Davide Campari Milano NV: 1Q26 OSG Strength Is Technical, Not Fundamental – Expect Sharp Q2 Deceleration

Core Conclusion

Campari's 1Q26 organic sales growth (OSG) of +5.7% will be dominated by c.+3.5pp from lapping three one-off headwinds (Easter phasing, US logistics delays, UK bulk sales decline). Underlying sell-out trends show only sequential stabilization vs Q4, not sustainable improvement. FY26 guidance of c.+3% OSG implies Q2 deceleration to +0.6% (consensus +2.3%), a gap that consensus underappreciates. At ~20x CY26E P/E, the stock's premium already prices in a recovery that requires genuine sell-out evidence. Maintain Equal-weight, target €6.6.

What the Market Likely Underestimates

The market over-extrapolates Q1 top-line strength into sustained re-acceleration. Three technical factors will reverse:

• Easter phasing contributed -€10m in 1Q25, adding ~1.5pp to 1Q26
• US logistics delays from 1Q25 had -€11m impact, lapping adds ~1.7pp
• UK bulk sales normalisation adds ~0.3-0.6pp

Consensus expects Q2 OSG +2.3%; our model forecasts +0.6%, a 170bps gap. Additional risk: potential unwind of Winter Olympics pre-shipping from Q4 into Q2 (estimated material but uncertain). FY estimates are broadly in line, confirming Q1 strength is temporary.

Evidence Chain

1. Scanner data shows only sequentially better, not sustainably improving trends

• US Nielsen off-trade: Campari total -3.8% last 12W (vs Q4 -4.6%), still negative. Espolon +3.4% vs +1.9% Q4, but Wild Turkey -4.9% and Skyy -7.4% remain weak.
• US NABCA data (on- + off-trade) shows Campari +3.7% in Mar-26 – confirms on-trade outperformance but does not indicate broad recovery. On-trade channel is smaller and less representative.
• European Nielsen off-trade: Campari +0.3% L12W (Q4 was -M-HSD%), an improvement but still muted and below pre-pandemic trend. Aperol +5.0% L12W vs -MSD% in Q4, but too early to call a trend.

2. Q2 headwinds are large and underappreciated

• Reversal of Easter phasing: -1.0pp vs prior year
• US logistics catch-ups from Q1 will lap in Q2, removing c.+1.5pp tailwind
• Winter Olympics pre-shipping unwind: EMEA shipments were +2% in FY25 despite sell-out decelerating to +1%; Italy OSG accelerated to +5% in Q4 while off-trade slowed. This suggests channel fill ahead of the Olympics, likely to reverse in Q2.

3. Input cost risks threaten FY27 margins

• Glass costs rising due to energy spikes and potential force majeure clauses
• Freight cost increases also weighing on FY27 COGS
• These are not priced into consensus for FY27, where our EPS is €0.35 (vs cons €0.34)

Key Risks

• Escalating price competition, especially in US tequila segment, could compress margins and market share for Espolon
• Higher glass and freight costs could erode FY27 margin progression by 30-50bps vs current expectations
• Macro downturn further depressing spirits consumption in US and Europe beyond current subdued levels – sell-out could deteriorate from already-weak levels

Valuation & Trading Implication

At ~20x CY26E P/E (target €6.6), the stock trades near fair value. The premium vs EU staples (~15% above) is below historical +40% average, reflecting reduced visibility. Re-rating requires sustained sell-out improvement, not base-effect-driven prints. Near-term risk/reward is balanced. We remain Equal-weight; Campari is our preferred spirits name versus peers, but near-term catalysts are absent. Any material upside would need Q2 sell-out surprise or margin beat.

Appendix: Key Estimate Comparisons

Exhibit 1: MSe vs Consensus (€m)

Exhibit 2: MS New vs Old Estimates (FY26E)