Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Campari Group first half 2021 results presentation conference call. As a reminder, all participants are listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Bob Kunze-Concewitz, CEO of the Campari Group. Please go ahead, sir.
Thank you. Thank you very much. Good afternoon and a very warm welcome to our first half 2021 call. As you can imagine, we're quite pleased to celebrate 20 years as a public company with such a nice set of numbers. If you'll follow me to page number first, I'll kick off with the highlights. As you can see, throughout the presentation, we have strong double-digit growth across all of our indicators. Importantly, not only versus the first half of last year, but also versus the first half of 2019, with quite a strong acceleration in Q2. We have strong momentum across all of our key markets and brands, and this is thanks to a combination of a sustained home consumption as well as the benefits of the gradual reopening of the on-premise across markets. Kicking off with net sales.
On an organic basis, we have an overall growth of 37.1% versus the first half of last year. The second half, as I mentioned earlier, the second quarter accelerated by 54%. Clearly, these numbers are also benefiting from a favorable comp base. Last year, we were down on the first half by 11.3%, and in the quarter, the second quarter by 15.9%. If you look at our core markets, the U.S. is up 29%, Italy 65.8%, Germany 11.9% and Australia 11.5%. All of our priority brand clusters are up double digits. Global priorities, 35.7%, driven by very strong Aperol, Campari and Grand Marnier. Regional priorities are up 44.3%, mostly driven by Espolòn.
Local priorities are up 39%, driven by our RTDs. Our overall organic growth was 22.3% versus the first half of 2019. I think that's very important given, you know, all the FOG due to the fact of comp bases and shifts from channels. With regards to the second quarter, we're up 30.2% versus the second quarter of 2019. This underlines solid business momentum. I already discussed most of our core markets. Clearly across the range, all markets are growing very, very strongly. Brand-wise as well, Aperol, Campari, Wild Turkey, Grand Marnier, our Jamaican rums and Espolòn all grew by double digits.
On a reported basis, we're up 30.2%. This reflects a negative parameter, down 1.3%, mainly due to a termination of an agency brand portfolio in Germany. On the other hand, from a Forex standpoint, we have a negative effect of 5.6%, so quite substantial, driven by the devaluation of the U.S. dollar as well as emerging markets currencies. Looking at adjusted EBIT, organically, we're up 88.7% versus the first half of last year, leading to a 640 BPS margin accretion. This is driven by the favorable sales mix as well as the easy comp base. You'll recall that last year in the first half, we were down 30.8% and had a 470 BPS dilution in marginality.
Gross margin was accretive by 130 basis points. Again here, the favorable sales mix was driven clearly by the aperitifs, which more than offset the dilutive effect of Espolòn. A&P was slightly dilutive, only 10 basis points, whilst SG&A were highly accretive, 520 basis points, driven by the very strong top line growth as well as the easy comp base. Versus 2019, our organic growth is a very solid 33.3%, leading to 190 basis points accretion, driven clearly by the top line. On a reported basis, the adjusted EBIT is up 71.2% after the negative perimeter effect as well as the negative Forex effect.
Net profit on an adjusted basis came in at EUR 156.8 million, up triple digits, 101.9%. On a reported basis, even stronger, EUR 159.6 million, up 118.7%. Moving on to free cash flow and net financial debt. We've generated recurring free cash flow, quite strong at EUR 141.6 million, up triple digits, 117.7% versus 2020, and up a very strong double digit versus 2019, of 64.2%.
On the basis of this, our net financial debt stood at the end of the period at EUR 1.065 billion, which is down EUR 39 million versus the end of 2020, and it's mainly driven by the positive free cash flow generated by the business. This, together with the strong alignment-Generation of the EBITDA led to a net financial debt to EBITDA ratio down to 2.2 x, significantly down from the 2.8 x we had at the end of the year. Moving on to page number six. Here we illustrate the off-premise sell-out value growth, as well as our shipment value growth, both versus the first half of last year and the first half of 2019.
It's important, we believe to look at it from a two-year stack standpoint, because as I mentioned earlier, there's quite a bit of FOG there due to the high comp base. You will recall our consumption indicators were very, very strong in Q2 of last year. Obviously, that forms a comp base. It's also interesting to make the comparison versus 2019 to see what the lasting effect is of the penetration of cocktail culture at home. We look at the anchor market of the Americas in the U.S., the sellout versus 2021 is slightly down. That's because we were very, very strong, one of the fastest, if not the fastest growing company last year. We compare it to 2019, we're up 33%.
In Germany, we're up 6.3% versus a very strong first half of last year, and up 29% versus 2019. In Italy, our sellout is up 23.8% versus last year and 45.8% versus 2019. Clearly in Italy, when you look at shipments, there's a big difference between how we did versus last year as we suffered significantly from the lockdown in Q2. Net in net, even in Italy, we're up 4.3% versus 2019, really showing the solidity of our brands and their momentum. Australia, least but not least, sellout up 9.5% versus a very strong 2020, and up 27.5% versus 2019.
The following chart number seven, is probably my favorite from this whole presentation because it shows that we're firing on all of our cylinders. Effectively, if you see the performance of the top line by region as well as by priority cluster, you'll see that we're growing double digit across both all of our regions as well as all of our priority clusters, not only versus 2020, but also versus 2019. That's quite a remarkable feat. Moving on to page number eight. There's not much actually to report here. I think it's more interesting to move on to the following one in the Americas. The Americas overall were up 34.2%. Again, here it's a combination of resilient home consumption as well as the very positive effect of the gradual reopening of the on-premise.
Our largest market, the U.S., was up 29%. Solid growth across all of our core brands with acceleration in Q2, where we were up close to 43%. The reasons I just highlighted earlier. Bear in mind, though, that we are in the U.S. favored by an easy comp base in Q2 2020, driven by destocking. We were down by 8.6%. In particular, our heroes in the U.S. are Espolòn, Grand Marnier, Wild Turkey, and the Jamaican rums, All of them had strong double-digit growth in the half. Also very pleased to see our aperitifs Campari and Aperol back to very positive territory in Q2, growing respectively 47.6% and 145%. We're clearly back in recruiting mode.
Our overall sales performance was up 24.6% versus 2019, which you will recall was also a very strong first half. On the back of strong numbers, we're growing double digit. This is thanks to strong brand momentum across the portfolio. Sellouts, on the other hand, reflected a very tough comp base versus H1 2020. Again, as I reiterated earlier, when we look at it versus 2019, which is the right benchmark, you can see that mostly our in-house consumption is holding on. It's actually grown significantly, we're up by 33%. Canada is up by 20.7%. We're seeing nice sustained growth led by Forty Creek, Aperol, Appleton Estate, and Grand Marnier.
This despite the normalization, obviously in Q2, due to the same tough comparable base effect we saw in the U.S. Jamaica, up strong double digit, 33.9%. Very positive growth. On the one hand, yes, we had an easy comp base, thanks to the resilient off-premise performance, as well as some initial recovery of the local tourism sector, which is, obviously, helping with the on-premise consumption. Strong performances, again, across our core brands, Wray & Nephew White Overproof, Campari, Appleton Estate, and Magnum Tonic Wine. If you look at the remainder of the region, a very strong growth, 74.4%. It's helped by a very easy comp base from last year.
It's also good to see, you know, markets such as Brazil, Argentina, and Mexico returning to an accelerated growth from Q2. Moving now to SEMEA on page 10, where we see the strongest bounce back, up 67.4%, very strong in Q2. Italy leads the way at 55.8%. We're clearly seeing revenge conviviality. I mean, if you come to Italy, all of the sidewalks are full of tables, bars, restaurants, and you'll see wave after wave of orange and red. Quite positive results. Yes, the comp base was easy. We were down 33.1%. We're really seeing the effect of the reopening of the off-premise in the second quarter, which was up 106.5%.
This is clearly traced to the positive developments linked to the acceleration in the vaccination campaign, where Italy is doing very nicely. There's also some slight stock replenishment ahead of the peak summer season, but it's important to say that these aren't really material. Very positive performance in Q2. If we look at it on a brand basis, Campari up triple digit, 121%. Aperol triple digit as well, 124%. Nice bounce back on Crodino, up 74.7%. Campari Soda continuing with its positive momentum, up 81.8%.
