Good evening, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the Campari Group 9 M onths 2024 results conference call. As a reminder, all participants are in 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 Paolo Marchesini, Chief Financial and Operating Officer and Interim co-CEO of Campari. On this call, there will be also Chiara Garavini presenting. I now hand you over to Mr. Marchesini. Please go ahead, sir.
Thank you for that. Good afternoon and good evening, everybody, and thank you for joining us today. Given the current circumstances today with me, we have Chiara, who will help me walk you through the presentation deck, which is, as you can see, quite thorough and long. But we'll do our best to keep it as short as possible to leave some room for the important Q&A session. In order to provide you with a comprehensive perspective of the many and important messages contained in the presentation, including the ones relating to the company reorganization and the cost containment program, we have prepared at the beginning an executive summary, which you have to consider as the fil rouge of the presentation.
So if you could follow me to page two of the deck, you see the three conceptual buckets of current year performance, key company initiatives, and outlook for year 2025 and beyond. Why continue to outperform the industry in key brand market combinations? Mainly thanks to aperitifs and tequila, we have to say. Overall, nine-month trends reflect a challenging backdrop due to macroeconomic and sectoral and climatic factors, with a peak in the third quarter of the year. Looking into the rest of the year, cyclical macro headwinds are expected to persist. Full profitability will also reflect the impact of fixed structure costs and committed business investments, which would generate a drift in SG&A pattern in Q4 as it did in Q3.
To fully exploit the long-term potential of our diversified portfolio, which has increased a lot following the many acquisitions we finalized, with an increasing share of aged premium spirits, our operating model will evolve towards an organization that combines, on one end, four newly created houses of brands: two in Europe, aperitifs and cognac and champagne. And two in the U.S., tequila and whiskeys and rum on the other end, so on one end, we have the four newly created houses of brands, and on the other end, those houses of brands would leverage the existing three regions of Americas: EMEA and APAC. In addition, we are envisaging an acceleration of portfolio streamlining, which means disposals of tail brands, which will enable us to enhance focus on our key priorities, the brands sitting within the brand houses.
The combination of the above two initiatives, the change in the operating model and the streamlining of the portfolio, together with a significant cost containment program, which we will talk through in coming charts, will allow us to achieve a more efficient cost of doing business, which is critical to support the A&P investments. Now, looking into 2025 and beyond, as the impact of the above cyclical factors fades away, we expect to continue to achieve sector outperformance, which is quite clear. We will go through the outperformance by market, and particularly for Aperol, with a gradual return in the medium term to a mid- to high-single-digit organic growth in top line in a normalized macro environment. On the other end, the profitability will be supported by accretion on gross margin that was there and will resume over time, creation of operating leverage.
Part of it is also the cost containment program and increased efficiency in brand building spend, which is one of the many outcomes of the change in the operating model. Now, if you follow me to the following page three, in nine-months, our organic net sales grew 2.1%, driven by global priority brands, primarily in the Americas and in EMEA, notwithstanding many negative impacts, namely very poor weather conditions in spring and September, some pressure on disposable income from rising inflation, and a reduced confidence both on consumer and distributor's end. In the third quarter, the organic net sales grew by 1.4%, reflecting the soft market context despite the outperformance versus the industry in key brand market combinations.
Now, if you look at the three regions, in the Americas, we see, particularly in the U.S., persisting challenges in selected categories, and we'll go through those. A n extraordinary impact of a hurricane in Jamaica in Q3, leading to supply shortages of rum portfolio, both for the local Jamaican market as well as for the international markets. Now, if we carve out the impact of supply shortages, our net sales would be flattish in Q3. And those negative factors more than offset the ongoing growth in our Aperitifs portfolio and on Espolòn. In Europe, particularly in on-premise key markets such as Italy, the poor weather conditions at the beginning of spring-summer as well as in September, coupled with the already mentioned soft and unexpected consumption, led to below-expectation reorders in the back end of the third quarter in the months of September.
In APAC, net sales have been impacted by persisting challenges in macro, particularly in China and Australia, and also adverse trading conditions. The EBIT organically declined in nine-months by 4.2%, with a margin of 21.9%, down 140 basis points versus a year ago. In the third quarter, the organic decline accounted for 18.2% and was mainly impacted by inefficient absorption of fixed costs, particularly both production as well as SG&A. In gross margin, in nine-months, we had a slightly dilutive effect of 10 basis points, which was entirely due to negative mix effect from the impact of poor weather and macro impacting the high-margin Aperitifs in Europe, in EMEA. The positive pricing in the first nine-months was fully offset by COGS increase. And as said, both pricing and COGS increase were mainly skewed in the first quarter.
Of course, the negative impact of lower production volumes drove lack of absorption of the production costs. A&P, with ongoing focus on brand building during summer, despite the impact of lower activations due to poor weather, led to A&P on sales at 16% versus 15.9% in prior year. The SG&A has been impacted by the continuation of planned investments, including route-to-market enhancements in a softer market context with muted sales performance, leading to lower absorption of fixed costs. Pre-tax profit of EUR 446.3 million was down by 5.6% on an adjusted basis, on a reported basis, down 6.1%. Now, if you turn the page and we go to page four, we see the performance of our regions and our brands in one-pager. Starting from Americas, which accounts for 45% of our global revenues, vis-à-vis pre-pandemic year 2019, CAGR has been up double-digit at 10%.
In nine-months, 2024, we're growing by 5% over a comp of last year of 7%. So quite a solid performance. In EMEA, which accounts for 48% of our revenues, since pre-pandemic, the CAGR accounted again double-digit for 11%. In the first nine-months, we're up 1%, but the comp is extremely tough at 12%. In APAC, again, double-digit CAGR, 11%. In nine-months of 2024, we're down 10%, but the comp is even more challenging at 27% in nine-months 2023. Now, moving on to brands that we cluster into global priorities, regional priorities, and local priorities. Global priorities were up 68%, so account for 68% of our total revenues. They were up over the five-year horizon, 13% in CAGR. In nine-months, they are up 3% over and above a comp of 13% of last year.
Regional priorities that are now a smaller portion of the pie at 17%. They were up 8% on a CER basis, a decline of 2% in the first nine-months of this year versus an increase of 3% of last year. And local priorities that now account for 6% of total revenues, they were up mid-single digit at 6% on a five-year horizon. They are now down 1%, but with high- single-digit comp base of 7% in nine-months 2023. If we move on to the Americas, 45% of our revenues, as said, 5% in nine-months, organic growth 1% in Q3. Starting from the biggest market, the U.S., 28% of our revenues, CAGR at 10% since 2019. Flat performance in Q3, 0%, resulting in 2% growth in nine-months in a quite subdued market context.
The performance in the third quarter was impacted by persisting challenges on three fronts: SKYY, some softness in Wild Turkey, and Grand Marnier that offset the continuing outperformance on our three star performers: Espolòn, Aperol, and Campari. Worth noting that Espolòn in the first nine-months of this year is up 18% over and beyond a comp of 40% of last year. Aperol is up in the U.S. 7% over and beyond a comp of 51% of last year. And Campari, on the back of the Negroni Week activation in Q3, is up 16%. Jamaica, 5% of our revenues, 10% CAGR since 2019. Q3 performance was badly impacted by the hurricane in July, which led to product availability constraints as well as a softer local operating environment.
The cumulative performance supported by price increases, both in rums and Campari, was enough to offset the negative impact on volumes and, in doing so, achieving + 1% in nine-months. Other markets in the Americas region, they, in total, account 12% of group revenues. They've been up double-digit 12% since 2019. Ongoing solid performance, mainly driven by double-digit growth in Brazil, where Campari is growing quite quickly, and local Brazilian brands quite on a good trajectory. In Argentina, the positive trend we started in Q2 accelerated further in Q3. You know, in Q1, we had a poor performance. There, also in Canada, we have quite solid growth, mainly driven by both Aperol and Espolòn, like in the U.S. Now, a little bit of perspective on the external sellout, that I think is important for the largest market of the Americas, the U.S.
We can see that the read across of this chart is that the group is outperforming the sector, particularly in the on-premise channel, which is strategic to our brand building model, and that is achieved while maintaining a very high pricing discipline. Now, if you look at the three channels, the Nielsen Off and NABCA and Nielsen On, the value, which, of course, as you know, comprises both volume and price mix, performance for Campari is 3% against a sector that is negative by 1%. We have a beat-to-sector performance of 4% in the off-trade. In NABCA, same 4%. In Nielsen On, we're up 1% against the market that is declining 6%. A delta of 7%. Of course, on the back of reduced disposable income and reduced consumer confidence, among the two channels off and on is the one that is currently suffering the most.
If you look at price mix trajectory, talking to our pricing discipline, in nine-months, we're up with our portfolio 3%. Market is up 2%, which means that we're growing prices 50% more than market. Same in APAC, while we're on par with market in on-trade. Now, if you look at still the U.S. market, if you follow me to page seven, this time around, not by channel, but by brand, you'll see the read across is solid ongoing performance in key accelerator brands, i.e., Aperol and APAC and Espolòn, which was partly offset by challenging trends in other categories, and we'll go through that. Now, if we start with Espolòn, Espolòn, we separate for each and any brand shipments from sell-out performance, and within sell-out, you see the three channels, consistent with the prior chart.
