Davide Campari-Milano N.V.

Good evening, this is the Coruscall Conference Operator. Welcome and thank you for joining the Campari Group 9 Months 2026 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and after the presentation there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. Today's call is... will be hosted by Mr. Simon Hunt, Chief Executive Officer, and Mr. Francesco Mele, Chief Financial Officer. At this time, I would like to turn the conference over to Mr. Simon Hunt. Please go ahead, sir.

Great. Thank you very much. Good afternoon, everyone. It's a pleasure to be here again with you all. And Francesco is here with me, as you heard. And as always, our IR team will be available after the call for any follow-ups. So a quick note before we begin. As you know, we present top line only in Q1 and Q3 for the focus on the houses and the regions. In Q4, we will present all the countries and the brand details as always. All growth figures you'll see on the slides relate to organic performance over the first nine months of the year, unless otherwise specified. And you can find the Q3 details in the annex. So with that, let's get into the results. Q3 marks our sixth consecutive quarter of top line growth. At the same time, we continue to outperform and gain share across all of our key markets in sellout, showing that the overinvestment we are putting behind our brands is delivering. This is a clear indication that our strategy is working and we are on track towards our mid to high single digit midterm growth ambition. We believe our portfolio is uniquely positioned to win in the sector, despite the challenging market context. In the nine months, we recorded plus 2.9% growth, with quarter three at plus 3.4, driven primarily by Europe, while North America was impacted by Jamaica and the U.S., where our strong performance in aperitifs and tequila was offset by challenging trends in other categories. This means we're doing a bit better in Europe, while North America is a little bit softer. And on balance, we are confirming our full-year guidance. During this period, the growth was broad-based across most brand houses and regions. And in fact, we were growing mid-to-single-digit to double-digit in 44 markets. In appearance, two-thirds of our growth in the first nine months came from solid momentum in our bottle business with all brands growing, while the remaining one-third was driven by the launch of our convenient formats in only a few initial markets. This not only shows the encouraging initial response, but more importantly, the significant geographic expansion potential ahead for us. Now, I repeat at every call, but it's important to reiterate that we are doing exactly what we told you in November last year at our Capital Markets Day. focus on our five growth drivers. First, sharper portfolio choices. We are doubling down and investing more behind fewer bigger bets. And the results on the sellout are clear with ongoing solid share gains across the regions and especially in the strategic on-premise. Additionally, over the last 18 months, we disposed of more than 10 brands or businesses, thereby decreasing the complexity and increasing focus. By the end of 2026, we will have finalized the bulk of our portfolio streamlining efforts with full focus on execution going forward. Second, winning the first shared drink every day, everywhere. This means being available in incremental occasions with convenient new formats of our key brands. In this area, we are seeing solid early results with encouraging velocity and distribution gains across the initial launch markets. For this, some initial European countries have been our pilot markets, and we're happy to see the strong initial results, which make us more confident that we can replicate this in other markets. And I'll dive into this later in the presentation. Third, geographic expansion. This strategy has two levers. First, growing faster in more markets, leveraging our new regional structure. In fact, 44 countries are growing mid-single to double-digit in the nine months, as I mentioned. and second, expanding our product range into new geographies. The recent Satyarosa launch in the U.S. is a good example of this with more to come going forward. And we'll discuss this later in the presentation. On the last two drivers, we'll give you more details in Q4. However, it's important to note that we have everything in place to grow with also our extraordinary CapEx program nearing finalization, which will support future cash flow conversion. We also continue to drive efficiency across all lines of the P&L with strong control on structure costs, allowing us to make bold investments behind our brand, which we believe is absolutely the right thing to do in this market context. So let's move to the next slide. As you can see in the nine months, organic top line growth of plus 2.9% was broad based across most regions and houses. We will go one by one, but first, let's look at sellout, which, as you all know, is the critical indicator. In the nine months, we are outperforming again and gaining share across all of our key markets, driven by our aperitifs and tequila. In the U.S., we are outperforming in all channels. While the off-premise remains the largest and most challenging for the industry and, candidly, for us, We are growing plus 5% in our key categories of aperitifs and tequila. In NABCA and the strategic on-premise, we are in growth with our overall portfolio and in these categories at plus 9% and plus 11% respectively. Our performance in this period has also been complemented by the launch of Sati Rosa. The sell-out data for the U.S. shows that our fewer, bigger bet strategy is working as we invest behind our most profitable brands where we have unique advantages. However, weak category trends are impacting our performance in vodka, whiskey, and cognac, as well as Grand Marnier across the total company performance in these channels. In Europe, we also recorded outperformance across the board. In total Europe sell-out