Compared to the first half of 2019, which was obviously, which is the benchmark that was unaffected by the COVID-19 pandemic, the Italian business is up 4.3%, which really confirms the strong brand momentum. France also is going from strength to strength, up 61.8%. Very positive brand momentum driven by the likes of Aperol, Riccadonna, Trois Rivières rums, which have actually reverted to our distribution network from January onwards. Campari, Grand Marnier, and the Glen Grant are also giving us satisfaction. GTR is up 24.3%. I know it looked like a nice number, but we need to bear in mind that last year we had a very easy comp base, unfortunately, where we were down 60.7%.
The initial lifting of travel restrictions is helping, but clearly, we're very far from where we were from the unaffected base of 2019. If we compare versus that base, we're down 52%. The rest of Southern Europe, Middle East and Africa is up 67.5%. Again, these are performances driven against an easy comp base, particularly in on-premise skewed markets such as Spain, which were up 58.3%. In South Africa, we've had again, progressive restocking, as we had changed our route to market last year. When we look at it from a total group basis, that clearly is not material. Moving on to North Central and Eastern Europe, going from strength to strength, up 23.5%. Sustaining strong performance helped also by the on-premise reopening.
Germany up double-digit, 11.9%. Nice, strong Q2, up 14.4%. Importantly, one must, you know, look at those numbers within the context of a prolonged lockdown, as well as record cold weather in Germany in the month of April. These are very, very strong numbers within that context. The performance of the group in the first half was largely due to Aperol, up 17.1%, Campari 6%. We've had also a very, very successful launch of the Aperol Spritz Ready to Enjoy. We're seeing nice resilient home consumption. As soon as the on-premise opens, we see, you know, droves of consumers going back to it. That should also start impacting positively Averna and BULLDOG.
Crodino, which is turning into an interesting business, in Germany, but also in the whole North Central Eastern Europe cluster, is up 27.7%. Actually, if we look at total Crodino now, about 18% of the volume is coming from this, from this region. It's nice development in the past two to three years. The U.K. continues to remain very, very strong, up 37.1%. Triple digit growth on Magnum Tonic Wine. Sustainable double digit growth on Aperol at 42%. Wray & Nephew 32%, Campari 26.1%. Again, here we're able to combine resilience in the off-premise, as well as strong performances in the on-premise. Russia also strong, quite strong, up 44.1%. Very positive performance with an acceleration in Q2, almost 7% up.
Double-digit growth rates behind Aperol, Mondoro, Cinzano Sparkling Wine, Campari, and Espolón. The rest of the region, Central Europe and the Nordics, are up 28.1%. Very, very nice performances coming from strong bases in key markets such as Switzerland and Austria. To round it all up, APAC, up 30.8%. We're seeing nice continuing growth, helped also by shipment recovery, as we'd made a lot of route to market changes in Asia last year. Australia, which is where obviously we didn't do any changes, is up double-digit, 11.5%. Very positive performance in the half. We've had a strong start to the year, but a normalizing trend in Q2, up 1.7%, due again to the very, very tough comp base.
We were up 19.2% last year. If we look at the rest of the region, it's up almost 93%. Very positive results in Japan, New Zealand, China, and South Korea, which were not only positively impacted by consumption, but also from the strong shipment recovery due to the post route to market changes. If you look at China, we're up 47.5%, and here the key drivers are X-Rated Fusion Liqueur, Aperol, SKYY Vodka, and Wild Turkey Bourbon. Japan was also nicely growing behind Wild Turkey Bourbon, Glen Grant, and Campari. Moving on to performance by our global priorities on page 14. Again, some wonderful performance indicators, starting with our aperitifs. Aperol up 42% versus year ago, 25.7% versus the unaffected base of 2019.
As you'll see in the text on the right, which I'm not gonna go through, we're growing double-digit across the range as we're back in the on-premise recruiting via our very effective activations. Campari, the same, up double-digit versus both benchmarks, 49.5% versus year ago, and 24.6% versus two years ago. Again, strong growth across the base. In chart number 15, you see, you know, from a consumption indicator standpoint, the indicators versus the unaffected base, you see very nice progressions. Moving on to page number 16. Wild Turkey also growing double-digit, 26.8% last year, double-digit 17.4% versus 2019.
Good strength in the U.S., Canada, whilst Australia was impacted by the very tough comp base, where the brand had grown almost 37% last year. Skyy is up 12.6% versus year ago and down 5.8% versus two years ago. Clearly, between the unaffected benchmark and today, we've had significant destocking in the U.S. on Skyy last year ahead of the brand relaunch. Obviously, that impacts the KPIs. We have overall a positive performance, mostly driven by the international markets at this stage, Argentina and South Africa, as well as Germany and China. In the U.S., the brand was relaunched, as you know. We did the distribution in the second quarter, and we started the activations and the campaign in the third quarter.
On a full half basis, we're up 1.5%. Moving on to Grand Marnier, which is really benefiting from the premium tequila brand and the premium margaritas brand with the Grand Margarita, up 52% versus year ago and 39% versus two years ago. We're also seeing nice performances in France and Canada. Our Jamaican rum portfolio up double digits as well, 29.7% versus last year, 45.6% versus the unaffected base. Appleton Estate, as you know, has reacted very well to the relaunch with new packaging, new ranges, liquids, and price repositioning. Wray & Nephew Overproof is just continuing on its regular growth pattern, up 27%. Doing very nicely in Jamaica, the U.S., Canada, and the U.K.
The rest of the portfolio, including Kingston 62, which we launched this year and replaced some of the lower level Appleton ranges, is doing nicely. Moving on to page number 17. Espolòn, very strong, up 56.4% versus year ago, 62.8% versus two years ago. Clearly, in the core U.S. market, that 56.4% was also helped by anticipated sales. We tried to limit them to the minimum possible ahead of the price increase in July. In beginning July, we took two price points on the big size and one price point on the small size or regular sizes. Again, we're one of the few companies taking pricing in this category.
BULLDOG, returning to nice growth again, 50.9% versus year ago and 15.9% versus two years ago. This despite the fact that one of its main channels, GTR, remains depressed. The impact of GTR can also be seen even more on Glen Grant, where the brand is down 2.6% versus the unaffected base of two years ago, but clearly up 43.6% versus this year. Our Canadian whiskeys progressing nicely, up 15% versus year ago and double as much versus two years ago. Italian bitters are doing nicely versus a year ago, but are still slightly down versus two years ago, as it's clearly, you know, it's more the outdoor spaces of restaurants which are being used.
The quantity of people isn't still back to where it was. Cinzano, up 32.4% versus last year, a solid 8.7% versus two years ago. Mondoro and Riccadonna, which are the more premium sparkling wines, up very strong, both in the 70s versus last year and the year before. Closing up with our local priorities, AriZona gives us a lot of satisfaction, and that's very important. It's really benefiting from this ready to go cocktail occasion, up 24% versus two years ago and 79% versus last year. Crodino is doing well versus last year, but it's still down versus two years ago, and this is one brand we're working on.
As I mentioned at the beginning of our presentation, we had a very successful launch of the Aperol Spritz Ready to Enjoy in many markets. We're up almost double versus year ago and almost triple versus two years ago. We've introduced it in 10 markets, including the test market in the U.S., and the results are very satisfactory so far. Our RTDs in Australia continue to perform very nicely, up 14% versus year ago, 40% versus two years ago. Magnum, again, very nice, Jamaican Gem up 70% versus year ago and 60% versus two years ago. X-Rated buoyed by strong performances in China and Korea, doing very nicely, doubling versus a year ago, and again, almost tripling versus two years ago.
Last but not least, Cabo, which is mostly an off-premise brand, is obviously penalized by the high comp base in the U.S. last year, but still showing nice progression versus two years ago. This was the roundup on the brands on the sales. I'll pass over to Paolo for the juicier bit.