Shipments in the first nine-months have been up 18% against a very high base of 40%. If you look to the right-hand side, there is a significant outperformance in sell-out. So in on-premise, Espolòn is up 23% versus 8% of Tequila. So a delta of 15%. In NABCA, up 27% versus market 7%, delta of 20%. And on-prem, again, we're up 13% versus a negative on-prem performance of Tequila of 2%. So a delta of 15%. Of course, the Espolòn volumes are mainly increasing volume. Sorry, the Espolòn performance is mainly driven by volume performance. But also on price mix, the brand is performing quite nicely. If you take the third quarter in isolation, the price mix on Espolòn is a 3% versus a 2% of the category. So we're performing better than the category. If we take Aperol, same picture.
The shipments in nine-months are up 7%, but against a very high comp base of 51%. If you look at the sellout data, again, very positive trends with strong outperformance in key strategic on-premise channel. And actually, as you can see, in on-trade, we're beating the market by 17%. We're up 15% versus -2%. In NABCA, which contains On, we're up 17% versus a positive 1% of the market. So a delta of 16. But also in Off, which is not the primary driver of our Aperol brand development strategy, we're still up 10% versus the market is up 1%. Wild Turkey, in bourbon category, shipments are negative, a -6%. And that trend is impacted by soft category dynamics.
The overall Wild Turkey franchise also has been negatively impacted by temporary shortages on Russell's Reserve, which anyway now represents 17% of the Wild Turkey portfolio. Worth signaling that Russell's Reserve is a brand that is extremely successful. Since the pre-pandemic, the brand grew two times in volumes and four times in value. A brand that last year, sorry, this year, we managed to reposition at about $55 per bottle, taking a 5-10 price points increase this year in a very challenging market. This is why volumes seem to be softer than the category. On pricing, price mix is clearly in the context of increasing and intensifying competition in Bourbon, we're doing quite well. On Grand Marnier, the shipment grew in nine-months 10% off a low comparison base of a -24% due to the fact that we're cycling through last year's destocking of Grand Marnier.
The sell-out is marginally below category trends, and that was entirely driven by volume, as the price mix on Grand Marnier in the first nine-months is pretty flat. Clearly, we've taken actions to improve the performance in coming quarters with a focused A&P approach, including the partnership with the 2 Chainz. Of course, if you look at the trading backdrop, we're noticing in the sector increasing and intensifying pricing pressure from competition. If you look at SKYY, the nine-month results are -13%, which are below the sell-out trend and continues to be under pressure, the brand in line with other major players in the category. In a category, and in its particular needs off-premise channel. Going forward, the gameplay is to stabilize volumes via limited A&P investments and focus on innovation.
If we move on to page eight, EMEA, which I said is 48% of group revenues in nine-months, is up 1% with a small decline of 2% in Q3. Starting from Italy, 16% of revenues. Still, in a very large market since 2019, we've delivered 7% CAGR. The third quarter has been impacted by significantly, as said before, below expectations, reorders in the back end of the quarter with the impact of very adverse weather conditions, both at the start of the spring-summer season as well as in the month of September. Just to mention, in Milan, we had the highest rainfall in 250 years, particularly in the northern part of Italy, leading to lower wholesaler appetite to hold stock. So the wholesale channel that is critical in the Italian market is, at the moment, destocking. On the other hand, we've regularly checked the key brand health indicators, KPIs.
On our portfolio, particularly on the Aperitifs, the brands are extremely strong. The issue that we're seeing is more macro and related, and it's definitely not brand health related. In Germany, that is 9% of our revenues. Again, a double-digit CAGR since the pandemic, 13%. Third-quarter performance impacted by very high base, 39% in Q3 of last year due to the releasing of Aperol in the second quarter of 2023 following commercial disruption. Aperol remains in Germany the clear market leader with strong brand health. While this is the good news, the recent launch of Sarti Rosa is taking quite a good traction. It's now 6% of German revenues, and we're expanding the brand in neighboring markets. Austria, Switzerland, Belgium, and so forth. Clearly, it competes in the spirits category, but it addresses more female consumers who definitely prefer sweet products as opposed to bitter ones.
Moving on to France, 5% of our revenues. Very strong CAGR since pre-pandemic, 83%. A decline of 8% in Q3 in a very challenging operating environment, which is primarily impacting high promo intensity categories like whiskey and rum. And clearly, we're not following that avenue of deep discounting and increasing promo frequency. While the aperitif portfolio remains in France quite resilient. Now, in France, of course, we also distribute third-party brands. If we exclude the performance of agency brands, in nine-months, we would be flattish as opposed to - 3%. In the U.K., which is 3% of our revenues, the CAGR since pre-pandemic is 16%. And it's relatively stable across most of the portfolio in a quite challenging operating environment, as in France and in Italy, with negative impact due to weather, particularly in the second quarter.
The resilient performance of the rest of the portfolio has been offset by weakness in the Jamaican rum and in Magnum Tonic due to the supply constraints from Jamaica, which I've alluded to before. In other EMEA markets, that accounts for 15% of group revenues, we achieved in five years a very strong performance, 10% CAGR, with double-digit growth driven by, sorry, nine-months driven by positive contribution from most markets. In particular, GTR that is registered within EMEA as it's managed out of here, with nine-month performance of 23% up. Also other markets like Spain, Austria, as well as the recently established Greek in-market company that are all performing extremely well. I think the launch, the creation of our in-market company in Greece has been extremely successful.
We do see the acceleration of Aperol and Campari in this market that is crucial to developing the brands because it's not only local consumers, but it's also exposed to international tourists. The share of Greece on the total group is now at 1%. Quite satisfactory results. Now, if you look at what is happening outside of the group in sellout data, a few more data sets for European market, both channels as well as then markets. Europe off-trade, so in value, we've been up 4% in a market that is declining 1%. A delta performance of 5% with, again, a solid bid on price mix front, 3% versus 2% of the sector. Now, if you look at the performance in Europe, Index 100 being pre-pandemic, year 2019, the market in Europe overall grew by 11%. Index 111. We delivered a growth of 73%, 133 Index.
With the only exception in Italy, and I'll come to that in a second, in all other markets, we're clearly beating the reference market. In Italy, we actually are Index 117 versus a market of 125, but it is due to the fact that this is off-trade performance, and clearly, the brands, the aperitif brands in Italy, they are consumed in on-trade. That is where we're gaining market share and we're doing better and, or at least in line with the market. In Germany, we're Index 167 versus market 104. In France, 277, market 103. In the U.K., 299, market 113. In Spain, 253, market 130. The read across is that in markets where we've established our own in-market company recently, France, U.K., and Spain, we're performing way better than the market because we leverage the infrastructure investment to accelerate our portfolio, particularly the Aperitifs in Europe.
The second key takeaway of this chart is that if you look at the market share of Campari in Italy and Germany, where we have a fairly established business and where the penetration of Aperol and the aperitif is already at a very good level, although plenty of opportunities there. In other markets like France, U.K., and Spain, we're between 1%-3% market share. There is plenty of opportunity to extract further growth out of these markets. Now, looking at the sellout performance on a market-by-market basis, if you look at Europe, the read-across is that there is some softness across the board in sellout. This is clearly, as already highlighted, triggered by weather and consumption patterns. Within that context, the Campari Group is outperforming everywhere. If we start from Italy, left-hand side, we have shipments.
We are down 6%, I said, due to poor weather in both spring and September, and softer macro leading to channel destocking. Now, you have to understand that Italy is a highly fragmented on-trade environment, and the go-to trade, go-to on-premise is via a multi-layered wholesaler structure. So it's quite a long distribution chain, and so this is where we're seeing the big, I mean, the shrink as wholesalers are trying to reduce the capital invested. On top of that, the shipment performance has also been negatively impacted by a commercial dispute with a certain retailer, which is extremely strong in C-stores, convenience stores, where it's clearly the channel where we build the Aperol and the Aperitifs at home consumption, so the shipment doesn't reflect the sellout that is, of course, - 1% in Italy as a Campari in line with sector.
So the shipment performance is way above the market trend. If we move on to Germany, we have a - 6% shipment performance, but worth noting that the + 5% shipment performance, but over and above a 25% nine-month performance in shipments. And in Q3, you see the 6% decline over and above a comp base of 39% in Germany. So clearly, the performance is good. And this is the last year performance is due to the relisting of Aperol in one of the retailers. If you look at the sell-out, actually, in nine-months, Campari Germany is growing 13% versus a market that is up 1%. So we have a lead of 12 points. In France, the shipments are negatively impacted by soft sector backdrop, a - 3%.
The subdued sector sellout trends show a Campari performance that is slightly below the sector, slightly below - 5% versus - 3% due to the two categories that I've mentioned, rums and whiskey. While the Aperitifs keep on growing in France, and actually, even considering the rums and whiskeys, the overall Q3 sellout is trending better than the sector. It's still negative, but better than the sector driven by the acceleration of our aperitif portfolio. In the U.K., the shipments are showing negative trends, a - 8%. This is mainly due to the already mentioned supply constraints negatively impacting both Jamaican rums and Magnum Tonic. If you look at the external sellout data, the sector is soft, a - 1%. Although we see some signs of our performance improvement in the Q3, we're up 6% against a market that is still negative 1%.
