Italian spirits heavyweight Campari Group saw its shares slide today (30 October) after a set of third-quarter results that missed market expectations.

Alongside the results, the Aperol maker set out plans to reduce costs and indicated it is looking to offload brands.

The company’s shares had dropped 14.58% to €6.63 at 09:59 GMT.

In the three months ended 30 September, Campari’s net sales were up 1.4% on a reported basis but declined 1.4% organically to €753.6m ($816.3m), markedly missing consensus forecasts of 9% growth.

Adjusted EBIT dropped 13.3%, or by 18.2% organically, to €139.4m.

Over the first nine months as a whole, sales increased 3.4% to €2.28bn and by 2.1% on an organic basis.

However, adjusted EBIT dropped 4.1% on a reported basis and by 4.2% organically to €499.4m.

Campari said its nine-month sales were hit by "a combination of concomitant factors". In the US, the group reported “persisting challenges in selected categories”, It also pointed to the “extraordinary impact” of a hurricane in Jamaica.

The Skyy vodka owner's business in Europe, particularly in markets it said are "skewed" to the on-premise like Italy, was affected by bad weather in the first half of the year and September. Campari also cited “softer than expected consumption” resulting in “below expectations re-orders in the back-end of the third quarter”.

Net sales in Asia-Pacific also faced “persisting challenging macro and trading conditions”.

Discussing its outlook for the rest of the year, the Wild Turkey distiller said it expected to see “ongoing muted consumption” in the US, while Jamaica would face a “tail-end impact” from the hurricane.

Its Europe, Middle East and Africa division is forecast to continue to see the effects “of destocking, competition and low consumer confidence in select markets” with “no recovery of shortfall” from the third quarter as a result of the “low seasonality of aperitifs”.

On the other hand, Campari is projecting its business in Asia-Pacific will see “some potential benefit” due to an improving macroeconomic environment “but with [the] ongoing impact of route-to-market finalisation”.

In the medium-term, which the group defined as “2025 and beyond”, the company was confident of making “a gradual return… to mid-to-high single digit” organic net sales growth, “in a normalised macro environment”.

In a note to clients this morning, Bernstein analyst Trevor Stirling said Campari’s results announcement marked "the mother of all resets" and came with “a promise of jam tomorrow”.

He pointed to Campari's expectations that gross margins are expected to rise next year due to lower agave and glass prices and “better fixed-cost absorption”.

Campari eyes cost-cuts, disposals

As part of its medium-term outlook, Campari announced a new “cost containment” plan, which looks to improve margins by 200 basis points.

The company also stressed it would look to “accelerate” the “streamlining” of its product range, “with the view to dispose of non-core brands” to provide more resources to its “core priority brands”, which will sit under four newly formed Houses of Brands – the House of Aperitifs, House of Whiskey and Rum, House of Tequila and House of Cognac & Champagne.

Alongside the results, Campari said its search for a new CEO was ongoing. The company said it expected the process to be completed by the first half of 2025.

Matteo Fantacchiotti stepped down from his position at the company with immediate effect in September. Paulo Marchesini, Campari’s chief financial and operating officer, and Fabio Di Fede, its general counsel and business development officer, stepped into the position of interim co-CEOs.

At the time, Campari cited "personal reasons" for Fantacchiotti's departure. He had been in the role for five months.

Speaking to Just Drinks following the news, Bernstein analyst Trevor Stirling said it was possible Campari could be considering internal candidates.

“I guess, and it’s only a guess, [that] there’s probably a preference to go internally rather than externally. Campari does have a very strong internal culture", Stirling said.