Thank you, Bob. If you follow me to page 20, where we have the analysis of the net sales and EBIT by region, we can see that the Americas as a region still remains the group's largest region in terms of net sales at 43.9% as well as profitability at 45.6% of group's EBIT. CEMEA, which was the region, you know, heavily hit by pandemic, given its strong exposure to the on-trade channel, particularly for the high margin aperitifs, has largely improved its weight in the first half, both in terms of net sales at 29.2% as well as profit at 18%. Moving on to the analysis of the largest region, Americas, page 21.
We can see that on a reported basis, net sales were up 22.6%, and EBIT was up 47.6% in value terms from EUR 69 to EUR 101.9 million with 390 basis points EBIT margin expansion in the first half of the year. If we focus on the organic performance, we see that net sales were quite robust, up 34.2%. And EBIT was up 73.6% overall with 570 basis points margin accretion.
Focusing on the organic performance to the right-hand side, we can see that gross profit increased in value by 35.6%, up to EUR 74 million at a stronger pace than sales, leading to 100 basis point margin accretion due to favorable sales mix combined with positive impact from the U.S. import tariff suspension. The favorable sales mix by brand as well as channels was mainly driven by the high margin brands, namely Grand Marnier, Wild Turkey, Campari Aperol, which more than offset the negative effect of Espolòn, with margin continuing to be affected by the stable but still elevated agave purchase price.
The A&P increased in the first half by 34% in value, EUR 19.5 million with an acceleration in the second quarter behind key brands to benefit from the gradual reopening of the on-trade channel in key countries, particularly the U.S., and in particular behind SKYY Vodka in connection with its complete relaunch. The A&P growth was broadly in line with top line, hence, was, you know, margin neutral. The SG&A expenses grew at a more moderate pace, 4.1% in value, EUR 3.7 million leading to 470 basis point margin accretion, thanks to, you know, the very strong top-line growth.
Perimeter and effects, overall, an haircut of EUR 18 million with a 180 basis point margin liberation, primarily driven by the depreciation of key group currencies such as the U.S. dollar, which was particularly negative in the first half. Otherwise, would be a little bit more ease in ease comp in the second half of the year, as well as the hyperinflationary effects in Argentina that negatively impacted effects and perimeter performance. Moving on to page 22, second-largest region, CEMEA. On a reported basis, top line was up 60.6% and bottom line, the EBIT moved from negative territory, EUR 1.8 million to positive territory, EUR 40.2 million with EBIT margin expansion of 14.7%.
If you look at the organic performance, again, to the right-hand side, gross profit increased in value by 60.5%. As you can see, EUR 68.2 million gross profit uplift at a pace that was clearly stronger than net sales and in so doing leading to 120 basis point margin accretion. Margin accretion was driven by the outperformance of the high margin aperitifs at the beginning of their peak season. You know, very, very strong results. A&P increased in value by 40%, corresponding to EUR 13 million, reflecting the accelerated investments in the second quarter of this year behind key brands. Particularly Campari and Aperol benefited from the on-premise reopening and were, you know, properly supported.
The increase in A&P was, you know, below top line growth, and that generated 100 basis point margin accretion. The SG&A increased in value by 12.9% corresponding to EUR 10.5 million against a very low comp base. You know, they were, you know, highly accretive, 12.7%, thanks to the strong top line growth in the region of organic growth of 50, 57.4%. Effects and perimeter, you know, neglectable effect, just EUR 2.7 million with 120 basis point margin dilution. If you move on to the following region, North Central Eastern European region, page 23.
Overall, net sales grew by 11.6% and EBIT by 26.6%, from EUR 57.4 to EUR 72.7 million, with EBIT margin expansion of 450 basis points on a reported basis. If we focus on the contrary on the organic performance, the right-hand side, EBIT adjusted organic growth accounted for 33% or EUR 19 million, which was higher than the net sales leading to 260 basis point margin accretion. The gross profit contribution was 28% growth in value, EUR 31.4 million, higher than net sales, driving 250 basis point EBIT margin expansion, totally attributable to the strong performance of the operatives in the region.
The A&P step up accounted for 33.3% in value or EUR 8.6 million, again, higher than net sales, leading to a 120 basis point margin dilution. You know, we saw sustained investments, marketing investment behind, you know, key brands, investment that accelerated in the second quarter, following the gradual reopening of the on-premise channel. The SG&A were up in the first half by 13.7% in value, EUR 3.9 million against again a fairly low comp base, a -3.7% in the first half of last year. The SG&A growth was clearly lower than net sales, hence generating the 130 basis point accretion, as you see in the chart.
FX and perimeter performance was overall negative, EUR 3.6 million, but overall, you know, accretive to the margin, aided by 190 basis points. The negative impact was attributable to the depreciation of ruble, a negative perimeter, most attributable to the termination of low margin agency distribution contracts in Germany. If you move on to page 24, the APAC, you know, still the smallest region, but, you know, again, very strong results. On a reported basis, top line was up 37.2%, and EBIT up, you know, 48.1% in the first half from EUR 5.7 to EUR 8.4 million.
On an organic basis, the EBIT performance was quite robust, 21.3% up, but lower than the net sales generating, you know, a 70 basis point dilution, which is fine given the focus that we have in the region to build up, you know, the business, on the back of, you know, A&P investments and investments in route to market capabilities.
In fact, if you see, you know, A&P notwithstanding an increase of gross profit of 30%, corresponding to EUR 7.9 million, A&P has been stepped up by 75.3% in value or EUR 4.7 million, and SG&A have been increased by 14.3%, EUR 2 million almost offsetting the gross margin contribution. Effects and perimeter, although tiny, drove a positive impact on P&L, EUR 1.5 million on the back of the appreciation of the Aussie dollar versus the euro. Page 25, the P&L at a glance.
Again, on a reported basis, this is, you know, both versus 2020 and both versus two years ago, you know, the unaffected basis of 2019 versus last year. On a reported basis, net sales were up 30.2%. EBIT adjusted was up 71.2% from EUR 130 to EUR 223 million. If you focus on the organic performance, top line, quite robust in the first half, 37.1% up. EBIT adjusted up 88.7%, with, you know, EUR 115.6 million EBIT uplift coming from existing business and 600 basis point, you know, organic EBIT expansion, driven by EUR 181.5 million of gross margin uplift.
By the way, driving a 130 basis points EBIT margin expansion, partly, you know, reinvested in A&P step up by EUR 45.8 million and SG&A investments of EUR 20.1 million, leading to an almost neutral effect on A&P, 10 basis points dilution, but, you know, a strong operational leverage within the SG&A line, driving 520 basis points EBIT margin expansion. Perimeter and FX haircut accounted for EUR 22.8 million in the first half, with clearly a very, you know, negative impact in the first half, which is destined to be, you know, easier as a comp base in the second half, and 110 basis points dilution, again, from FX and perimeter.
Worth noting the performance versus 2019, where we have net sales up 23% and EBIT adjusted up 33.3% versus, you know, quite a, you know, strong year 2019. More in detail, page 27, versus first half of last year, gross margin on a reported basis, 33% up in value, 140 basis point accretion.
The organic performance, which I've mentioned, which, you know, was 40.1% in value, leading to 130 basis points margin accretion was due, as commented in the segment analysis, to favorable sales mix thanks to the outperformance of aperitifs, starting to benefit also from U.S. import tariff suspension, coupled with stronger absorption of fixed production costs or operational leverage within costs, driven by high production volume and an easy comp base. Those two, you know, positive effects were able to more than offset the dilutive effect of Espolòn, which versus last year accounted for 100 basis points versus, you know, two years ago accounted for 180 basis points, as you can see, you know, below.
Again, A&P, a meaningful organic step up in A&P, 37.6% in value, neutral on margin, reflecting the accelerated investment in the second quarter behind key brands, aperitifs in their peak season, as well as due to a low comp base. The G&A organically up 10% in value with a very strong margin accretion. EBIT adjusted performance already mentioned before, organically again, 88.7% in value up 640 basis points margin accretion. Versus two years ago, the gross margin a bit is still quite robust, 18.2%, with still a margin dilution of 200 basis points that we need to recover going forward.