If you look at the rest of European markets, the shipment performance is quite strong, 12%, a double-digit, as it did, as it performed last year. The growth that is extremely sustained is across all key European countries. This is clearly mainly driven by our Aperitif portfolio. If you move on to APAC, which is just 7% of our revenues, I said in nine-months, we're down 10% and 8% in Q3. Actually, Australia, which is 3% of our revenue since pre-pandemic, is up 5% on CAGR basis. The performance has been impacted by challenging macro and a very competitive environment, impacting particularly the Wild Turkey portfolio. On the other end, Aperol and Campari, they show double-digit growth momentum in, sorry for that, in Australia.
And this is extremely encouraging because we're getting, as we speak, to the peak season for Aperitif with a very good trajectory in Australia. Espolòn as well, although off a small base, is growing double-digit, also thanks to the newly launched Espolòn RTD. Clearly, now that Espolòn is no longer constrained in terms of liquids, we're pushing the brand in every single market, as we see a lot of potential on tequila in international markets. So in Australia, we also, our business is not only selling our own products. We also have a fairly significant co-pack business, which is negative. So it's bottling of RTDs for third parties. So if we carve out the poor performance of co-pack business, Q3 would be up 8% and year-to-date performance a - 3% versus a reported - 9%.
In the other markets of APAC that account for 3% of global revenues, the performance since the pandemic is quite strong, 20% CAGR. In nine-months, the performance, the shipment performance has been mainly impacted by India, South Korea, and China. That more than offsets the ongoing growth in Japan. And Japan is also leveraging the recently successful launch of the Wild Turkey Highball Ready-to-Drink. In South Korea, in Q2 and Q3, we're benefiting from easier comp. We had a poor performance in Q1, but this is South Korea, we think, is a very promising market, very high gross margin as a percentage of revenues, very important brown spirit market. So it's a market that we intend to nurture in coming years. And of course, both China and India have been negatively impacted by change in route to market.
And in China, that change in route to market impact was coupled with a very challenging macro backdrop. We'll see whether the announced stimulus measures will help improve the consumption patterns in coming quarters in China. If we move on to the analysis of brand performance, I'm starting from our leading brand, Aperol, 26% of our revenues, 17% compound annual growth rate since 2019. The growth of 3% in nine-months on a tough comp base, 23% in nine-months, 2023, was impacted by phasing of shipments and poor weather, as said, particularly in Italy. But if you look at Americas, we've registered on Aperol a strong growth in all markets, U.S., Canada, and Latin markets, also as said in Brazil and Mexico. But also in APAC, and mainly in Australia, we had very good growth.
In Europe, the most successful markets in nine-months have been Greece and GTR. Now, if we exclude the Italy and Germany for the cyclical factors I've alluded to, the growth would be in nine-months, 9% as opposed to 3%. Campari, which accounts for 11% of our revenues, was up 14% on an annual basis versus 2019. The nine-month ongoing growth was quite solid, 8%, and was led by Americas, particularly Brazil, as said, but also Greece, GTR, and France. In the U.S., specifically, Campari grew by 16% in the third quarter and was supported by the Negroni Week activation in the months of September. Espolòn, 9% of our revenues, 32% annual growth since 2019, double-digit growth on a very high comp base of last year, nine-months, 2023, 38%.
The performance was led by the biggest market, the U.S., growing double-digit, but also in all key markets, Australia, Italy, GTR, they are growing nicely. Wild Turkey, 7% of our revenues, up 8% on an annual basis since 2019. In Q3, we had a soft performance driven by core U.S. across the portfolio. As said before, Russell's Reserve was flat in nine-months with impact on volumes. And that impact on volumes due to supply constraint was offset by price repositioning, as said, at 5 - 10 price point, price repositioning in a backdrop of intensifying competition, particularly in super premium bourbons. In Japan, we see an ongoing double-digit growth, also in Canada and in other European markets, although of a relatively small base. The Jamaican rums, up 10% annual basis since 2019.
Of course, the performance of both Q3 and, as a consequence of that, nine-months have been negatively impacted by the hurricane and the product shortages, and so this is something that we have to factor in, but we believe we'll come to a resolution of the supply chain issues by the back end of this year, so we believe by December, this supply constraint situation will be fixed. Grand Marnier, up 1%, 5% of group revenues, up 1% since 2019. Of course, in nine-months, the brand is up 6%, but the pace of growth is slowing down as we cycle through the easier comp base of the first six months. The category is highly competitive, and this is clearly offsetting the progress that we're making on Grand Marnier in other geographies outside of the U.S.
SKYY 4%, now SKYY is just down to 4% of our revenues, is negative. CAGR, 4% since pre-pandemic. The negative performance is driven by core U.S. in line with other major players in the vodka category. And the growth in the rest of America and in other international markets outside of the U.S. is not enough to offset the decline in the U.S. Now, if you look at drill down on Aperol, I think it's an important brand. Again, here we have sellout data. The read across is that Aperol is outperforming the category in all core European markets, except Italy due to the cyclical factors that I have and the one-offs that I've mentioned. But it's still enjoying a very strong double-digit growth in certain markets and is delivering on strategy.
So starting from Italy, where we have 8% shipment, - 8% shipment performance, this shipment performance is not reflecting the sellout, which is negative by 1%. And this is due to de stocking in the commercial dispute that I have alluded to. The nine-months in sellout performance has been, of course, negatively impacted by weather, consumption pattern. But the brand is performing in line with the category because the brand is mostly the category. In Germany, in first nine-months, the shipments were up 3% against a very tough comp of 34%. In the third quarter, you see a decline of 17%. But of course, you have to measure that performance against the + 44% of last year that followed the releasing of Aperol after the commercial disruption. Aperol in sellout in Germany is quite strong, 22% up. So you see shipment 3%, sellout 22%.
The Aperitifs overall are up 16%. So there is a delta performance positive of 6%. In the last two years, that is not just this year, but it's a recurring thing. And now Aperol has achieved the number one spot, the number one spot as a spirit brand and most ordered spirits brand in Italy. So quite a remarkable achievement. And as said, all the brand health indicators are extremely strong in Germany on Aperol. The U.S. shipments were up 7% against a very tough comp base of 51%. In sellout, we have clearly an ongoing outperformance also in this market. Cordials are up 1%. Aperol is up 10%. So the delta versus market is a healthy 9%. And additionally, if you look at this is sellout. If you look at the on-trade, the on-prem is the brand.
Our key channel is up in nine-months, 15%, driven by increased rotation in core cities. Then maybe we can elaborate on our expansion strategy in terms of penetration of Aperol in the U.S. But clearly, Aperol is in a very good footing in all our markets and particularly in the U.S. In the U.S., Aperol Spritz is the most popular cocktail in the U.S. If you look at France, where shipments are flat as a pancake, 0%, we have positive sellout, 5%, beating market that is up 1%. Its trend is decelerating due to the subdued sector backdrop. But clearly, the outperformance is still there. If you look at brand health indicators, now Aperol is the most improved brand by consideration. It means that, of course, in France, the brand is taking traction.
In the U.S., sorry, in the U.K., shipments are down 2% over and beyond a comp of a positive 26%. In sellout, the brand is down 2%, but the market is down 13%, so there is a positive delta of 11%, and the category decline is totally attributable to the very poor weather condition in the second quarter of this year. Now, if you look at the performance in the third quarter, the brand is up 15%, so coming back to positive territory. Again, also in the U.K., pardon, if you look at the brand health indicator, one of those, Aperol Spritz is the number one cocktail in London and the number three cocktail nationally, which means that it's no longer just London, but is taking traction globally in the U.K.
In the other European markets, again, shipments and consumption is quite healthy at +13% in all markets and in particularly, as mentioned, Spain, Greece, GTR, and also Australia. Regional priorities, I will go quickly through those. Other specialties up 10% in nine-months, mainly impacted by Magnum Tonic supply constraints. But other brands like Frangelico, Aperol Spritz, and Picon, they are growing nicely. Sparkling wines and vermouths, they've been up 13% since 2019. In nine-months, they're up 10%, driven by Champagne Lallier, but also the sparkling wines. Crodino, which is just 2% of our revenues, a moderate growth since pre-pandemic. But it's a brand that is getting very strong momentum and solid double-digit growth in all international markets, not only in the Netherlands, Germany, Greece, and Switzerland, and U.K., but it's a brand known architecture is definitely there.
In Italy, the brand suffered from the streamlining of the offering, so we've discontinued certain Crodino variants, and that is impacting the Italian performance, but if we excluded the discontinued SKUs in nine-months, we would be up 5% globally. Other whiskeys, and they've been up 3%, but the performance has been impacted by the softer category trends across all markets. South Korea, as said, we need to keep an eye on this market because it's quite promising for our brown spirits portfolio. On local priorities, Campari Soda, 6% up since 2019, solid performance in Q3 in the core Italian market. It's recovering following the poor weather condition in second quarter, so year to date, in nine-months, it's negative 3%, and then you can see on other brands, Wild Turkey, RTD, Ouzo 12, we have solid performance.
