Italy's Campari Group plans bigger than usual increases in drinks prices next year to offset surging costs for glass, alcohol and sugar.
"We normally raise prices every year... in 2022 we plan to have more robust increases than usual, given higher costs on all raw materials," said Campari CEO Bob Kunze-Concewitz.
Aperol lovers best turn away now.
Not a case of dwindling profits
Campari's production portfolio includes over 50 premium drinks, including: Aperol, SKYY vodka, Cinzano vermouth, and El Espolón tequila.
The top executive from the maker of the famous bitters reported a 12.8 per cent yearly rise in like-for-like sales in the July-September period as consumers went back to drinking and dining out, splurging on aperitifs.
The group's best-selling aperitif, Aperol, which is the key ingredient for the Aperol Spritz cocktail, posted a 15.5 per cent rise in third-quarter sales.
People are happily drinking Campari's alcohol, more so since lockdown restrictions lifted in countries fond of their Spritz's.
Instead, the problem lies in the costs that come with producing those products.
The group, flagged risks coming from rising costs and alerted investors about potential bottlenecks slowing down spirits shipments towards the United States and Asia.
Where will Campari raise its drinks prices?
Campari will raise prices in all its main markets, including Europe and the United States.
Kunze-Concewitz added that speciality beverages such as Aperol and Campari could see higher increases than drinks that are more exposed to competition, such as vodka.
"We have increased tequila prices twice in 18 months, and we will have to do it again in 2022," he said.
During a conference call on quarterly results, Campari's top executives said the group expected costs of materials, production and logistic expenses to increase by 5 percent at constant volumes.
Rising costs and worker shortages
Many industries are feeling a similar squeeze that mirrors the Campari Group's predicament.
Other companies around the world have warned investors and consumers about rising costs and workers and raw materials shortages.
With over 160 years in the business of making beverages, Campari hope to take it in their stride.
"In the United States we have experienced booming consumption but we have issues with deliveries both at ports and on the ground ... we are doing our best to reduce tensions in the supply chain," Kunze-Concewitz said.
Campari said it was also busy working to reduce the impact of bottlenecks due to ocean freighter issues and truck driver shortages.
The Campari CEO said the group would also take action to be more efficient and adjust the mix of the products sold to protect its profitability.