You know, we've achieved, you know, 130 basis points organic gross margin recovery versus a year ago. We're still lagging behind 200 basis points two years ago. This was due to unfavorable versus the year, two years ago sales mix driven by, again, Espolòn, which I've mentioned, which is 180 basis points of the 210 basis points. The, you know, the only brand that is, you know, behind 2019, that is SKYY, and probably, you know, Crodino in the two brands, SKYY and Crodino in the Italian market.
Again, you know, on a two-year basis, A&P step up is still quite strong, 10% over two years with, you know, 180 basis point accretion given, you know, the robust 22.3% offline growth. The SG&A growth over, you know, the two-year period was okay at 10.6%, so, you know, 5+% year- after- year with margin accretion of 220 basis point. EBIT adjusted versus two year ago on affected basis, you know, 33.3% was higher with 180 basis point expansion. Moving on to page 28, we see operating adjustments previously called one-offs, EUR 0.1 million, primarily attributable to restructuring initiatives.
Last year, we had, you know, EUR 27.4 million of negative one-offs, primarily attributable to brand impairment losses non-cash. On the total financial charges, we've recorded EUR 8.8 million versus EUR 19.2 million. If we carve out the effects of the exchange gain and losses, in the first half of this year, we achieved EUR 4.2 million of exchange gains. Last year, we've registered EUR 1.3 million of exchange losses.
Net of the, you know, one-off exchange gain losses effect, the total financial expenses before exchange gain and losses accounted for EUR 13 million this year versus EUR 17.9 million of last year, with a significant compression of the coupon down from 3.9% to 2.4% due to the liability management transactions that have been carried out in 2020. If you look at the 2.4% average cost of net debt, excluding, you know, the exchange gain and losses, this is due to, you know, a true cost of net debt, excluding the negative carry 1.7% plus a top-up 0.7% of negative carry effect.
The financial one-offs, financial adjustments, we have EUR 4.6 million that are relating to interest income, resulting from the favorable closure of previous tax disputes in Brazil. You know, we won the case in Brazil. Then we have, you know, minute, put option effect of EUR 0.4 million and a positive effect related to associates and joint venture accounting for EUR 1.9 million, that is due to the reassessments of the group participation in the South Korean JV, which we acquired a controlling stake in at the beginning of this year.
PBT, profit before tax reported was up 112.4%, adjusted of one-offs in operating financial adjustments and whatever, we have a profit before tax adjusted increase of 93.5% at EUR 213.1 million. If we move on to the following page, 29. We can see that the taxation came in at EUR 54.9 million on a reported basis, and group net profit came in at EUR 159.6 million, again, on a reported basis, 818.7% versus a year ago.
Adjusted of the, you know, one-offs, group net profit came in at EUR 156.8 million and was up 101.9% versus, you know, a year ago. Looking at the, you know, tax rate, even here, we see some positive news. The recurring tax rate down from 29.7% on an adjusted basis to 26.5%, and on a reported basis from 28% to 25.6%. Most notably the recurring tax rate, cash tax rate clearly under control and below last year from 23.6% down to 21.8%. If I manage to turn the page, we move on to page 31. We have the free cash flow analysis that will focus on the recurring performance.
EBIT adjusted up 64.2%, EUR 90 million year-on-year from EUR 169.7 million to EUR 261 million. We then have, you know, taxes paid that have been, you know, stable on a recurring basis, you know, year-on-year at about EUR 23 million. We have a change in working capital is clearly, you know, leading to EUR 43 million increase in change in working capital from negative EUR 55 million to negative EUR 98.7 million. Clearly, it's totally driven by the acceleration of the top line in the business in the first half. Increase in receivable, as you can imagine.
Cash flow from operating activities increased by EUR 78 million, 80.9% year- on- year from EUR 96.8 to EUR 175 million. With regards to interest paid, you know, fairly stable at EUR 8.3 million. On a recurring basis, EUR 8.3 million. We have the CapEx coming in on a reported basis at EUR 74.4 million, with maintenance CapEx at EUR 25.3 million, with an extraordinary CapEx increase related to the purchase of real estate investment in London. You know, the new London office that we bought to move the regional headquarter in the new office.
Recurring free cash flow up EUR 55.4 million, 64.2% versus a year ago. A very positive news on the ratio of recurring free cash flow, cash flow over EBIT adjusted that grew from 38.3% of last year to 54.1% this year. You know, which is, you know, a level even higher than, you know, two years ago, 2019 on affected basis, which posted 40.1% recurring free cash flow over EBIT adjusted. Moving on to operating working capital, page 30, 32.
As said, organically, we have an operating working capital increase of EUR 98.8 million, driven by increase in inventory, EUR 45 million, of which EUR 15.5 million is aging liquid to support the growth trajectory of Grand Marnier. Increase in receivable of EUR 44 million, you know, minute decrease in payable of EUR 9.7 million. Forex had a positive impact of EUR 11 million, perimeter, a negative impact of EUR 2.5 million. On KPIs perspective, operating working capital as a percentage of net sales came in at 36.5%, down 160 basis points compared with last year, down 110 basis points compared with two years ago, 2019.
Totally in line with our target of achieving, you know, 1% operating working capital compression over net sales in comparison to 2019. Page For the full-year. Page 33, net debt reduction. Thanks to positive business performance, we've seen recurring free cash flow of EUR 141.6 million, reported free cash flow of EUR 82.9 million. We have the dividend, a net purchase sale of own shares accounting for, you know, an income of, you know, a cash flow, positive cash flow of EUR 30.6 million, leading to a six months, June end, net indebtedness of EUR 64.5 million. With regards to the maturity profile, again, even here, quite a solid position.
Long-term EUR bonds and term loans account for EUR 1,150 million. We're seeking over EUR 668 million excess cash, which is more than enough to repay, you know, loans and bonds that are expiring in the coming two years. With, you know, an average nominal coupon of 41.42%, and a fixed interest rate that accounts for 78% of the overall gross debt. With a very, you know, solid position vis-à-vis the hedging of interest rate risk in which, you know, may or not, you know, arise in future years. I think this is it on numbers. Bob, I would, you know, happily back to you on the conclusions.
Thank you, Paolo. Before we get to the conclusions, just some update on business developments. On page 36, you'll see we're very pleased to introduce The Notes Collection. It's a new range of non-alcoholic super premium spirits dedicated to the high-end on-premise. You can have them both as well as as mixers. Clearly this is a segment of the market which is seeing a lot of action. It's very interesting, we do believe that we have an edge in the quality of the liquids. Because unfortunately, whilst there's a lot of action in this category, it is littered with products which don't have much of a taste. Look at this page.
We're going to take our time to build it on the on-premise. Hopefully in the mid to long term it'll become a nice addition. Our brands continue to receive very strong accolades for their liquids, be it the Bisquit & Dubouché or the Appleton Estate aged range, very active on new campaigns. As well as premiumizing our brands, we're launching a premium Espolòn Cristalino, which is a special form of Añejo tequila and Espolòn. We've launched it in Mexico quite successfully. We'll be launched in the U.S. in the second half of this year. We have high expectations behind that. Last but not least, we're introducing a 60-year-old Glen Grant to celebrate our Master Distiller, Dennis Malcolm, who's been 60 years in the industry.
He actually you know, spent most of those years, he started in Glen Grant and then came back to Glen Grant after his retirement. This is a super premium and well, ultra premium, to be honest, and quite unique as nobody else in the industry can claim to have put something into a barrel and then actually put it into a bottle 60 years later. Moving on to SKYY. We're clearly right into the middle of the relaunch. We did the distribution job in Q2, and now the relaunch campaign is in full swing. We kicked it off at the Independence Day, and we're gonna stay on this for quite some time. We're very pleased with all of the assets which were developed, which were very well received by consumers and the trade.
Clearly, you know, this is something which we need to stay on for a long time, because turning around a brand in the highly competitive U.S. vodka category will take some time. Moving on to Aperol. As I said earlier on, you know, Aperol has become the symbol of the reopening, be it in the U.K. and Italy or even France, where you can see the picture in the bottom of the French president celebrating the reopening of the terraces with a wonderful Aperol Spritz in his hand. More important than that is the fact that we're back to recruiting new consumers, quite aggressively with a lot of activations and a lot of events throughout the world. The world continues to be turned orange.