And the only one that in nine-months is in negative territory, although up 4% since pre-pandemic, is SKYY RTD in the highly competitive core Mexican market. A little bit of update now on Courvoisier. I think it's important to be underlined. So far, we made some good progress on both the integration of the brand as well as on the development of our strategy. So in terms of investments, we've strengthened our sales and commercial capabilities in core markets, namely the U.S., the U.K., the two biggest markets, as well as in China. The brand has high exposure to African Americans and Hispanic, and clearly, it's not core target of our portfolio. So we've hired salespeople. We have clearly filled the head of Cognac and Champagne brand house with a Cognac veteran, Augustin Depardon. We are taking commercial actions to clear the trade channels.
Probably there is a little bit excess stock, particularly in China, we have to say. We are realigning the pricing structure. So we are negotiating commercial agreements virtually in all markets as we sense that the price position of the brand is not yet the one that it deserves. And we've started the brand building investments. We have reopened the Maison Courvoisier in Jarnac after a multi-year restoration project, which cost a significant amount of money to the sellers. And the brand strategic assessment and way forward will be ready by the end of 2024 for a launch and rollout in January 2025. Now, clearly, there are some improvements that we need to achieve. First and foremost, we need to go through a structural reset of the brand health.
And also, as a consequence of that, the profitability of the brand to make sure that we improve its gross margin following the negative impact of the transition of the brand transition from the sellers to Campari. So we need to clear the prior tactical price discounting. So we need to reestablish the proper price positioning. And of course, we need to cycle through the very high cost of the eaux-de-vie that we're currently using, as those have been built four, six years ago during COVID at very high prices. And on top of that, given Cognac in its biggest market, U.S., where the brand is most exposed, suffered since 2023. And volumes for the category and for Courvoisier as well are lower than they used to be.
There is an element of making sure that we have a full absorption of production fixed cost in our Courvoisier plant that is further diluting the gross margin. In terms of way forward in the two biggest markets, clearly, with the approach that we're taking is that we would focus on VS in the U.S., that is the key SKU, on the higher marks in APAC. We will go through portfolio premiumization in all markets, also via innovation and simplification. In innovation, clearly, as you know, the offering goes through typically VS, VSOP, XO, and in between, you have variants. So this is clearly an opportunity that we have to tap into the intermediates. And in terms of simplification, the upper end of our offering over and beyond XO, it has to be cleaned up.
If you look at the performance and contribution, the sellout trends in Q3 are showing, of course, weakness, as I said, in the U.S., driven by volumes. While the price mix is negative one versus a category that is down 4%, driven, of course, by the market incumbent in the U.S. While in the U.K., the stable trend in the category, flattish. On the other end, Courvoisier is performing quite nicely with a positive 8%. The contribution to nine-months in terms of net sales accounts for EUR 35 million for the period May to September. It's primarily achieved in the U.S. and U.K. with a quite tiny impact on EBIT due to the already mentioned investments. A little bit update on activation.
So on Campari, film festival, from the pictures, you can see the fifth consecutive year celebrating the Locarno Film Festival as official partner, the seventh year as a main sponsor of the Venice International Film Festival, and the debut partnership at the Toronto International Film Festival. So the film festival platform is clearly key to activate our Campari brand internationally. But also the Negroni Week this year, we're celebrating through a series of initiatives and experiences across now 93 markets and across almost 14,000 venues. In terms of reach, in terms of number of markets, we're up 18% versus prior years. And in terms of venues, up 16% versus last year. So quite successful. On Aperol, clearly, you see the U.S. Open partnership, which is second time this year with further expansion of its presence on location. So we're taking a bigger share of the U.S. Open pie.
We also collaborated with the actress Ashley Park from Emily in Paris series across multiple channels, including media and social media. With that said, I happily hand the floor to Chiara, who will help us go through the numbers, the PNL.
Thank you, Paolo, and hi everyone. On page 20, we analyze EBIT adjustments, which amounted to EUR 499 million, down organically by 4.2% and generating a margin dilution of 140 basis points, reaching a margin of 21.9% on sales. As we mentioned already, this trend was driven by lower absorption of fixed costs across PNL lines in a softer market context, given that net sales organic change was up by 2.1% in the nine-months.
This effect was amplified in the third quarter as the organic change in EBIT adjusted was negative by 18.2%, showing a margin dilution of 370 basis points, given net sales organic change of -1.4% . In terms of the key drivers, so we focus first on gross profit, which was up by 1.9%, generating a dilution of 10 basis points. This result was due to mix effect, mainly in Q2 and September, generated by the impact of poor weather conditions and also macro conditions on margin apparatuses in EMEA, as well as a rapid growth of Espolòn, which was up 19% in the nine-months. With regards to the other drivers of gross margin, we had a positive pricing impact, which was fully offset by COGS, both incurred into Q1.
So as we mentioned earlier, pricing was driven by carryover effect from the previous year, and COGS inflation was driven by carryforward effect of high-cost inventory from the last year, which we depleted since beginning of 2024. Focusing on the third quarter, the gross margin was accretive by 10 basis points, mainly impacted by inefficient absorption of fixed production costs due to lower production volume, whilst we continued to remain disciplined from the viewpoint of pricing. Looking into Q4, from gross margin, we expect unfavorable sales mix and lack of absorption of fixed production costs due to lower production volume, and that is despite benefits on ingredients, including agave and glass. So combined, we expect that this effect to drive an overall dilution, which is also driven by a very challenging comparison base in Q4 2023 when gross margin was up by 160 basis points.
As a result, on a full-year basis, we expect the positive pricing effect as we guided for full year 2024, a positive pricing effect no more than 1%-2%. Positive pricing effect to be more than offset by COGS headwinds, as well as unfavorable sales mix effect. In terms of COGS headwinds, we expect this effect to be generated by the inflation combined with stock effect, lower absorption of fixed cost, higher depreciation, partly offset by positive benefit in ingredients, particularly Agave and glass. Particularly with regards to Agave, we are confirming our expectation for EUR 20 million on a full-year basis as a benefit, plus other packaging materials as well as logistics.
Moving on to A&P, A&P was up by 3.7% in the nine-months with 30 basis point margin dilution, with ongoing focus on brand building during the summer season, despite the impact of lower activations in connection with poor weather, particularly in spring and September. A&P to sales were 16%, so relatively stable versus nine-months 2023 when it was 15.9% on sales. Focusing on the third quarter, A&P was up by 6.6% with a dilution of 140 basis points, impacted by soft sales. It reached 17.7% on sales versus 16.8% in Q3 2023. Looking into Q4, we expect to keep A&P broadly in line with Q3 as a percentage of net sales. So as a result, 2024 level on a full-year basis for A&P, we expect this cost line to remain slightly below 2023 level of 16.9%, but also clearly depending on trend in net sales.
A&P on a full-year basis might be from neutral to slightly accretive overall. In terms of SG&A, SG&A grew 7.6% in the nine-months with 110 basis points, impacted by the continuation of planned investment, including our strengthening of route to market, both in Asia with carryover effect from last year's investments, plus the setup of the new in-market company in Greece. That was in a market context of softer sales. That led to lower absorption of fixed costs. As we explained, our SG&A fixed portion is about 75% of total cost line. In Q3, SG&A grew by 10.9%, generating a dilution of 200 basis points, mainly driven by muted sales at - 1.4. Looking into Q4, the trend will be driven by ongoing completion of committed business investments. Therefore, Q4 SG&A organic growth trajectory is expected to be similar to Q3.
And so that means that it is expected to generate a dilution on a full-year basis. Meanwhile, we define a roadmap ahead with initiatives in place to ensure growth and profitability in the medium term, and Paolo will focus on that in a couple of slides. Overall, EBIT adjusted reported was negative by 4.1%. Perimeter was slightly positive on EBIT by 0.4% or EUR 2.2 million, resulting from the impact of Courvoisier and other business, partly offset by the termination of some agency brands in France. As we explained, Courvoisier is generating a contained impact on EBIT in this first transition year, also given investment in commercial and marketing teams, which occurred in Q3 and which will continue into Q4. So on a full-year basis, with regards to perimeter, we expect a contained contribution combining Courvoisier and also the effects from the termination of agency brands.
Effect was slightly - 0.3% or EUR 1.7 million, and that was generated by positive impact on costs of U.S. dollar and pound depreciation. In Q3, we benefited from favorable trend in the Mexican peso, and in Q4, we still expect a slightly positive effect or a positive full-year basis effect. EBIT adjusted was EUR 591 million, down by 1.8%, of which 2% organic. Just a quick mention to depreciation. Depreciation increased by 11.6% or EUR 9.4 million in the nine-months as a result of CapEx plan, which will continue in Q4. In terms of group pre-tax profit on the next chart, so we had total operating adjustment of -EUR 30.9 million , mainly driven by the Courvoisier deal-related costs, plus some more restructuring initiatives. In terms of the financial expenses, the interest overall amounted to EUR 57.7 million, increasing by EUR 7.2 million versus nine-months 2023.
This line is composed by two items: exchange losses amounting to EUR 2.1 million, mostly unrealized versus negative at EUR 12.1 in nine-months 2023, benefiting from less unfavorable or less volatile trend in exchange rates in 2024. Excluding these effects, financial expenses were EUR 55.6 million with an increase of 17.2%, driven by higher average net debt, EUR 2.1 billion this year versus EUR 1.7 billion last year, mainly due to the Courvoisier acquisition, and as well as by higher average cost of refinancing in the nine-months. These two effects were partially offset by the benefit of temporary higher cash position ahead of Courvoisier closing at the end of April. Average cost of net debt was 3.7% versus 3% in the nine-months.
