Campari mixes a profitable cocktail

There is no obvious tribute to Lorraine Chase on display at the opening of the Campari group's spectacular new galleria at the company's Milan headquarters.

The galleria is an impressive combination of museum and interactive art gallery that traces the history of the 150-year-old Italian company through its commercial art archive. It includes the work of artists from Fortunato Depero, one of the leading exponents of the Futurism art movement, to film director Federico Fellini, who once made a commercial for the sharp, sour, red drink.

So it is perhaps understandable that Lorraine's contribution has not earned any wall space. She appeared in an old British TV advert as a cockney girl, wafted in from Luton airport, being wooed by an upper-class toff.

Consolingly, Campari's executives do say that she has not been forgotten and they may even consider bringing back the advert one day if they decide to go the retro route.

For now, the marketing route they are taking seems to have a momentum of its own. Hollywood star Jessica Alba is their current pin-up celebrity.

And, according to the latest 2009 results, the sales were €1,008.4m – that's up 7 per cent with a net profit of €137.1m – an increase of 8.3 per cent.

Chief executive Bob Kunze-Concewitz is credited with implementing new marketing strategies and sales techniques that have seen one of the world's biggest drinks groups maintain its dominance despite the recession. But it is his insight into Campari's attitude to marketing that throws an interesting light on the different approaches to surviving the downturn.

"Our marketing philosophy is to be among the top spenders in the markets where we operate, he says.

"If you look at our company, we are spending 18 per cent of our sales on marketing where our competitors are spending only 15 per cent, and at least 50 per cent of that is above the line advertising.

"If you look at a year like 2009 where we had a slightly reduced spend, we still managed to increase our share of voice because all of a sudden we looked around and saw that nobody else was advertising.

"We spend a lot of time and money on researching consumers and how they spend their time so that we can spot trends, and this research generates the insights that we can translate into our advertising. It's not one year on and one year off. We maintain the pressure."

The new galleria is a part of their investment in branding and in their history. Through its advertising, the company has had unique links with great names in art history and design. The drink was invented by Gaspare Campari in 1860 and it still remains one of the company's brand strengths, although recent acquisitions such as Wild Turkey and Aperol are also driving its current success. The family owns 51 per cent of the company; 10 per cent is owned by the London-based Cedar Rock Capital and the rest of the shares are traded on the Milan and London stock exchanges.

The new two-storey galleria was, until July 2005, the factory where Campari was manufactured, and it is already a popular destination for design fans. The building has been restored and was integrated into a new complex which includes an interactive exhibition space that houses drawings, TV adverts, film clips, sculptures and a document archive including the 1984 advert made by Fellini.

Today, Campari ranks sixth in the world's branded spirits category with a portfolio that spans three business segments – spirits, wines and soft drinks including 140 brands which are distributed in 190 countries. Its signature red liquid brand is still made by infusing bitter herbs, aromatic plants and fruit in alcohol and water and the recipe is unchanged since its inception. The top markets are Brazil, Italy, Germany, France and Japan.

Among young, fashionable Italians, Campari is synonymous with the aperitivo hour when young office workers meet up in bars after work to drink three or four cocktails and help themselves to a free tapas-style buffet that comes with the drink. Although it started as a Milanese tradition, the aperitivo has been successfully promoted throughout Italy by Campari and is a big part been part of their on-premise sales success story.

In the UK, the distinctive red bottle is beginning to show up at trendy launch parties in Shoreditch and among the contemporary art crowd as well enjoying steady sales with the fans old enough to remember the Lorraine Chase ad. But it isn't just the marketing that has proved crucial to Campari maintaining its market share. Big changes in its distribution system have played a significant role. This has been achieved by radically changing their traditional route to market, and in some countries actually cutting out parts of their chain.

"This has meant a big cultural shift for the staff and an important software update which enabled our sales force to switch from being order-takers into conceptual sellers," says Kunze-Concewitz, the Istanbul-born Austrian boss who was promoted to the top job in 2007.

"Instead of aiming just to fill warehouses, the sales staff had to find new ways of explaining our products conceptually and doing things like organising events to create the demand.

"We invested heavily in new software and in retraining our sales staff. Of course, because of the new data at their fingertips and because we have taken some elements out of the distribution, our margins have increased. So the recession gave us a shove to introduce some radical new changes that were needed. And now the system works much better and our factories work every single month, where in the past the orders would not have been as regular."

As for the UK and the company's plans for marketing, there is probably little point in trying to undo our rather less elegant after-work habit of drinking buckets of cheap chardonnay in a wine bar or downing happy hour pints – a world away from the sophistication of Italian aperitivo ritual.

Kunze-Concewitz's assessment of the British drinker is diplomatic. He politely resists the national stereotype. "I think the current customers in the UK are sophisticated and well travelled – probably middle aged and very loyal to the brand," he says.

"What we need to do now is to recruit younger urban consumers and so we have to organise a lot of educational tastings in restaurants and bars. Once people have tasted it, we know that they really like it. So that will be our focus."

When Campari has done the groundwork and established a critical number of new consumers, it will then consider a return to above-the-line TV advertising. And, depending on whether the fashion for retro advertising is still on trend, Lorraine and Luton airport may even get a second chance.