One nice addition, which we think is gonna be strategic for the long term because it's the beginning of a program, we're gonna open a Terrazza Aperol in Venice, which is the heartland of Aperol, this late summer in Campo Santo Stefano. You know, that's. It took us more than three years to find a location. That's where 9 million tourists walk by every year. Clearly it's gonna be a very important, I think, embassy for the brand, as well as a model for more Aperol terraces, which will pop up around the globe in the years to come. On page 42, e-commerce, this is something we've announced a few weeks ago.
We've gotten together with our friends at Moët Hennessy, and we've pooled our stake in Tannico into a joint venture with them, which is 50/50. This makes two strong and complementary players, obviously there to support the growth of Tannico, which already started via making an important acquisition in France, but this will not be the last one. Last but not least, we're very proud, as you can see on the ESG front, we've been upgraded by MSCI from a B-- triple B to an A, and this is definitely for us, a further incentive to continue on raising the bar in this very important area for us.
Before moving on to the conclusions, as I kicked off at the beginning of this call, this month we're celebrating our 20 years as a public company. It all started on July 6, 1991. Sorry, 2001. I'm getting my math wrong here. Taken over by the emotion. You know, we're quite proud to see that market cap has grown to EUR 13 billion, 15 times, and we've delivered an annualized TSR of 16% and outperformed all of our relevant indices. Becoming the 10th largest company from a capitalization standpoint in the FTSE MIB. Clearly we couldn't have achieved this without really the continued support of our Camparistas as well as our shareholders.
We've always said this is a business which you build for the long term, and the long-term support of shareholders is absolutely fundamental, as well as the daily passion, sweat, and tears of Camparistas in building our brand. We'll be celebrating this tomorrow at the Camparino, and I think some of you who are Italy-based will probably join us, and we look forward to raising a few cocktails to the health of our industry. In conclusion, what to say but that, you know, quite positive business momentum continued in the first half of 2021. We're benefiting from the buoyant consumption, which is a combination of the partial reopening of the on-premise and sustained home drinking, the penetration of cocktail culture in homes. Clearly, was also helped by the comp base.
I think overall the outperformance is driven by consumer pull and consumption. Looking at the remainder of 2021 and our underlying performance, we're quite positive on our brand momentum. We expect it to continue, and it will be fueled by sustained marketing initiatives, which will accelerate in the aperitif peak season, so in Q3. We will make the most out of the progressive full reopening of the on-premise channel, as well as home consumption opportunities across our various markets. At the same time, we're living on this planet, and we know that some uncertainty remains, and particularly in connection with the achievement of widespread vaccination in some key countries that has slowed down. There's a spread of new variants, and that can impact the overall evolution of the global economic environment.
We're quite vigilant, we'll remain agile, and we'll make the most out of the situation. Looking at Forex and perimeter, we and their effect on E adjusted EBIT, on Forex, our currency outlook is not We're not expecting it to materially worsen in the second half of the year. On the perimeter also, we will remain broadly unchanged on a full-year basis, if we think about termination of agency brands, et cetera. This is it on our side, and I see there are already quite a few people in the queue ready to ask their questions, and we're all ears, and hopefully we'll give you satisfactory answers.
The first question is from Andrea Pistacchi with Bank of America. Please go ahead.
Hi. Hi, Bob Kunze-Concewitz. Hi, Paolo. Congratulations for these results. I have three questions, please. The first one is on the U.S. There's a lot of moving parts in this very strong performance in Q1 and H1 on trade, obviously reopening, the resilience of the off-trade, et cetera, the comps. Could you talk about maybe where you are, what the situation is with the distributor stock levels? Last year you said that last year you lost EUR 28 million of sales in the U.S., and you thought this probably wouldn't come back, whether that has changed and some of this is coming back, please. The second question is on emerging markets. A lot of your emerging markets have been, in the past two or three quarters, remarkably strong.
Brazil, Russia are something like 50%, 60% ahead of 2019, I think, in H1. Jamaica strong too. What do you think underpins really lies behind this, and how sustainable is this performance in emerging markets? Maybe the third one is for Paolo on logistics costs. Some of your peers, some of the other consumer companies are flagging logistics cost as quite a headwind to margins this year. You didn't mention it in your prepared remarks. I was wondering what you're seeing on logistics costs, whether this could affect your margin and maybe how much this could be a headwind to your margins this year.
Thank you, Andrea. I'll take the first two questions. As I mentioned in the presentation, you know, we haven't seen any material restocking across any of our markets. Now, particularly in the U.S., our largest market, obviously there are a lot of moving parts, as you said. If you look at our distributor stock levels, I mean, in terms of days, they have remained unchanged. I mean, we came down in days significantly last year, we're committed to maintain those stock days. Clearly on an absolute level as, you know, the business performs well, the stocks might increase.
I mean, the one or two brands where we've done slight adjustments, but again it doesn't move the overall needle, is on imports, due to obviously, you know, the constraints you see in logistics and the ability of finding containers to cross the ocean. Net in net, we haven't seen any, and we are not looking at having any major restocking in the U.S. In emerging markets, it's a combination of two things or three things. I mean, I think one is also in Q2, you know, as the weather improved, you know, people emerging out of lockdowns, have been wanting to live their lives again, and there's revenge conviviality in those markets as well.
At the same time though, we, you know, we've been working very hard at the fundamentals of our business, particularly in South America and the changes which we're making both from a marketing as well as a management, marketing, and route to market standpoint are starting to be felt. In Jamaica, it's a combination of having, you know, winning brands, with the pandemic overall pretty much in control and tourists starting to arrive, albeit on a low level.
Yeah, Andrea, on the logistic cost headwinds and more in general on input cost, shed a little bit of light on how we see it. We need to separate this year from next year. With regards to this year, more in general, input cost is not an issue to us. We have a very strong gross margin expansion which we expect potentially is destined to continue in the second half of the year. Logistic and availability of 3PL is more a bottleneck to make sure that shipments regularly flow through the channels, distributors, importers, and our own in-market companies.
You know, nothing that we want to signal, you know, we're clearly managing it, and we do not envisage, you know, any issue there. Clearly, you know, the perspective, you know, going forward, is less benign. You know, there is, you know, clearly, evident signs. There are evident signs of increase of raw materials. If you take, you know, as a benchmark, you know, last year, 2020, you know, cost of goods sold in our case accounted for roughly 42% of net sales with gross margin at 58%. We need to break down these, this, you know, 42% cost of goods sold into the, you know, four buckets. Typically, you have, you know, packaging and raw material that in our case accounted for 50% of net sales.
You have production that is, you know, at 27%, logistics that is about 12%, and, you know, the rest 11% is, you know, agency brands that we buy and then, and then sell into the marketplace. If you look at packaging and raw material, this is the area where, you know, we're noticing an increase in input costs and some pressure. You have packaging that in our case accounts for roughly 24%, where the biggest component is glass, 1%. Contrary to soft drink manufacturers and beer players, it's cans, it's just 1% in our case. We're not, you know, much exposed to aluminum, you know, cost increase as we, We're not particularly fan of, you know, bottled dark spirits as others do.
Then you have raw materials that account for 20%, 26%. So, you know, looking at inflation on raw material and packaging material, we expect that overall for next year on a per liter per bottle basis, including some procurement productivity programs that we have in place, like, you know, central buying of product related materials, we believe next year the pressure overall will be at about 3% of overall costs. You know, quite a different perspective vis-a-vis, you know, a year ago. That said, you know, we believe we have a number of offset which put us in a very strong position. First and foremost is, you know, price mix. You know, we've started taking price this year.
We'll do that more aggressively next year. We believe we have, you know, quite a strong brand momentum. We primarily rely on proprietary brand, not directly competing neck to neck on promos. You know, with the very low price sensitivity, we feel quite good at, you know, raising price to offset input cost pressure. Secondly, we have the possibility of seeing some upside from the agave cost that, you know, it's a big piece of it because it's, you know, it's worth this year a profit opportunity of €40 million. You know, we're start seeing signs of positive signs on the agave market, so we feel pretty confident that next year we'll benefit from some, you know, material tailwinds on agave.
