Campari Group, the spirit manufacturer, is eyeing up potential acquisitions in the near term despite warning of tough market conditions and weak margin growth in the next quarter.
Chief Executive Bob Kunze-Concewitz said the Italian drinks group has a robust pipeline and would be able to fund acquisitions through its ability to raise up to €25 billion, without losing control, from its majority shareholder.
Owning brands like Aperol, Cinzano and Wrap & Nephew, the company has completed 11 acquisitions in the past five years and could now target a larger purchase, signalling a shift in strategy.
Kunze-Concewitz said: "The effort you put in an acquisition is the same with small-medium companies and large ones, so you might as well go for something bigger,"
This prospect of acquisitions coincides with Kunze-Concewitz's impending retirement in April next year after a 16-year tenure.
Lagfin, the group’s majority shareholder, upgraded its stake in the company from 68.6% to 84% in August, and the changes provide the group with more financial muscle for its expansion plans.
Although the CEO didn't specify potential segments for acquisition, he dismissed premixed cocktails as a direction Campari intends to pursue.
"[Premixed cocktails] are very fast in short-term cycles but can be very damaging to the equity of the mother brand in the mid-to-long term…You boost your short-term growth by bringing innovation to the market, but then the consumer rapidly tires of that taste and in order to keep growing you have to launch more flavours to accelerate the growth," the Austrian boss added.
Campari's recent third-quarter update led to a 6.8% dip in shares, with a 4.4% growth in sales slightly below analyst expectations.
Underlying profits lifted around 6% to €520 million in the first nine months of the financial year.
"There has been an overreaction to our results. If you take a step back, we are outpacing our reference markets, both in the third quarter and in the first nine months of the year," the CEO said.
Shares in Campari dropped around 1.5% on Friday, having opened at around €10.25.