Negroni at Harry’s Cafe NYC
A couple of weeks ago I shared a link from CNBC in which Mario Gabelli, Chairman and CEO of Gamco Investors, mentioned several buying opportunities in the wake of Brexit, including Diageo (DEO) and Davide Campari Milano (DVDCY). So far, both have recovered quite well from their Brexit dip.
Diageo is up nearly 9% from its June 27 low, closing at $112.80 on Friday. Since the UK referendum, Diageo has invested in the British non-alcoholic spirits distiller Seedlip. It is reported to be the first time Diageo—which is typically invested in 8-10 businesses according to the Financial Times—has taken a stake in a non-alcoholic beverage company. In a world of consumers growing ever more health conscious and drinking less, with UK alcohol consumption down 26% 2002-2012, it seems to be a pretty logical extension of their business. Seedlip had a nice write-up at Tales Of the Cocktail last October, and worth a read here. That announcement was made at the beginning of last week and, after a slight initial decline, by the end of the week Diageo was trading at levels last seen in mid December.
Campari finished last week at $4.80, up 6.4% from the June 27 Brexit low. Gabelli noted they had recently added Wild Turkey and were buying Grand Marnier, details of which hit around the same time. Campari stock jumped in early March and has maintained a steady range between $4.75 and $4.90 since. While the current level is about 4% off the early June peak, it remains 25% above the end of February level.
In the US, the aperitif Campari has seen growing popularity, moving from a long-standing case volume of around 50,000 to 100,000 cases the past five years, according to Fortune Magazine. No better example of this heightened interest that with the Negroni – the go to cocktail at Gin & Bitters. Negroni Week itself provides some evidence as the June week-long charity event keeps getting bigger. Started in 2013, Negroni Week last year raised $321,000 from 3,500 venues. The amount raised last month has yet to be announced, but the number of venues alone was up 71% to 6,000 in 61 countries and 47 states.
Once again, market turmoil provided some very good buying opportunities, and in this case also brought the ingredients to toast your success.
Cheers!
Gin & Bitters 