Campari's Redemption. Diageo changes CEO and drags EU beverage upwards

(Il Sole 24 Ore Radiocor)- The rally of Diageo in London is driving the European spirits sector. Thus, Davide Campari soared at a good pace at Piazza Affari, thanks also to the positive signals that emerged from last week's Capital Markets Day. Pernod Ricard and Remy Cointreau in Paris are also well in tune.

Looking in detail at Diageo, supporting the share price of the parent company of Baileys and Guinness beer is a change at the helm of the company, which will see former Tesco CEO Dave Lewis as its new chief executive as of 1 January next. For analysts at Interactive Investor, the appointment 'could represent aturning point'. The shares of the British spirits producer have been under pressure recently, dropping about 28% since the beginning of the year. However, Lewis, a 'proven brand-building manager' who has held senior roles at Tesco and Unilever, could 'entice investors to reconsider the strength of the spirits producer's premium brand offerings', such as Johnny Walker whisky and Don Julio tequila, according to analysts. For Rbc, the move is 'unexpected, but nonetheless timely'. The new ceo could indeed 'accelerate sales growth and bring new efficiencies', as well as 'catalyse a cultural shift' in the spirits market.

The news, in general, is encouraging for all stocks in the sector, including Campari, which also benefits from Deutsche Bank's positive verdict on the indications that emerged during its first Capital Markets Day. The company, analysts explain, "outlined its ambition to achieve organic revenue growth of between 5% and 9% in the medium term". Although no "new quantitative profitability targets" were set, Campari "indicated that this growth should generate cash and increase margins", the bank continues. Deutsche Bank also appreciates "the significant growth potential" of what the group has termed "Champion Brands", such as Aperol, as distinct from "brands operating in more crowded and competitive categories". In light of these factors, Db maintains its 'Hold' recommendation on the stock, with a target price of EUR 6.2.