Thirdly, there is the operational leverage on fixed production cost. Production costs are 27% of net sales within which the fixed component is at 25%. Given the quite, you know, robust top line growth trajectory that we're experiencing and that we expect to continue in coming months and quarters, even there on the production operational leverage, there is quite a strong offset that we can enjoy. Netting net, you know, we're not, you know, concerned about the inflation effect on raw and packaging materials and also on logistics, you know, costs. This is something we can clearly manage.
If anything, we see, you know, costs as a percentage of sales as an opportunity with upside on gross margin on sales going forward both this year and next year as well.
Thanks. Just to clarify one of those numbers you said, Paolo, I think you said that raw materials and packaging combined should drive around 3% of COGS inflation on a per liter basis. However, you've got various factors that can offset this.
Yes. Correct. 3% of the 42% to be Yeah.
Oh, okay.
Of the whole thing. Yeah.
Thank you.
Yeah.
The next question is from Simon Hales with Citi. Please go ahead.
Thank you. Good afternoon, Bob, Paolo. Congratulations on that 20-year anniversary. Three for me as well, please. Firstly, you called out for stock replenishment in CEMEA in Q2 as the on-premise was reopening. Are you able to sort of quantify how big a benefit that was in the quarter? Is there any other regions where that was material? Perhaps linked to that, Bob, you just said you were happy with stock levels in the U.S. at the end of the half year. Does that hold true for stock levels, you know, in all of your major markets globally? That's the kind of first question. Secondly, you know, you obviously delivered, you know, good levels of profitability in the first half, you know, ahead of market expectations.
Are there areas where you expect to redeploy some of perhaps some of that excess profit through the second half of the year? Maybe specifically your thought process around A&P spend in H2. I noticed obviously that in CEMEA, A&P spend was running below sales growth in the first half. Should we expect that to catch up? Just finally, then it's a quick one for you, Bob. I mean, a couple of quarters ago, you talked about the fact that you thought maybe between 10% and 25% of on-premise outlets might never reopen post-COVID-19. Is that still the sort of range of numbers you're expecting or are things a little bit better than you feared?
Thank you, Simon. I'll start with the last one. I think we were quite pessimistic when we came out with the 10% to 25% on-premise closure rate. I mean, particularly in the U.S., because a lot are reopening. Even in Europe, what we're seeing is that the number is much lower because obviously all of the support which came from governments has really kept them afloat. Particularly what they've done is, as you know, is allowed outlets to operate outdoors while taking over sidewalks, and that has given them quite a bit of oxygen. Now, they're not back in rude health, but at least they do have oxygen. Moving on to your question on stocks overall.
I mean, overall, last year, we really came down significantly with stocks, across markets and brands, and channels. We are still continuing at low stock levels, which means that any surge in demand from consumers and on-premise partners has an immediate effect on our supply chain. I must say they've done really miracles in this first half to respond to the increases on a weekly basis of forecast. Overall, as I said earlier, you know, there's no material restocking effect. There's some slight phasing in Italy, but I mean, if I look at how our Italian business is actually trading in the month of July, there's absolutely no effect from the slight replenishment at the end of June. It's all demand driven. It's all pull driven.
You know, we will Our aim is to remain at low levels and, you know, ensure that from a supply chain standpoint, we're able to satisfy that demand and be very active and agile.
Also, given the constraint on 3PL availability, you know, managing shipment is somehow, you know, living in a constrained environment. You know, even if we, you know, somehow wanted to leave stocks, it wouldn't be possible realistically. Talking to the, you know, second part of the year, how we see, you know, H2, you know, clearly, you know, let's start from top line. Clearly, you know, in the first half, in second quarter, there was a clear build of about EUR 100 million on net sales. You know, we believe this is definitely under our belts, and this is something that will flow through to, you know, full-year, you know, net sales.
With regards to gross profit, as said, the current positive momentum in terms of gross profit on sales, with gross margin accretion of 130 basis in first half, is destined to continue in the second part of the year. We feel pretty confident about that. With regards to A&P on sales, clearly, we know we manage A&P on sales with a margin neutral stance so that's the way to go with some flex of 20, 25 basis points on sale. Depending on top line performance and gross margin expansion, we will maneuver the A&P to maximize potential going forward.
There is the SG&A line, which, you know, given, you know, the very robust, you know, top line performance can, you know, going forward, generate some slight accretive effect due to operational leverage in SG&A. With regards to phasing of the first and second A&P and SG&A, clearly, you know, we see A&P on sales heavier in the third quarter, where we still have, you know, to support peak season for the aperitifs. Whilst we see on the SG&A, you know, the toughest comp in Q4, when last year, basically we had, you know, a very, you know, low level of SG&A due to the fact that basically we've cut down back on STIs, MTIs, bonuses and whatever. You know, the comp clearly this year is tougher.
As you know, given the robust performance, you know, we're in positive territory on bonuses.
you know, overall, you know, we feel pretty confident that this year we will deliver a very strong result, given the fact that, also, you know, Q3, you know, started pretty nicely. you know, we're in a good position. We feel we're in a good position at the moment.
Brilliant. Great. Thank you.
The next question is from Trevor Stirling with Bernstein. Please go ahead.
Hello, Bob and Paolo. Three from my side too, please. First one, Bob, it's probably too early to say we're post-COVID, but certainly as we look forward, where do you think the big residual drags are today? You highlighted GTR, probably indoor hospitality in Italy. Are there any other pockets of the world where you still see some opportunity for a COVID recovery? Second question is, if you look at the U.S., where I suppose we're almost completely open bar in the on-trade, you know, certainly states like Florida and Texas more than fully open, any learnings from that reopening process that you'd like to highlight?
The final one, I think a quarter or two ago, Bob, you said that one of the impact of the COVID crisis had been that maybe some potential M&A partners were more inclined to sell as a result of the experience with COVID. With the recovery in place, are those people now having sort of cold feet and going back into their shells?
Yeah. Thanks, Trevor. Hi. Well, with regards for opportunities for recovery, clearly there's some markets in South America which are still quite subdued, and they're closed. The same can be said for most of non-Pacific Asia. We still have quite a few lockdowns across Asia, which isn't helping us as we're more on-premise skewed in those markets. China is the exception, but the rest of Asia is pretty much locked down. The same can be said on an off and on basis in Africa, particularly in South Africa. In addition to GTR, those would be the 3 geographic areas which I would add to the list.
Learning from the reopenings is, you know, it's clear to see that as soon as markets reopen, consumers really go out there with a revenge mentality. They want to go out, they want to celebrate, they want to see their friends, and they're going back to their established cocktails. We're seeing that across the range. Overall, when you look particularly in the U.S., I mean, the premiumization trend is very, very solid, and the acceleration in tequila, high-end, you know, dark spirits, be it American whiskey or rum, is happening as we speak. With regards to M&A, I mean, I think some people got scared about what they saw, but they know that it can happen again.
I don't think that the reopenings have really changed fundamentally outlooks. I think overall, you know, there's some deep consideration as to what, you know, the future will bring and what is the best choices for individual companies. We'll have to wait and see what the end result is. I don't think that necessarily the reopenings have given, you know, have changed, let's say, or eliminated the questions which were planted by the first lockdown.
Thank you very much, Bob.
The next question is from Edward Mundy with Jefferies. Please go ahead.
Afternoon, Bob, Paolo. Three questions from me as well, please. First is around sustained home consumption trends versus the gradual on-trade reopening. On the home consumption element, as spend gets rebalanced between the on and the off-trade, are you seeing any reversal of the premiumization trend that we've seen in the off-trade over the last, you know, 12, 18 months? The second question, you know, going back to slide seven, where you showed a just very, very strong growth, not just versus last year, but versus H1 2019 as well. If we drill into your biggest market, the U.S., I think, you know, one of the learnings is you're seeing this, you know, longer lasting benefit from the consumer reaction to lockdowns, you know, around making cocktails at home.
