Davide Campari Milano NV: 1Q26 Miss Is Structural Not Cyclical – Consensus Must Converge to Reiterated Guidance

Core Conclusion

Campari’s Q1 organic sales growth of +2.9% missed Visible Alpha consensus of +5.1% by 216bps, driven by two non-recurring but non-recoverable headwinds: European retailer disputes (now resolved) and a €10m US inventory destock on non-priority brands. FY26 guidance of ~+3% OSG was reiterated. The miss is structural to 2026 P&L – Q1 impacts will not be clawed back – meaning consensus OSG of +3.4% must fall ~50bps. EPS cuts of ~LSD% are likely. Near-term stock pressure is justified despite encouraging underlying sell-out trends.

The Two-Pronged Q1 Headwind Is Permanently Lost

European retailer negotiations (Germany/Switzerland) suppressed Q1 brand activations but did not result in delistings. These are now resolved. Separately, US inventory optimisation on SKYY and Grand Marnier subtracted ~1.5pp from group Q1 OSG. Management confirmed neither impact will be recovered in subsequent quarters. The US adjustment was a strategic decision to rightsize distributor inventory levels, not a demand issue. This distinction matters: the Q1 shortfall is a one-time accounting effect on sell-in, not a deterioration of consumer takeaway.

Investment implication: FY26 organic sales will carry a ~50bp structural drag from Q1. Consensus must converge towards the reiterated ~+3% guidance. The Q2 provision that US destock may continue at non-significant levels means further small downside risk remains.

Underlying Consumer Demand Is Solid, But Not Compensatory

North America sell-out data shows genuine momentum: off-prem -3% (market -4%), NABCA +2% (market -3%), on-prem +16% (market +5%). Management confirmed encouraging early velocity/distribution gains from incremental headcount. European sell-out grew +2% versus flat industry, with Italy +5%, UK +3%, France flat, Germany -3%. APAC ex-GTR grew +1.9% on robust Australian Aperol/Espolon momentum. Jamaica surprised positively with mid-single-digit growth post-hurricane recovery.

Investment implication: The quality of sell-out supports the strategic thesis, but these positive signals cannot offset the two Q1 headwinds within FY26. The FY path now relies on H2 delivery against tougher comps and an uncertain macro environment, increasing execution risk.

Key Risks

• Macro downturn. A broader consumer slowdown would further pressure spirits volumes, particularly in Europe and the US on-premise.
• Aperitif category risk. Aperol’s growth trajectory may plateau in core European markets or fail to scale in new geographies.
• Execution risk. Courvoisier integration and cost-saving delivery remain unproven at scale.
• Tariff/regulatory risk. Changing US trade policy or excise regimes could hit margins directly.
• Glass cost pass-through. ~90% of glass procurement is under long-term contracts with price adjustment formulae, but current energy prices have not triggered force majeure thresholds. Any escalation would pressure COGS.

Valuation & Trading Implication

Morgan Stanley’s price target is €6.60, the average of P/E (€6.30, ~20x CY26 P/E, a 15% premium to EU Staples, well below the long-term +40% average) and DCF (€7.00, WACC 8.9%, terminal growth 3%). Current price €6.55. Upside risks: faster US recovery, sustained agave price declines, deleveraging via disposals. Downside risks: macro deterioration, aperitif category maturation, execution error.

Consensus EPS will likely fall ~LSD%, translating to a modest downward revision path. The stock trades near the target, offering limited upside absent a catalyst. The Q1 miss removes the near-term positive momentum needed for re-rating. Investors should expect a negative price reaction and wait for evidence that H2 delivery is on track before adding exposure.

Appendix: Key Financials