Looking into Q4, we expect an amount of net interest in value terms to be slightly higher than Q3, reflecting the impact on available cash from certain corporate transactions, including closing the acquisition of the minority stake, as well as the acquisition of the remaining minority in the Mexican companies, as well as our continuous commitment to extraordinary CapEx plan. That is, of course, a narrow but positive cash flow generation. The hyperinflation effect and earn-out remeasurement were EUR 9.6 million, mainly due to Argentina. We had overall pre-tax profit adjusted over EUR 446. Pre-tax profit at group level was EUR 423 million after non-controlling interest of -5.8. Moving on into the next chart on analysis of net debt. Net debt was EUR 2.6 billion at the end of September, up EUR 710.5 million versus last year.
And that amount reflects the net impact of the Courvoisier acquisition, EUR 477, a narrow capital increase. The acquisition of the minority stake in Capevin for a total amount of EUR 83 million, extraordinary CapEx investment of approximately EUR 200 million, the dividend payment of EUR 78, and all these partly offset by the positive cash generation in the nine-months. Just a quick reference to CapEx, we confirm our plan for overall EUR 500-EUR 550 extraordinary investment for 2024 and 2025, with about 2/3 of the program to be completed by 2024 and 1/3 to be completed in 2025, which means that in Q4, we will still have a little bit more than EUR 100 million of CapEx to go.
With regards to cash position, we need also to remind the impact on EUR 46 million for the acquisition of the remaining 49% in the company owner of Ancho Reyes and Montelobos, bearing in mind that this transaction has no impact on the net financial position, as it was already included in the estimated put option and earn-out. Overall, liabilities for put option and earn-out reflected first the earn-out in connection with the Courvoisier acquisition, and then the effect of the reduction from the earn-out in connection with the acquisition of the minority stake in Ancho Reyes and Montelobos.
EBITDA ratio, so net debt to EBITDA ratio was 3.4 x on a pro forma basis, considering Courvoisier impact only for five months, and that would correspond to 3.6 x with an annual estimated effect for Courvoisier, and that compares with 2.5 x at the end of December 2023. So that's it for my side, and I hand you back to you.
Thank you. Thank you, Chiara. If you follow me to page 24, we have in one page the summary with both description and impact of key company initiatives, starting from the creation of houses of brands. This is quite a transformational move as we create the four houses of brands: Cognac and Champagne in Paris, Aperitifs in Italy, and whiskeys and rum on one end, and tequila in New York. In terms of impact, looking first at growth and then the impact on efficiency and profitability. Clearly, the overriding objective is to accelerate the growth of our brands and our categories, so enhance the ambition. The four houses of brands will be fully accountable for the brands and the category global P&L.
They will be accountable at global level for the resource allocation, including marketing and commercial investments. They will be responsible for innovation, and they will have a very tight connection with upstream supply chain. Read it as liquid making, cask finish, eaux-de-vie procurement, blending, and so forth, which is a key piece of the marketing exercise, particularly in brown spirits, less so with Aperitifs. Again, another positive impact on growth is that it goes towards further premiumization of our portfolio, particularly in brown spirits space, and it will improve the effectiveness of our marketing initiatives, where we're going towards a stronger central coordination, central drive, which would leverage the existing local marketing capabilities and local marketing teams. So we fundamentally believe that consumers are different in each and any market. We leverage the existing marketing capabilities, but we want to have a stronger central coordination of the different local initiatives.
In terms of cost, efficiency, and profitability, it clearly increases the efficiency and the agility, also via leveraging of global and local structures and reduction of duplications, and also, if you look at the A&P budgets, we will have a more focused and effective allocation of the investments and the resources, again, to avoid duplication and to get the best ROI of the assets that are developed centrally. The second vertical of key company initiatives is portfolio streamlining that goes through disposals. As I said before, the global priorities now account for 68% of our total net sales ahead of the full first-time consolidation of Courvoisier, and so clearly, as we redirect investments into the priority brands and into the houses of brands, clearly, we need to make choices, and we will reduce, we will cut the tail.
As we redirect funds, focus, and investments on key priorities, of course, that would bode well for their growth trajectory in coming years, and of course, by reducing the complexity of portfolio management, we free up resources that we can partly allocate to priority brands, and partly, we can reduce costs to support margins.
The cost containment program, which I've alluded to, is basically to create efficiency in structural costs, leveraging, as I said, the change in the operating model with the creation of the brand houses, the delayering, the reduction of duplication, the reduction of the portfolio complexity via disposals, but also leveraging the very high-tech investments we've done in the past, starting from the migration into S/4HANA and the implementation of advanced integrated planning, which would, on one hand, accelerate our growth as we have better business visibility, but also drives a lower cost of doing business with reduction of the organization. In terms of targets, we are setting ourselves a target of 200 basis points overall reduction of SG&A as a percentage of net sales in the next three years. So reduction of 200 basis points in the year 2027 as a percentage of revenues.
It is clearly accretive from an EBIT perspective and would progressively deliver operating leverage. In terms of outlook for year 2024, Chiara has already covered most of it. In terms of net sales, we are looking at a low single-digit top-line growth. Americas is impacted by ongoing muted consumption environment in the U.S., with growth rate also to reflect high comp base in Q4, as well as the tail-end effect of the hurricane in Jamaica causing supply shortages and poor trading environment in Jamaica. While in Americas, the other countries, we expect that it would continue to grow as they did in the first nine-months. EMEA with ongoing impact of stocking, high competition, and low consumer confidence in selected markets, and no recovery of the Q3 shortfall in a low seasonality quarter for Aperitifs, and that's a clear effect.
In APAC, with some potential benefit from easing macro environment, but still with ongoing impact of route to market finalization, particularly, as I said, in India and China. The organic performance in EBIT, both in terms of margin as well as value change, will be negatively impacted by gross margin due to diluted sales mix and lack of absorption of this production cost due to lower production volumes despite all the benefits on raw and packaging materials. The SG&A driven by ongoing completion of committed business investments.
Now, if we look into the medium to medium-long term, Campari Group, we remain confident to continue outperformance, to remain confident in continued outperformance and market share gain as we saw in the previous nine-months, leveraging its strong brand in growing categories with a gradual return in the medium term to a mid to high single-digit organic growth trajectory in a normalized macro environment. On the other hand, if you look at profit and profitability, gross margin is expected to benefit from that top-line growth, mid to high single-digit organic net sales growth, positive sales mix driven by Aperitifs, but also tequila that in 2025 will be no longer diluted or, if any, marginally diluted, and the overall premiumization across the portfolio that we are achieving as shown in the prior charts, and also some cost efficiencies, namely tailwinds that will impact positively 2025 and coming years.
EBIT margin accretion will be therefore supported by the key company initiatives that they have just described with 200 basis points overall benefit on net sales of SG&A as a percentage on net sale in the next three years by 2027, and increased efficiency in brand building spend on the back of the reorganization of our brand management operating model into the houses of brands. With that, we are here to take your questions.
This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask you to use the handset when asking questions. Anyone who has a question may press star and one at this time. The first question is from Andrea Pistacchi, Bank of America. Please go ahead.
Yes. Good evening, Paolo and Chiara. Three, if I can, please. The first one is really to try and unpack a bit what happened in the quarter. On the H1 call in July, you sounded cautiously but reasonably optimistic about the outlook, and you'd said that Q3 had started pretty well in all regions. So you've highlighted a lot of things today, like destocking in Italy, the hurricane in Jamaica, but if you really had to highlight two or three main things that have completely derailed the quarter, what would these be? Then my second question, please, is actually on the medium-term sort of outlook that you're presenting, particularly on margins.
You say gross margin should increase, SG&A to sales leverage, thanks to some of the initiatives you're doing, an important benefit, 200 basis points over three years. How much of these benefits do you think you'll need to or you'll want to reinvest in A&P? You were talking about efficiencies in A&P, but do you think the 17%-18% of sales, which is your historic level of A&P, do you think this will be enough given the various growth ambitions that you have now also on brown spirits?
Then, if I may, with a third question, I don't know how much you're able to say on this, but I was hoping a bit for an update on the CEO situation, whether you could share any context possibly on Matteo's departure, but more importantly, how you're thinking about the new CEO appointment, what are the main criteria for the search, internal versus external? Does he have to be Italian-speaking, or is that less important, experience in Asia, etc., and where you are in the process?
Thank you, Andrea, for your questions. No, I think the first one, if I understand it well, vis-à-vis the July outlook, what are the major derailers? Of course, the hurricane in Jamaica, the very poor weather conditions in the months of September, which is critical for Aperitifs, is another one.
I think probably we have maybe underestimated the level of disruption at the level of consumer confidence. That's one, and we were all hoping for a bounce back of consumption following very poor weather conditions of last year, whilst consumer confidence suddenly fell in a significant manner, and I think also the destocking was highly unexpected, particularly in Italy. Of course, we know that in the U.S., if you think at inventory levels, you have the wholesalers, you have the retailer, you have consumers' stocks. At wholesaler level, they remain quite healthy at about two months or below, selectively on local brands. At retailer level, even there, we've noticed a shrink in inventory on hand, and so that is clearly negatively impacting the shipment performance.
