declaring that higher prices might not be sustainable in 2015, in a category like vodka. Our approach is to continue to grow our brand equity to make sure that if we take price it’s sustainable in the long run. We also want to drive operational efficiency. We made a big step in that area in 2014, opening our bottling plant in Kentucky. Prior to that we had partnerships with third-party bottlers. Today we bottle every product that we produce in the U.S. That increases operational leverage, and we can also do it in other areas, for instance on the sales side and in marketing, where we’ve reduced our roster of agencies to be more efficient.

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