data, which includes 12 countries, we are outgrowing the spirits sector by five points with plus 4% growth in the nine months driven primarily by the core aperitif bottle business. The momentum during the peak season was supported by innovations in Italy and the progressive rollout of Sati Rosa, primarily in the UK. So let's move to the Europe top line. Europe delivered plus 3.8% growth in the nine months, driven primarily by Italy and the UK, with all, I repeat, all other countries also in growth. This solid performance was supported by excellent execution across the summer period, leading to mid-single-digit growth momentum in aperitifs with contribution from all brands and formats in the nine months. Germany remains impacted by consumer pressure, but with some limited support from innovations in the third quarter. And we've seen encouraging early results from our innovations over the summer in our initial pilot European markets. and going for the last part of the year, this will be the first time we can unleash tap in the winter season. So let's see the results and how this can support our de-seasonalization efforts. And we'll touch more on this on the aperitifs in the upcoming slides. Now moving to North America, we recorded a positive plus 1% organic growth with all markets contributing. In the U.S., we are making solid progress in aperitifs and tequila. while the challenging operating context is impacting the rest of the portfolio. Overall, the US business has seen sell in and sell out broadly aligned in the nine months with no extraordinary stock movements. And we're going to dive into the US on the next page in more detail. In Jamaica, the underlying trends remain solid, but our nine-month performance is largely impacted by the high base effect of quarter three. Just to remind you all, we had plus 52% growth last year. So barring any new weather-related events, this will reverse in the final quarter and support our regional performance. So on the next page, we want to give you some additional insight into the U.S. market so far this year, and we've recorded a strong performance on 50% of our business, covering aperitifs and tequila. Instead, on the rest of the portfolio, we continue to be impacted by the negative market trend, as I mentioned, as well as Russell's Reserve supply constraints and a high comparison base in rum. The House for Aperitifs has been the largest contributor to growth so far this year, driven by Aperol and by Sati Rosa. April is benefiting from the bold brand investments, including activations like the Hilary Duff Concert Tour Partnership, Coachella, and the Lollapalooza, among others. The expansion of Stassi Rosa into the U.S. also created solid early traction with ongoing rollout across channels. The official launch party was on September 12th in New York, while social media interest meant that we were already sold out before then. and have to ship in new product just for the launch event. In fact, Sate Rosa has become the second most mentioned in search for Spritz in quarter three after April, helping to grow the visibility of the entire Spritz category. The Plus 21 new brand activators we put into the on-premise across four states towards the beginning of the year, also continue to contribute positively, not just for Aperol, but now also for the whole portfolio, including Sati Rosa. Esplom is also a solid contributor so far this year, recording high single-digit top-line growth. In sell-out, it's growing across all channels and significantly outperforming the category. Small size and variant expansions that we launched last quarter are already contributing positively, driving 20% of the nine-month growth. The solid positioning of the brand, our commercial efforts, and the new launches are supporting our performance, and we are not seeing a direct impact from the price repositioning from our competitors in our data. Now, the rest of our U.S. portfolio has been impacted by three main areas. Vodka, the biggest spirits category, remains the most pressured by the ongoing macroeconomic challenges, and that's impacting Sky. Whiskey also remains challenged due to the supply pressures and heightened competition in the category, impacting Wild Turkey. Conversely, Russell's Reserve, we continue to be impacted by the constrained supply, despite high demand. and one last impact is a high comparison base in rum due to the quarterly volatility created by the hurricanes over the last few years. For the balance of the year, we see these impacts continuing to weigh on our overall performance. In addition, we will be cycling a high comparison base in Courvoisier and Grand Marnier in the final quarter. So while the market conditions remain challenging, we are taking action. You might have seen that we announced the Courvoisier relaunch last week, and I'll talk more about that in just a second. On Russell's Reserve, our supply will come back online in time for Q1 next year. And at the same time, strategy work is underway in the other brands to better define the future growth platforms required in these challenging categories. Now, these actions are fully aligned with the strategy we consistently outlined. making sharper portfolio choices and concentrating resources behind fewer, bigger, and more profitable bets. To give you an idea, the left side of the page, the 50% of aperitifs and tequila, is significantly more profitable than the right. And we are focusing on driving growth in these highly profitable categories. On the next slide, you can see that in the developing markets, we recorded solid momentum with plus 9.3% growth in the nine months, benefiting from the regional structure that we set up at the beginning of the year. In fact, despite challenging trends in some markets, our geographic expansion strategy is working with 17 seeding countries in growth, some mid-single, some double-digit. Brazil is the highest contributor to growth driven by the expansion of Aperol and ongoing solid trend in Campari. Remember that Brazil is the second biggest