But that said, we believe all those factors are quite cyclical and non-recurring, and we believe we'll be back soon to our original growth trajectory across the different markets. So we remain quite confident vis-à-vis the long term. Unfortunately, this year is a combination of disappointing consumption pattern across key categories and across key markets. It's more external elements with planned investments that we've clearly implemented to accelerate the future development of our portfolio performance, including investments in strengthening the recently created route to market, existing markets, and this is clearly causing the SG&A drift that we will correct over time. If you look at the second question, that is the midterm margin guidance, then of course, starting from next year, of course, as you're very well known, this year, it has been impacted by some positive tailwinds and some negative headwinds.
But if you look at year 2025, and we sum up all the headwinds and the tailwinds, we end up with roughly a net positive effect of EUR 30 million in year 2025. And this is coming from 2024 headwinds that are turning into 2025 tailwinds for EUR 30 million, namely the non-recurring effect of lack of fixed cost absorption that impacted this year for EUR 15 million. The negative effect of safety stock that has been built in year 2023 at very high cost, and this is clearly negatively impacting year 2025. This is another EUR 15 million. So those EUR 30 million are non-recurring and shouldn't be seen in the base for year 2025. You then have tailwinds that remain tailwinds in 2025. That is the effect of Agave, EUR 25 million this year.
Sorry, EUR 20 million this year, 2024, which would have a tail effect of another EUR 25 million-EUR 30 million in 2025, and another EUR 10 million in 2026. You have glass logistics cost in 2025 that still are positive. We're talking between Agave, another raw packaging material, another possibly EUR 30 million. You have 2024 headwinds that still remain headwinds in 2025. This is the higher depreciation due to higher CapEx. We have a very heavy CapEx expansion program that is generating roughly EUR 500 million of extraordinary CapEx. This is generating a depreciation drift in our P&L. If you look at EBITDA, clearly, of EUR 15 million. You have the fact that as we dump aging liquid that has been distilled years ago, we have a negative effect in our P&L.
So that negative effect was worth EUR 10 million in 2025, and again in 2024, pardon, Andrea, and it still is worth EUR 10 million in 2025. So if you add the three components, you end up with roughly EUR 30 million of positive. So we have, aside of the mixed effect, roughly 90 basis points of net tailwinds next year to start with, which is, I think, encouraging. Now, if you look at the question on the A&P as a percentage of revenues, whether the 17% perspective is enough or not, we think yes. Clearly, as we look into the A&P budgets, and we are making some very good progress into activity-based budgets, and we not only plan A&P based on incremental spend, but also we challenge the activities, and we measure how much the assets that are generated are leveraged by the organization.
We sense that there is a big opportunity of getting a bigger bang for the buck. So I think there is a lot of opportunity of increasing the impact on consumers while keeping the A&P on revenues at about the 17% you've mentioned. Just on your last.
Sorry, Paolo, just going before we move to the Q&A question, just if I wrap that up, if I understand. So gross margin, yes, there's a benefit of potentially around 90 basis points, then plus minus any mixed effects that we'll see. Then you have some SG&A leverage, in theory, which will depend on top line, and then the A&P probably goes up a bit, but the 17%. One thing you didn't really mention on this is promotions and how that may have weighed or whether it will weigh in a competitive environment. Is that not a factor on margins?
On promo, it's very difficult to, but overall, clearly, we see an increased level of promo frequency, and that's a fact. But that said, I think we've proven the fact that on pricing, we've been quite disciplined so far, and we intend to maintain that stance, both in key U.S. markets as well as in Europe, where most of our products, particularly the Aperitifs, are consumed on-premise. So it's not really promo frequency that drives consumption in our point of view. So if you look at the U.S., I think in our key categories, our own is quite well-positioned in terms of pricing and headline pricing, and it clearly benefits from trading down from super premium plus and super premium tequilas and trading up from standard tequilas. So we don't sense any need of being aggressive on pricing tequila.
On U.S. whiskey, overall, the environment we sense is fairly benign. There is probably one player, which I'm not going to mention, that is a little bit more aggressive on pricing. But on the other, if you look at the other players, I think bourbons and U.S. whiskey is in a safe place. There is, of course, a lot of distilled whiskey sitting in bars and warehouses. But the players seem to be disciplined. Of course, we're all reducing distilling amounts, but I don't sense that bourbon is at risk. Of course, pressure on vodka is definitely there. On SKYY Vodka, clearly, we're quite active in double-checking price elasticity on a state-by-state level in the U.S. And I think in few test markets, we're getting very interesting results by trimming the positioning of SKYY Vodka versus key competitors. And it seems that overall, we're achieving net positive gross profit impact.
So we will be more focused on a state-by-state basis as opposed to going broad with one single price policy overall. But even there, I think there will be a little bit of drift. But I don't think, if I can summarize globally for next year, promo will be the big mover. Mix is key. Unfortunately, this year, it didn't go well for the reasons we've mentioned. But again, structurally, the business is structured in a way that the gross margin expansion will be achieved. On Espolòn, we think that on the back of the reduction of the cost of Agave, next year will be at around 50% gross margin. That I think is a very good achievement. Also, taking into consideration that negotiating Agave contracts in Mexico is quite difficult. So I think the results are there.
Next year, at least, we will not see the significant drift in our gross margin from tequila. Overall, I think on promo, we're in a good spot. I think probably the worst is behind us. Of course, in cognac, we've seen some deterioration of pricing, particularly from the incumbents, starting from, I would say, Q2 2023, looking at the Nielsen data. Clearly, the Courvoisier brand is not yet where it should be in terms of pricing. But any price repositioning of the brand should come with strong A&P investment to reinforce the equity of the brand. Of course, some aggressive and tactical discounting that has been implemented by the seller during the transition will not be repeated in year 2025.
And so per se, we will have an improvement of the Courvoisier gross margin in next year vis-à-vis this year that is quite low for the reasons I've mentioned. I don't know, Andrea, whether you have a question otherwise on the CO? Yes.
I'm on CO, but I passed on. I've been on enough, I think.
Okay. On the CO, I think we're making good progress. I think we will realistically come to an appointment in a relatively short period of time. We're not talking years. Clearly, the company is managed by a very strong team of professionals. So everything is progressing as it should. You've seen we've announced a major cost containment program. We're reorganizing the company. The markets and the regions are in very capable hands. And we're filling step by step all the positions of head of the Maison, sorry, of the brand houses.
It is extremely important because it would strengthen our leadership team. So I think it is important to fill the position, but it is equally important to make the right choice. In terms of qualities, of course, Campari is an international player where the biggest market is the U.S. So it's not necessary it has to be Italian. It can be by chance, but that's not a necessity to us. The management team of Campari is quite diversified in terms of origin, all FMCGs, and in terms of culture. So it's important to be not Italian, but international mindset, having international mindset. In terms of internal and external, the two avenues are equally possible at this stage. So we cannot disclose more than that. But we sense we're making good progress and more to come. That's what Andrea can say at this stage.
Thank you, Paolo.
The next question is from Sanjeet Aujla, UBS. Please go ahead.
Hey, good evening, everyone. A couple from me, please. Firstly, as you look out to Q4, is your expectation at this stage for organic sales to be broadly in line with Q3, worse or slightly better? And as you're thinking about building back up to mid- to high single-digit top line, is that a relevant framework to think about for 2025? Or which of the headwinds you're seeing at the moment across your business do you expect to continue into at least early part of 2025? That's my first question. And then as you're thinking about non-core disposals, I appreciate you might not want to get into brand specific, but can you give us a sense of what percentage of your sales today would you classify as non-core that could be disposed of in the fullness of time?
My third question is really around coming back to the U.S. I think you highlighted a bit of unexpected destocking in your business, but the tone seemed to be somewhat reassuring on sellout. Can you just give us a sense of where your depletions were in Q3 and for how long do you expect retailer destocking to persist? Thanks.
If we look at the Q4 organic sales expectations, we think Q4 will be positive. So it will not be, of course, super positive also taking into consideration the tough comp of Q4 of last year. But we're definitely in positive territory. With AB 2025 or the mid to long-term sorry, the mid to long-term mid to high single-digit top line organic growth rate, I think it very much depends on market conditions. I believe realistically, probably the beginning of next year, it will still be relatively soft.
Then it would improve. We clearly count on the stimulus measures of the different central banks and the end of the election period. There would be many factors that bode well. In terms of mid- to high-single-digit growth trajectory, we're looking more into 2026. I think the key points is that if you look at our growth trajectory, why we remain extremely positive. First and foremost, there is an outperformance in key brand-market combination that is there and is destined to stay. On pricing, as you have answered to Andrea, we remain extremely disciplined. There are no recurring impacts on performance, the hurricane, the poor weather in EMEA, but that's a non-recurring per se impact. After all, as I said, outperforming across all EMEA markets, but also in the U.S., and it's growing double digits in all key markets.
