Bob Kunze-Concewitz, Campari’s CEO, is the guest at the last 2017 BAA Dinner Speech
November 23rd represented for the Bocconi Alumni community the opportunity to have dinner with an exceptional guest, the 2007-appointed CEO of Campari Group: Bob Kunze-Concewitz.
TiL had the chance to join the Dinner Speech and conduct a brief interview with the guest at the end of the event, but before disclosing what we have found out we would like to go through some of the anecdotes and stories that the MD and Chief Executive of one of Italy’s most successful businesses talked about during the evening.
What is Campari’s success recipe?
“Business is about brand and people, but it is people that create the brand, so ultimately business is about people”. What makes Campari successful is the commitment and sense of community of its employees, who are willing to contribute to the development of a business they strongly believe in. Bob made the example of the London office where many of the 240 people working there have been in the firm for over 30 years. There is low or no turnover in a company where employees share the values, fit in the culture and feel they can and have to make a difference. Campari certainly has not been able to keep its over 4,000 employees, who also come from acquisition processes, driven and happy by motivating them solely with money. “When we have the annual convention, there are over 200 managers that I all know directly”: having a flat structure where regional managers report directly to the CEO helps to create an environment that encourages all employees to freely contribute and feel valued. “We focus on constant growth rather than on ranking.” Campari grows 5% annually, a figure to which acquisitions contribute. What is key to the success of an acquisition? On one hand is Campari’s ability to find hidden gems in the acquired companies and bring them back to life, meaning exploiting the innermost strengths and iconic productions of the businesses it takes over. On the other hand is the fact that the integration of the new company’s distribution, financials, and systems is conducted onsite with Campari’s teams that physically move to work in the acquired offices to foster new employees’ integration.
What is the story of Aperol’s acquisition?
“In 2003 Aperol had a 4 million litre production whose consumption was limited to the area of Venice, Padua and Treviso, meaning that every single citizen age 5 to 90 was consuming 5 litres of Aperol per day.” On December 1st 2003, Campari announced the 100% acquisition of Barbero 1891 S.p.A., a wholly-owned subsidiary of the Irish Cantrell & Cochrane group belonging to a UK Private Equity investor BC Partners. The acquired portfolio includes Aperol, Aperol Soda and Barbieri liqueurs in the spirits segment. Bob was asked to tell the story behind this acquisition as it is a curious and lucky one. Campari had initially lost the auction against another bidder, who made the mistake of not signing the contract straight away, on a Friday. Taking advantage of this situation, Campari made a higher bid over the weekend and by Monday, Aperol’s acquisition was final. Aperol is another success story as it has now grown 12 times bigger than its 2003 figures and currently accounts for 14% of Campari’s total revenues.
Which are the prospects for Aperol’s growth abroad? Do Asian markets have potential?
Aperol currently sells 1/3 of its volume in Italy and it is a drink whose specific characteristics and consumption habits do not facilitate export, especially in countries where drinking habits, or tastes, are very different from our own. Moreover, Aperol is still perceived abroad as a seasonal drink to be consumed during summer and it takes time to de-season it. The establishment of a market abroad for Aperol is a 7-year-long process. The strategy is tied to the spreading of Aperol’s most famous drink, the “Aperol Spritz”: it starts with a focus on the biggest cities and well-known bars where Campari teaches barmen how to properly make and serve a Spritz, and then moves towards smaller towns in order to be able to finally sell Aperol in Supermarkets. The process is long because it takes time to consolidate a new drinking habit in a population, but it is effective.
Asia and specifically China are currently outside Campari’s expansion scope because the very different tastes of the population make it incredibly difficult to penetrate those markets successfully. Moreover, emerging markets entail a high component of risk, because should a crisis burst out, Campari’s sales would disappear. For this reason, it is a safer option to exploit the opportunities of the domestic and most developed markets, where profitability and margins are much higher, and growth is obtained competing on market shares. The ultimate goal is not to maintain the current market share, but rather to increase it at the expenses of competitors, a strategy that is proving quite successful, e.g. in the Italian market Campari is four times bigger than the second player.
Now that we see the first true signals of an economic recovery, what could Italy do to develop faster?
This was one of the last questions asked to Bob and his answer was met by the audience’s claps.
“Sense of community spirit!” The state of play in Italy is not only the Government’s fault, as one of the country’s greatest problems is individualism, which undermines collective development. An effort should be made by every layer of society to build a sense of community through a zero-tolerance policy and education.
At the end of the event, which was a great success with around 240 participants, TiL managed to ask Bob a few more questions.
Which have been the biggest changes you have implemented in the company after becoming the new CEO?
First of all, it is important to remember that the CEO does not work alone, rather as a member of a team that comes up with and develops ideas. The biggest changes in these past 10 years have been regaining control and internalizing the distribution on a worldwide scale, completely restructuring and internalizing the supply chain, and rebuilding the IT systems in order to create a model that enables the company to exploit economies of scale and then acquire new brands and extract value from them.
What makes Campari particularly attractive to new graduates?
Campari has a particular attention on the new generation of consumers: the millennials. This focus has also influenced our marketing strategies that now concentrate more on sponsoring parties and events and opening Brand Store houses that help Campari to be perceived as a young brand.
For what concerns this generation’s future as employees, Campari is determined to recruit talents, and since Italy is a great pool of hungry talents, we have a 6-month Graduate Program for Bocconi graduates.
What should make the business really attractive to young graduates is that at work they will have fun!