market for Campari after Italy, and it continues to perform strongly. Argentina is also contributing well, although with some moderation due to the higher comparison base in Sky Cosmic as expected. In mid-September, we launched a second variant, Sky Jungle, and we are monitoring its early progress. During this period, performance was also supported by positive trend in Courvoisier, local brands, as well as the early contribution of Sartre Rosa Rollout, in Eastern European markets. For APAC and Global Travel Retail, or GTR, we registered a slight decline of 0.4% in the nine months. Australia continues to have a solid momentum driven by double-digit growth in both Aperol and Espelon, and here we continue to focus in the on-premise and activating strongly. While Turkey, including the bottle and the RTD, which contributes more than 50% of Australia's top line, also recorded a positive trend in the nine months, benefiting from some easier Q3 cons. In GTR, performance is being supported by strong European execution and encouraging momentum in Esplanade. In the rest of the APAC region, we will have completed our market reset by the end of the year, paving the way for return to growth in 2027. In fact, I was just with our distributors in Southeast Asia, and they are very excited about this significant opportunity to accelerate the growth of our brands. In the meantime, we continue to focus on opportunities for geographic expansion, such as the launch of Esplanade in India, which is a fast-growing tequila market. So now moving on to the spritz, I'm sure many of you are curious about the evolution of our household priorities, given the significant innovation and the strategic actions we've been taking, especially over the summer period in our initial pilot European markets. Therefore, we wanted to show you the nine-month trends and the potential. Now, many of you have heard me talk about our aim to take a category approach in this area, and we've been doing just that with a progressive rollout across six initial markets. We have a portfolio that no one else can offer, ranging from the sweeter, fruity, more floral offerings of Sati Rosa and Mondoro to the iconic Aperol Spritz to our non-alcoholic option with Crodino and the more bold and bitter Campari and Chinar Spritz. As you can see in the pictures, in the off-premise, we are making this approach much more visible on shelves, while in the on-premise, we are starting to create a separate section of the menu dedicated to our Spritz offerings. This category approach, led by Aperol, also allows us to leverage the strength of all of our aperitif brands, aligned with the macro consumer trends that we shared with you at the CMD. Now, looking at our most established brands of Aperol and Campari, we are present with a bottle in more than 150 markets, but only 11 markets are driving the majority of the top line. In the nine months, seven of these 11 markets grew at least high single digits, and another 28 smaller markets grew double-digit. This shows the potential still ahead for the core bottle business of these brands, plus our new category approach offers even more geographic expansion opportunities as we lead the category. As you can see, the other brands are in fact only available in very few markets, so a big opportunity for us to go after. Now on top of the ongoing growth of the bottle business you just saw, our new convenient formats have also started contributing off a small base in new incremental occasions. As of the nine months, a third of the aperitif's growth is coming from these new formats, equating to nearly 60 million incremental serves. And just to put that in context, that's nearly an additional quarter of a million serves every single day. Four new formats in only a few initial markets have contributed to this performance in the nine months, namely Aperol and Campari ready to serve, Aperol on tap, and the Aperol to go can. So based on this success, we are actively assessing accelerating the pace of expansion of these formats into new markets. And our most recent launch just last week is the Aperol to go bottle in Brazil. and we're excited about the opportunities this product can unlock in every market which currently lacks adequate Prosecco availability. We're now able to play in new incremental occasions and channels which of course cover sports events and festivals but also high velocity year-round on-premise locations where previously we're not able to compete effectively due to the time required to make a spritz. I'll just give you a perspective regarding the potential We've already reached 1.6% market share of premium beer with our innovations in Italy, primarily driven by Aperol on tap. Now, Italy was prioritized for the tap launch for several reasons. First, the demand of tap was very high. And second, we also have a strong footprint ready to distribute nationwide. Now, going forward, reaching just a small portion of the success of Italy and a few other markets, can bring a significant additional top-line growth opportunity for us in the coming years as we source from a much bigger profit pool. We're also excited to share another recent development. Since the acquisition, the house has been patiently building the vision for Courvoisier with a disciplined, decisive, and disruptive strategy that we believe will start laying the foundations for the brand's trajectory going forward. This includes a global campaign, a new drink strategy, investments in specific target markets. And we'll share more of the next update. But for now, we want to show you the brand's first global campaign in 20 years, in case you haven't seen it. Rebuilding Covoisier will, of course, take time, as I've said on multiple occasions. But we've got strong confidence in the brand and in its potential. And this is the first step in the right direction. So with that, let's pass the Covoisier.

I'm in the room of the famous faces Hey, Romeo, Pesce Cuvazier Yeah, I feel just like a movie I'm gonna vomit some fake friends and Yo, Per Scamassier.