In Italy, the performance is soft, but it's totally driven by wholesaler destocking and the commercial dispute. In the U.S., as I said, the problem is with the muted sector context, but the performance is extremely strong. Espolòn is in a very good position. If in tequila, we will see what happened on vodka. Espolòn is really in a sweet spot. We've seen in vodka Tito's where it went as the super premium plus vodkas started decelerating and consumers moving into a brand that has very strong equity, a reasonable price, and a very strong traction in the on-trade and very credible marketing positioning. This is where we are on Espolòn. It, roughly call it $27-$29 per bottle. I think it's the sweet spot, so it can only accelerate.
On Courvoisier, I think it's a long-term slow burn, but we start seeing the first positive sign despite the category that remains quite challenging, and I think then we remain positive because of the initiatives that I've mentioned: the reorg, the streamlining of the portfolio, and the cost containment project, so I think talking to the top line, I think we are definitely there. Macro, we cannot foresee it completely, but I think we believe it will improve over time. Vis-à-vis the disposals, we cannot be specific on brands, but clearly, we're not fishing in the pond of global priority brands. Those are not for sale, including if that is the question. SKYY Vodka, that is not performing nicely in the U.S. Vodka is still the biggest category in volume and probably the second biggest after tequila in value. It provides critical mass to our U.S. organization.
It's a category where you have to play in the U.S. So this is not a brand that we intend to sell. But then you have clearly local priorities. Those are priorities, but in regional priorities, probably in the rest of portfolio, it's where we may want to streamline. So the logic at the moment is not per se achieving a percentage reduction of revenues by disposal of assets. It's more reduction of complexity. So we will first chase and get rid of brands that are creating a lot of complexity for the organization and limited profits in all geographies. So this is a bit the logic that we're trying to pursue. In terms of the stocking, I think is the other one. As I said, at the wholesaler level in the U.S., we're pretty fine. I don't think there is anything to signal.
In retailer inventory, it seems that there is probably a little bit too much there. And given the subdued environment, the retailers are less keen to buy because they don't want to hold inventory. So this is where probably we will see some tail-end effects, although I do not expect anything meaningful. And then consumers at home, probably they bought heavily during pandemic and probably on SKUs that have low rotation, typically the high price point SKUs, consumers still have something in their pantry. But less so on high rotation products like vodka and tequila. So I think this is not of a concern. So we think that the stocking will most likely phase out in Q4, and we should be fine in next year. The last question is this. Yeah.
The next question is from Simon Hales. Citi, please go ahead.
Thank you. Good evening, Paolo. Hi, Chiara. A couple of quick ones, hopefully for me. Just coming back to the 2024 outlook as things stand, obviously, you're looking at low single-digit organic sales growth for the full year now. You said it was still slightly positive in Q4. It doesn't sound from the comments you made with regard to the margin outlook into Q4 that we were going to see much of an improvement on the organic margin picture at EBIT versus what we saw in Q3. If my math is correct, that means we're probably looking at EBIT margins for the full year maybe down about 200 basis points.
Is that the right way to think about the messaging you're giving for this year? So that's the first question, and then secondly, just on perimeter impacts, clearly a small positive contribution to profitability for the nine-months that you highlighted. But given what you said about Courvoisier from an investment and a destocking standpoint, do you still expect perimeter effects to be positive for the full year 2024?
Yes. On the first one, looking at year 2024 and the fourth quarter specifically, so we're in positive territory density on top line. Problem is the lack of absorption of fixed costs, both in COGS and in SG&A. So clearly in COGS, we're slowing down production at our key sites, production sites. And so this is where we see deterioration of gross margin in the fourth quarter. And equally, as Chiara has just mentioned, in SG&A, 75% of SG&A are fixed. And then we cannot absorb the fixed cost. And the investment initiatives that we've implemented, starting from, unfortunately, July, Q3, they have a tail-end effect in Q4.
So if you look at SG&A in value, we're expecting SG&A to grow broadly in line with Q3. So this is dilutive as well. So you are mentioning the 200 basis point dilution at the level of gross profit, sorry, gross EBIT margin. And I think it's a little bit on the high side. I think we can do probably a little bit better, but we need to think in fourth quarter, we need to see where it goes. On the perimeter, yes, so it will be still positive, the perimeter contribution on Courvoisier, but it will be quite tiny.
Honestly, we were guiding and the markets were a EUR 10 million profit contribution from first-time consolidation of Courvoisier. If you take into consideration cleanup of the market, investment in structure and so forth, it will be not there. It will be below the EUR 10 million. I think realistically, roughly EUR 5 million is a sensible number.
Got it. Thanks, Paolo.
The next question is from Chris Pitcher, Redburn . Please go ahead.
Thank you very much. A couple of technical questions and one strategic. On Jamaica, the impact from the hurricane, that shortfall in the third quarter, are you back up and running enough to start to replenish? And therefore, should you see some bounce in Q4 in Jamaica, or is that more into next year? Then on your investment plans, can you say how much you're sort of committed in terms of eaux-de-vie purchases for Courvoisier and what the sort of working capital outlay is likely to be? Because the stocks were pretty high when you consolidated it. And then thirdly, Paolo, if you could just talk briefly about the logic behind the Capevin Holdings investment. Is there a route to control over the medium term? What are the short-term benefits by having a minority stake in a Scotch business? Thanks.
On the first one, Jamaica, the Jamaican thing is actually two issues at the same time. There is one that is the most evident, is the hurricane. There is a second one that is our ability, this is more long-term, to distill at full capacity in Jamaica to support the development of our rum portfolio, both J. Wray & Nephew , that has a short aging period, as well as Appleton Estate that is 12, 18, and so forth. On the first one, clearly, the hurricane disruption has impacted our ability not only to distill, but also to bottle physically. We will fix it by December. We still are expecting Q4 to be negative in Jamaica.
And the shortfall of supply will still impact international markets, namely the U.K. and the U.S., the two biggest ones. The other one, the issue of ability to distill at full steam, that depends on the investment, the green project of odor treatment, so waste management treatment. This project, the second one, will be completed in the first part of next year as planned. And that would unlock the possibility for us to distill at full steam. Benefits would be immediate on J. Wray & Nephew overproof for both the Jamaican market, where the brand is extremely strong in the U.S. and U.K., so also in international markets, a little bit more down the road so circa H2 2025.
And so this is how we see the Jamaican issue being solved between, say, December this year on general operations and on distilling for full steam a little bit more down the road. On the eaux-de-vie, as you said, we have more than enough given the reduction of volumes in the marketplace. So, in, we can trim the procurement volumes, leveraging the existing [ODVs]. With the acquisition, we've inherited EUR 400 million of aging liquids. So if anything, I see an opportunity in terms of cash flow to exploit the existing eaux-de-vie and have a positive impact on operating working capital. The other one is the Capevin. Yes, it's a financial investment. We have achieved roughly 15% of the company. Of course, we have minority shareholder protections.
And this is where I think we have an opportunity in the mid to long term because, of course, the portfolio is extremely interesting. And so I think, as I said, for the time being, it's merely a financial investment. The brand portfolio is quite nice from Bunnahabhain to Tobermory, Ledaig, Deanston, as well as Scottish Leader, who has a very interesting business in Taiwan. So it's a financial investment for the time being, and then we'll see.
Just to clarify, it's all about consolidating Courvoisier, sorting that out. There's not a risk in the short term that you move to control there. This is mid- to long- term.
Sorry, can you? I've lost your question.
Sorry. You said over the mid- to long- term, there's no risk that while you're trying to consolidate Courvoisier, you then try and take on another increased investment in Scotch. That is very much a longer-term prospect.
It depends. Yeah, but it's not for tomorrow, I believe.
Okay. Thank you.
The next question is from Trevor Stirling with Bernstein. Please go ahead.
Hi, Paolo. I'm Chiara. Two questions for me, please. The first one, Paolo, you talk about a return towards mid to high single-digit growth. But six to nine-months ago, we were talking about Campari being a business that should be growing high single digits or low double digits. So is that reflective of a change in strategic expectations that you think the long-term growth of the business isn't quite as strong as you did six to nine-months ago? And the second question was relating to rate of deleverage. I appreciate, Paolo, that a lot depends on the actual level of EBITDA growth. It's not just the level of debt reduction. But can you give us any idea of sort of a range of what you think the underlying rate of deleverage should be in the business?
No, vis-à-vis the mid- to high- single-digit organic growth trajectory indication, it's definitely not a change in our expectations. The business is solid as it was in the past. Clearly, it's interpreted with a pinch of salt given the current market dynamics. So you have to read it as, okay, structurally, the company, the brands, key brand market combinations are in an extremely strong spot. The market at the moment is, and consumer confidence is what it is. But you don't have to read it as a reduction of our ambition, if you will. On deleverage, of course, as you very well know, we have this extraordinary CapEx program that is still ongoing.
Therefore, as you correctly pointed out, the reduction in indebtedness or debt is not big in this year and in the coming year. But of course, if I can say, as the market normalizes and we achieve our target top-line growth and we deliver the expansion of gross margin that we've commented plus the expected savings in structural cost, so the 200 basis points, I think we can achieve a pretty quick deleveraging in coming years. If I think at the 200 basis point cost compression, as a % of sales, in terms of curve, we would see it as a back-loaded shape. So probably 50 basis points in year one, 90 basis points in year two, where all measures will have full impact, and then probably a tail of 60 basis points in year three. So that's how we see it.