As we think about 2022, do you think we just grow off the higher base, you know, at a more normalized level, say 4%-5% in terms of the industry? Do you think there is scope to grow off the higher base at a much faster level, given these habits formed, you know, during COVID, such as, you know, home mixology, as well as premiumization? The third question is really around your tie-up with Moët Hennessy. I appreciate it's early days, is there optionality for a broader global collaboration over time?
Now, with regards to the sustained home consumption trends, is there any reverse of premiumization? We're not seeing it. I mean, we're seeing the pre-premiumization continuing, particularly, you know, in hot categories such as tequila and rum, American whiskey. No change there. Now, with regards to the U.S., looking at, you know, the base versus 19, clearly, you know, all the consumption indicators show that there's been a significant increase of cocktail culture and penetration in home consumption. I mean, if you look at our data, we're up in strong double digits across all of our brands. Question mark is what will 2022 give?
I think it will probably mean that we consolidate that acquired, overall increase in penetration and build on that, but probably at a more, normalized basis. I'm afraid I didn't make a note of your third question.
no, MH and the e-commerce in Europe.
Okay.
What is the opportunity of a sort of longer term for more global tie-up?
Look, I mean, you know, we're still dating and, you know, let's see how it goes. I mean, our agreement is to have a JV, which is focused on Europe. There's plenty to do in a very fragmented marketplace. Before we start, you know, even building that, we need to go through the usual moves, antitrust, as well as bring this to a closing. That's what we're focused on. Meanwhile, you know, in Tannico, they're busy integrating Ventealapropriété, which is the first step of the consolidation on a European basis. It's exciting. There's a great management team there at Tannico, which with the support of MH and ourselves, I think has great opportunities ahead.
Great. Thanks much.
The next question is from Olivier Nicolai with Goldman Sachs. Please go ahead.
Hi, good afternoon, Bob, Paolo. I have three questions from my side as well. First, on Espolòn, the demand has been very strong. You mentioned that there's a price increase in July. Can you give us a bit more details on the magnitude of this price increase? Secondly, to stay on Espolòn, if you go back to the slide, I think it was slide 38 in your presentation. I managed to find the price of the bottle on the right, but actually I was interested to know what was the price of the bottle of Espolón Cristalino. If you think that this Cristalino brand expansion can essentially participate in the super premium tequila segment, or do you still look to add new premium tequila brands to your portfolio?
Just lastly, since you mentioned the very impressive 20 years track record that has been built on organic growth, but also on a very active role in M&A. Just thinking over the next, you know, maybe 20 years, if you think, or at least in the future, if you think that M&A will play still a big role in Campari's growth, or should we expect just perhaps small bolt-on deals or perhaps JV announcements like the one you announced with Moët Hennessy? Thank you.
Sure. On the Espolón price increase, as I said in the presentation, we took two price points. That means $2 on the large size, on the liter 75, and one price point on the 75 and the liter. With regards to pricing on Cristalino, yes, it will be priced in line with our super premium brands, because not only is it an añejo, but it goes through other processes, and the packaging is very, very premium. By the way, it's an excellent liquid. That doesn't exclude the fact that, you know, we continue to look at the super premium and up part of tequila as an area of opportunity.
You know, between M&A potentially, as well as, you know, some of the things developing to have internally, this is certainly an area which we will cater to in the years to come. No doubts about that. Now, with regards to, you know, will M&A play a role in the next 20 years? I would say absolutely. I mean, the whole move to the Netherlands from a, you know, corporate registry standpoint is actually based on that to create a lot more flexibility in our capital structure. We've said that we're doing it for the long term. It doesn't mean that on day one, you know, there's a transformational deal, but we like to prepare everything for when the opportunity becomes concrete.
Thank you very much.
Thank you.
The next question is from Laurence Whyatt with Barclays. Please go ahead.
Good afternoon. Thanks very much for the questions. Firstly, you mentioned that next year, you expect the agave prices to be beneficial to your margins. I was wondering if you could quantify, just sort of in terms of percentage moves, where you think agave price has moved over the past few months and sort of what you're expecting to see for next year. Secondly, we've seen a dramatic increase in both at-home consumption, but also the recovery of the on-trade suggests a dramatic improvement in the on-trade consumption as well. This looks like overall, volume consumption by consumers has also dramatically increased. Do you see that as a sustainable trend, or, is this a increase in per capita consumption, or is this a more people coming to different alcoholic products?
How do you see that evolving as maybe we get through the revenge spending and consumption trends? Finally, on your upgrade from MSCI to A grade on your environmental credentials, what has driven that change? Is that something you've done internally, something you've changed internally this year, or is this a greater engagement with these agencies? Thank you very much.
Yeah. I'll let Paolo answer the first question, and then I'll take the other two.
Well, on the agave price, we've said quite positive vis-a-vis the prospects for 2022 as well as for 2023 when, you know, a quite a significant part of in-house agave production will be available, you know, at fixed, you know, internal cost of production costs. You know, with regards to price, actually, we've just started debating and discussing and negotiating with suppliers the prices for next year. You know, we will start, you know, becoming more concrete from September to December. We're not now in a position of giving, you know, a full target. You know, directionally, we can say that we're in a good spot for next year.
You know, and then in 2023, you know, we will get, you know, more, more upside from internal production.
With regards to your second question, I think there are really two trends which are summing themselves up. I mean, one trend is, you know, with as a reaction to the pandemic, you know, people really do want to make the most out of their free time when they're able to meet friends, be it at their own homes or outside of home. I think that this revenge conviviality is here to stay for quite a while. I mean, I don't wanna be as presumptuous and say that it's gonna be exactly like the Roaring Twenties after the First World War and the Spanish flu, but, you know, I wouldn't be surprised if something like that happens. At least that is the sensation I get from whatever I'm reading and people I'm talking to.
Yeah, you know, it's carpe diem, let's make the most out of life. We've taken too many things for granted. The other thing is that if you look at it from a category standpoint, is that within, you know, the setting of conviviality, spirit through cocktail culture are taking market share from beer as well as from wine. It's a combination of those which are making for quite robust demand for our products. We believe in Campari that it is here to stay for quite a while. History will then show whether we are right or wrong. With regards to the MSCI upgrade, I mean, it is linked to increased disclosure, particularly on target setting, which we've done this year.
We're also, you know, this is an area where we've developed an internal organization which is clearly engaging with the relevant institutions out there, and making sure that internally, we all march to the same drum beat and are there to hit the KPIs.
That's all really clear. Thank you very much.
The next question is from Vincent Ryan with J.P. Morgan. Please go ahead.
Good afternoon, Bob, Paolo. Thanks for the chance to ask some questions. Two from me, please. Firstly, just in terms of the relaunch of the SKYY Vodka brand, how I appreciate you said that the June was more the sort of sell-in, and then July has been the sort of big push in terms of e-commerce and the activations. I wonder if you could give us any sense of how you think that relaunch has gone so far in the U.S. and any sort of targets, what you might be looking out for in terms of market share within the vodka segment. I appreciate just with all this calls ongoing, the Nielsen data for a big chunk of July has come out for the U.S., and it still seems the brand is quite weak, at least year-on-year.
Any color there would be quite welcome. Secondly, I think the just appreciating the sort of the on versus off trade dynamics and some of it's actually talked about before. Specifically within the RTD or the Ready to Enjoy portfolio, note that Australia slowed somewhat in Q2, and given that's quite large RTD market for you in particular. Are you seeing any as the on-trade is reopen, are you seeing maybe a switch away from the RTD part of the portfolio? How does that affect your thinking when it comes to launch of the Aperol Ready to Enjoy product across your key markets? Thank you.
I'll take that last question first. I mean, we're seeing quite a bit of consumer pull behind our Ready to Enjoy propositions, be it, you know, the SKYY Blue RTD in Mexico and Japan, whether it's the Wild Turkey RTDs in Australia or Campari Soda and Aperol Spritz in Europe. Depending on the market, there are movements from one month to the next, depending again on the opening and closure of the on-premise. I mean, currently in Australia, the on-premise is mostly closed, and we're seeing very strong growth again back on the RTD. We're gonna have this volatility going forward.
Having said that, if you look at the secular trends, they're all quite positive. With regards to the relaunch of SKYY, I'm gonna disappoint you here because, I mean, it is really way too early to come to any conclusions. I mean, every single element of the brand assets, as well as the new liquid were thoroughly tested quantitatively in many markets, and they've tested very, very well, so we feel very good about the proposition. You know, a brand like SKYY in a category like vodka will take quite a bit of time to be turned around. I mean, this is a supertanker. You know, build momentum within 2 or 3 weeks of the start of a campaign. We're gonna stick to this because we believe in it.
I think we'll have a fairer read probably in a year or two years down the line.
Very clear. Thank you.
The next question is from Mitch Collett with Deutsche Bank. Please go ahead.
Hi, Bob. Hi, Paolo. Just a couple of quick ones. A follow-up on Aperol Spritz Ready to Enjoy. Can you just comment on how many markets you're in now? Can you also maybe give us a bit of color on how the Ready to Enjoy product affects Aperol as a core brand? Is it in any way cannibalistic or perhaps even accretive to overall Aperol? I appreciate Crodino is a very small brand, but can you maybe comment on your rollout plan for that to take advantage of non-alcoholic drinks? Maybe feels a bit harsh to pick out the one brand that has gone backwards versus 2019. Given it's been successful in Germany and Switzerland, can you perhaps comment on the decline that Crodino is seeing overall relative to 2019?
I guess that's because Italy remains under pressure. Thanks.
Look, Crodino, now international markets account for about 18% of the total on a volume basis or a net sales basis. This is quite a development coming from basically zero a few years ago. We've introduced the brand in Central Europe, Germany, Austria, Switzerland, Benelux. I think it's available now on Amazon in the U.K., and we'll be expanding it gradually across all core markets. We see a great opportunity there. There's a big difference between the brand visual identity and the size of Crodino in international markets versus Italy. I mean, it's a much more premium brand in a larger pack, and it has a different support, or let's say, marketing support behind it. In Italy, it's a very established brand.
We're looking at its fundamentals, this is something we're gonna tackle very, very soon. We'd expect it to The same way as what we did with Campari Soda for it to take probably a year or so, but then start responding to what we do to it. There's no question that we've set a standard for the brand internationally, and now we need to reflect that into the Italian proposition. Aperol Ready to Enjoy, I mean, it's currently only in 10 markets. When I say 10 markets, one of them is actually a test market in New York State in the U.S. We've just started there too about a month ago. Really, we're in nine markets. It represents about 5% of the total mother brand.
Again, it's coming from nowhere. What we're seeing in all the markets is that it is additional volumes because it really is focused in the off-premise, in convenience stores, and particularly warmly embraced by people who either live on their own or couples who don't necessarily feel like they want to open a whole bottle of Prosecco when fixing themselves drinks. You know, large gatherings, which is the heart and the core of Aperol, continue to be satisfied with the perfect serve with the full-size product and full-size Prosecco. You see that a case in point, I mean, in Germany, we grew by 17% despite the significant or very successful introduction of the Aperol Spritz Ready to Enjoy.
We've also had it in Italy now, I think, five to six years, and we've seen the mother brand continue growing double-digit on a regular basis. Again, here, you know, we've kept it very pristine in the off-premise and targeting it to special, and particular occasions.
Got it. Thank you.
Thank you.
The next question is from Paola Carboni with Equita SIM. Please go ahead.
Yes. Hi. Hello, everybody. Ciao, Paolo and ciao, Bob. I have a few questions. The first one, I appreciate your comment on gross margin marketing and selling, which were referring to the comparison on 2020. I don't know if you can give us a sense of how we should expect these dynamics to be compared to 2019. In particular, if you believe your confidence, let's say, on gross margin trend, is enough to offset the drop we saw in 2020. Second question is about your long-term growth. We have had already several questions on what could be a sustainable trend, in particular in the off-trade.
I was just curious to hear from you, let's say, kind of updated midterm target you used to envisage midterm organic revenue growth for Campari. In the past, we have already seen a bit more of that in past years. I'm wondering if you have probably now a higher guidance for as a sustainable growth for the group. A further point. Sorry, probably, I'm missing something. I would like you to come back on the point of restocking replenishment, which is a word you mentioned here and there in the presentation about in your answers. You have played down a bit this kind of dynamic. In particular, I was looking to the slide number six.
In effect, I understand you play down it because we see that compared to 2019, sellout is still quite ahead of shipments. I was just struggling to give the right importance, let's say, to the few times you mentioned replenishment or restocking during the presentation. I'm wondering whether maybe in that case you were referring to on-trade, whilst maybe this chart on page six is comparing sellout off trade with overall shipments, including on and off. I would like you to help me in understanding this chart and your comments on restocking. Really last point, probably also a bit more boring.
You mentioned the positive impact from U.S. tariff suspension. Could you quantify it for H1? How much could this help also in H2 should the situation remain like it is today? Thanks.
Paolo, if you want to let me take the two middle questions. That I start studying and Paolo is trying to get us some oxygen. Yeah, exactly.
Okay.
With regards to guidance, I mean, look, you know, within this environment, with the pandemic still being true, et cetera, economies going up and down, we're not gonna revise any guidance, Paola. I mean, you know us, we'll always sell as many cases as we can. Clearly, if you look at the fundamentals of the business, what we've been doing for the past five, six years has significantly strengthened the fundamentals of the business, our brands, our route to market, the organizations, our capabilities. If this were a benignly normal world without, you know, external shocks, yes, we definitely would be doing better than what we've done historically. This is not the time to, you know, pick out a number from a hat and give you that number further.
We're too serious to do that. With regards to the stock replenishment, you know, I was very clear in saying that the stock replenishment has not been material. I mean, we're still continuing with low stocks across the board, brands and markets. We aim to maintain that situation, putting more pressure on the supply chain. You know, on a selective basis, on a brand A or brand B, if it's got to travel 8,000 miles to go somewhere, we might have increased a little bit the stocks, but I mean, in the grand scheme of things, it hasn't really moved the needles, and that's where we'll stay.
On the, on the other two questions, Paola, if I, if I get, you know, the first question correctly, you know, if you look at 2021 versus 2019, not versus 2020, where, you know, I've described how we see, you know, gross margin, A&P, SG&A moving in the second part of the year. You know, the question is, would you be in a position of recovering entirely the gross margin, you know, dilution you suffered in 2020 versus 2019? You know, if you go back one year, you know, we've lost last year versus 2019, 280 basis point of gross margin. If I remember it well, we've lost 380 basis point at EBIT level. You know, in June, we've recovered 130 basis point of gross margin.
As said, you know, we're expecting, you know, the trend to continue in the second part of the year, but we will not be, you know, in a position of, you know, recovering the 280 basis point gross margin shortfall that we suffered last year. It is clearly due to, you know, the agave issue, which, you know, over, you know, the two-year period accounted for 180 basis point gross margin dilution. You know, as said, you know, we need to be a little bit patient and wait for 2022 to see, you know, the full catch-up.
That said, you know, we're quite positive because aside of gross margin expansion that is there and will continue in coming years, we also now rely on, on some very interesting operational leverage, which give us, you know, a little bit of flex on A&P spend, on structural cost. This is very good. The objective is clearly to fill the gap that, you know, pandemic created in 2020 versus 2019. We will not be in a position of filling entirely the gap this year. Even at EBIT level, you know, we're talking 280 basis points.
Okay, thanks. Just the last question on U.S.
Sorry. Yeah, the last question, I forgot. If the question is tariff impact overall is, you know, EUR 18 to EUR 19 million, of which we said, you know, 50% this year and 50% next year. In H1, we've registered EUR 2 million positive and, you know, the remainder will be, you know, accrued in second half, so, further EUR 7 million in H2.
Okay, thank you very much.
Okay.
Mr. Kunze-Concewitz, there are no more questions registered at this time.
All right. Thank you. Thank you all very much for joining us. We truly look forward to hosting as many of you as possible tomorrow at the Camparino. These have been a great 20 years. We look forward to even better 20 years in the years to come. Stay well. Enjoy your summer. Carpe diem, make the most out of it. Negronis and Aperol Spritzes do make life much more enjoyable. Thank you. Bye-bye.
See you soon. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.