Clearly, in terms of phasing, if you look at year 2025, given the investments we made in the second half of this year, we're expecting some carry-forward effect in Q1 and Q2 of next year on SG&A, and so the operating leverage in year 2025 will be primarily skewed in the second half of the year, but still, we have plans in place, and we think we'll be there by year-end.
[Beautiful], thank you very much, Paolo.
Thank you, Trevor.
The next question is from Isacco Brambilla, Mediobanca. Please go ahead.
Hi, good evening, everybody. A quick follow-up on the net financial position side. Just wondering if there is any kind of guidance you may give for this year in terms of leverage.
No, no, we're not giving a guidance, but it would not materially move from the current position.
Okay, thanks, Paolo.
Thank you.
Sorry, the next question is from Jeremy Fialko with HSBC. Please go ahead.
Hi, good evening. Thanks for taking the question. So a couple from me. First one is to talk a bit more about the U.S. Cognac category and just kind of how you see that evolving over the coming period. So obviously, it's in a very difficult spot at the moment. And how can you give yourself the confidence that there aren't some more kind of structural issues within the category in terms of consumer preferences and consumers, previously Cognac consumers migrating to other categories? Second one is on the Asia region, where I believe that your predecessor had indicated that there was going to be double-digit growth in the second half, but still a lot of disruption due to route to market changes.
So perhaps you could elaborate on those and when you think you get into a kind of cleaner situation and then the final one is on Italy. If you could talk a bit more about whether that retailer dispute has been solved and how you see inventories in the kind of Italian wholesale supply chain. Thanks.
So starting from the U.S. Cognac industry is one of the categories where we saw high promotional activity and it seems that the high-end Cognacs are struggling the most with consumers trending down into VS. Luckily enough for us, our U.S. business is primarily VS and so that is potentially a positive. Of course, level of inventories seems to be in Cognac now reasonably okay and so in the future, our expectations currently are that the sell-in, the shipments will mirror depletions and sell-out data. So that's our expectations.
Of course, on Courvoisier, we need to rebuild the equity. There is a big opportunity of lifting price over time. At the moment, it is probably 30% below the biggest player. And we need to catch up there because the brand does deserve more. So on Cognac, we think we will develop an interesting marketing platform for the brand in year 2025. And that would start, put a little bit of energy into Courvoisier. Vis-à-vis Asia, yes, the double-digit growth trajectory is not achievable on a full year. Still, in Q4, we're expecting good results. In terms of disruption, probably China is the market where we've moved from a distributor go-to-consumer structure into having our own organization. As the time goes by, we more and more cover with tier one and tier two wholesalers distribution across all the regions.
Clearly, if we think of Cognac, the area where we see big opportunities is the south and east, and this is where we're building our organization, so of course, we have presence in Shanghai and in Beijing, but clearly in the south, Shenzhen and Guangzhou is where we're making further progress. In southeast, Xiamen is where we're going. If you think of Cognac in Asia, it's mainly on-premise in the south and southeast: energy venues and gifting across the whole country, and probably for us, there is an opportunity there, not only for Courvoisier, but also for Aperol and Aperol Spritz, so we are quite confident, but still, it's a big country, and the path of execution of our go-to-consumer, direct go-to-consumer strategy is probably slower than what we thought. India is the other market where we've had some changes of management and distributor.
And so even there, I think we are behind schedule. But if I look at other markets, for example, Japan is an extremely promising market. We're growing nicely in this market, and we see a lot of potential there. South Korea, I've mentioned that, is a very high-margin market with a significant brown spirits market. You know we've basically took full control of the distributor. And so basically, it's a focus market for us. Of course, in Asia, the largest market remains Australia, which is going through poor macro conditions. But on the other hand, we have a very strong performance on our Aperitifs. And we're entering into the peak season of consumption for Aperitifs in Australia. We've a little bit tweaked the Australian strategy.
You used to be, I have to say, in sync with the context, very much off-trade focused with a new management team in place and with new strategy where being more emphasis on the on-trade. So we think particularly Aperol and Campari will benefit of this reallocation of focus and energies into the on-trade channel that is fundamental. But still, it's a highly competitive market where we operate with ready-to-drinks, Wild Turkey in particular, and glass business, the bourbon Wild Turkey. So it's definitely not, on a full-year basis, a double-digit growth market. Vis-à-vis the last question, the Italian wholesalers, yeah, they have destocked a lot, I have to say. You have to think at Italian wholesalers as small players, not the big multinational. It's a small business. So perception matters a lot to them of consumer confidence and consumption in the on-trade, particularly.
So at the moment, the sentiment remains negative. So they are aggressively restocking. We think most is done. We don't expect further restocking. The level of stock is quite low at the moment. You do not have all the elements because, as I said, it's highly fragmented and it's multilayered. But it seems to us that the worst is behind us and most of the stocking has occurred. Of course, the consumer confidence and disposable income in Italy is an important element, and that's what can really make the difference.
And sorry, I just thought that the retailer disputes. I know there's quite a few questions there, but if there's anything you could say about whether that is now resolved or not.
Sorry?
I think the question about the dispute with one of the convenience store retailers that you mentioned in Italy, whether that is now resolved.
Yeah, the commercial dispute is closed. So we're back to business. Yeah, unfortunately, we've lost the peak season with them. So basically, they ask for price reduction, which is not in our hearts. So we prefer to walk away. They had to list both Campari and Aperol by buying the product in the wholesale channel and in the cash and carry. But clearly, they positioned the price at a very, very high level. So basically, the brands were not rotating in a critical channel. We've lost EUR 1 million in that channel, on that account in Italy in Q3. But I think it's important because if you keep price discipline, then you can better manage all other retailers and the upcoming negotiations on price increase for year 2025. If you give up, then everything becomes more and more difficult.
Perfect. Thanks for those detailed responses.
Mr. Marchesini, there are no more questions registered at this time. Apologies. We have a question from Francesco Brilli with Intermonte. Please go ahead.
Yes, good evening. Thanks for taking my question. Just a very quick one. Just wondering if the link to the cost containment programs, some additional CapEx, specifically for infrastructure in technology or something like that. Very quick one.
No, we're not envisaging any specific CapEx. It's org design, org adjustments, and leveraging past CapEx. So we've invested a lot in IT and technology, and this is clearly unlocking opportunities in terms of reducing the cost of doing business. Of course, it's not just the technology, it's also process design. So we're simplifying our processes from planning to whatever to be more effective and agile in what we do, and that comes with cost reduction. But no, we're not adding any other extraordinary CapEx to the ones that have been already announced.
Okay, perfect. Thank you.
The next question is from Paola Carboni with Equita SIM. Please go ahead.
Yes, hi. Good evening, everybody, and ciao, Paolo. I have a very quick question on your guidance for savings on SG&A on the three-year period. I was wondering whether we should take this indication of 200 basis points saving as, say, the gross effect of your initiatives, but then we might expect you to keep on strengthening your route to market in some region as much as supporting, for example, Courvoisier and so on. Or is it reasonable to expect this 200 basis points to be entirely visible, so as a net effect?
Secondly, on Courvoisier, if you can give us a sense of where you are with the cleanup of the range, as the brand already being impacted by this in 2024, including the current quarter, or should we expect this headwind to continue in 2025, and to what extent, if possible? Thank you very much.
No, on the SG&A front, we are aiming to achieve 200 basis point reduction of SG&A on net sales, net of any investment. So it's a straight 200 basis point cost containment on revenues. So any investment in route to market is covered by that. So it's not offset by other incremental investments. So if you look at year 2025, as I said, the shape is bell shape, [50 in 2025, 90 in 2026, and 60 in 2027] .
So if you look at 2025, you have the 90 basis points organic gross margin expansion due to the already mentioned net effect of tailwinds and headwinds, EUR 30 million. You have the synergy program, the cost containment program of 50 basis points. And within that, we accommodate potentially a minimal step up of A&P as a percentage of revenues, if any. So that to be seen on the back of the analysis of our operating model review with the creation of houses of brands and the review of the marketing budgets, global marketing budgets, and local marketing budgets. So we think there are opportunities for strategy efficiencies also in the A&P spend. And so we'll see what's the outcome. But directionally, we may want to step up the A&P to, say, the 17% as percentage of revenues. We'll see whether that occurs in 2025 or in subsequent years.
Okay, thank you. And on Courvoisier, if you can. Thank you.
Yeah. So on Courvoisier, there is the need of doing the cleanup of the range. At this stage, the premium end is primarily so over and above XO, targeting China, Asia. But at the moment, given the level of stocks that are there, there is very limited business. So actually, the impact on 2025 is negligible. And so even if we decide to proceed with the cleanup, as we will decide to proceed with the cleanup of the range in 2025 and onwards, the impact on the business is insignificant. It's not the Grand Marnier business case where we've cut Cordon Jaune in Germany, which was a good 10% of the business. So here is small.
Okay. Thank you.
Thank you.
Thank you. Marchesini, there are no more questions registered at this time.
Okay. Thank you very much.
Look forward to seeing you soon. That's about it. Enjoy the evening and the evening for everybody now.
Thank you.
Thank you. Bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.