Good afternoon. This is the ChorusCall conference operator. Welcome, and thank you for joining the Campari Group Full Year 2023 results presentation. 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 Mr. Bob Kunze-Concewitz, CEO of the Campari Group. Please go ahead, sir.
Thank you. Good afternoon, or good morning, and thank you for joining us today. As you know, my 17-year tenure is coming to an end. I've actually, on an operational basis, passed the symbolic cocktail shaker to Matteo. Paolo and I will take and answer all of your questions today. Matteo is with us, and he'll be in listening mode, but he'll say a few words of introduction at the beginning. Matteo?
Thank you, Bob, and good morning and good afternoon, everyone. Obviously, it's a real pleasure to be here with you today. Most importantly, I'm looking forward to meet you, and answer all your questions in the coming weeks and forthcoming roadshow. For today's call, however, like Bob said, I will leave it to him and Paolo, who will entirely manage the presentation as well as the Q&A session. Thanks a lot. Look forward to meeting you, and over to you, Bob. Thank you very much.
Thank you very much, Matteo. So if you join me on page three of the presentation, as you can see, 2023 was another year of quite strong and profitable growth, where we're consistently delivered on strategy. I mean, net sales at EUR 2.919 billion is actually best in class from an organic sales growth standpoint, leading to a 10.5% organic growth over the fiscal year. Q4 was also quite a strong quarter, where we ended up organically up by 10.6% on the top line. Clearly, we have solid brand momentum, which continues to be driven by our aperitifs, tequila and bourbon, and this continued as well into Q4. We have a sustained and continued industry outperformance, which is underpinned by pricing across the portfolio, driven by the U.S., our core European, as well as Asia-Pacific markets. Adjusted EBIT came in at EUR 618.7 million.
It's an organic growth of 15.5%, so a 90 basis points accretion over the year. When we consider a normalized level of A&P, as you know, during the summer, we had to cut quite a few activations because of bad weather. Taking that into consideration, adjusted EBIT would come in at EUR 600.7 million, which would result in an organic growth of +12.3%, which is also spectacular within this overall environment, leading to a 30 basis points accretion over the year. And this has been driven thanks to pricing and mix. Now, the forex gods weren't on our side, and we've had quite some headwinds. We've had net negative forex effect on net sales of EUR 94.5 million over the year. And on the adjusted EBIT, the headwinds reached EUR 46 million.
Clearly, quite an impact, and this is largely due to the transactional effect of the Mexican peso as well as the depreciation of the U.S. dollar. Net debt on EBIT, adjusted came in at 2.5 times, a slight increase from the 2.4 times we registered the prior year. Basic, adjusted earnings per share came in at EUR 0.35, roughly flat versus previous year. As is our habit, every few years, we propose a dividend increase, so we propose a full-year dividend of EUR 0.065 per share, which amounts to an increase of 8.3%. Now, while we'll dive into the details of 2023 and dissect them, and I'm sure you'll have a lot of questions, I think it's also worth zooming out and looking at the bigger picture and what we've been able to accomplish since the pre-pandemic era.
Now, overall, our business scale increased by 60% versus 2019. This clearly reflects a strong momentum and creates, whereas now, a new base across core categories and key markets, which will continue to be supported and enhanced by commercial capabilities and our boosted infrastructure. Looking at our top-line growth between 2019 and 2023 on a compound annual growth rate basis, you'll see that our three most important categories have been growing solidly double-digit: the aperitives by 16.5%, bourbon by 10.7%, and tequila by 30.3%. Now, if we look at it, in terms of the overall growth over that period, our core aperitives grew on an organic basis by 84%, representing today 40% of our sales. Bourbon grew by 50%. Tequila almost tripled. So clearly, it's quite a good performance.
Importantly, we've had a nice diversification also from a geographic standpoint, thanks to the route-to-market build, which we executed in the past few years, most notably in Asia-Pacific, which managed to double its value weight to 4% if we exclude Australia. Now, with the strong growth of tequila, obviously, that had an impact on gross margin, as you can expect, due to the high cost and the increasing cost of agave in the past few years. Our gross margin at the end of 2023 remains still down 220 basis points organically, 270 reported. As I said earlier, this is largely due to the increase in agave purchase price with the strong growth of Espolòn and the general input cost inflation increases, which we saw post-pandemic, as well as incremental depreciation, which is linked to our step-up in production capacity.
Now, over the time period, it must also be underlined that we've had strong pricing power, which more than offset COGS inflation in value. And clearly, we're quite confident regarding the potential for the gradual margin rebuild in the medium term. EBIT margin trend benefited also from significant operating leverage following sustained investment in brand building as well as business infrastructure. And we've had continued brand building investments amounting to almost EUR 200 million over the period. And we've enhanced our route-to-market with 26 direct markets versus the 20 we had in 2019. Now, all of this also added up in terms of total shareholder return. And it's interesting to see that if we look at 3 different periods, since our IPO in July 2001, since I took over in May 2007, as well as the last five years, we've practically outperformed all of our benchmarks.
We've outperformed the average of the spirits sector as well as the Euro STOXX 600 food and beverages. With regards to since IPO as well since 2007, we've outperformed the MSCI Europe. So what is driving all of this, and what will we do going forward, big picture, clearly? Now, we believe that consistency is key, and we strongly believe that our group remains prime for the next stage of growth thanks to the consistent strategic framework with focus core strategies. This is our cocktail for growth and is built on four pillars: enhanced focus on core strategic markets and categories, continued brand building via proprietary marketing model, continued reinvestment and development of commercial capabilities to support the growth of our core categories. Last but not least, clearly, M&A remains a very important business priority for us, at the same level as organic growth.
Starting with the first pillar, enhanced focus on core strategic markets and categories, we're very pleased to say that Espolòn is finally joining the Global Priority Brands, and we will be able to combine very strong U.S. presence. By the way, Espolòn U.S. is our largest brand-market combination, and we'll be able to couple that with unconstrained volumes enabling international opportunities. With regards to the aperitifs, we'll continue strengthening our leadership in this key category, leveraging our scalable model in both established, high-potential as well as seeding markets. We will continue premiumizing and leveraging premiumization opportunities via our aged spirits portfolio, particularly in strategic markets like the U.S. and Asia. We see good opportunities for a further step up in the under-indexed APAC via strengthened commercial capability as well as the very positive expected impact of future Courvoisier acquisition.
And by the way, this is a region that has also grown 80% organically since 2019. Last but not least, we're announcing something which we've already started executing and is in place since early January, which is a strategic organizational change via a partial business unit reconfiguration leading to one combined Europe-Middle East Africa region for the next phase of our growth. And clearly, you know, the key driver here is marketing and commercial synergies, and it makes a lot of sense. With regards to brand building, we'll continue to reinvest, you know, leveraging the deflationary input costs in brand building and leveraging our sustained A&P investment behind our proprietary model, which you know is quite distinctive compared to our peers and is based really on activations and events and then the digital propagation of that.
We will focus on differentiated campaigns, and all of our brands have very clear and identified brand territories. We will continue engaging across all of our channels for our core brand building and occasional ownership. With regards to commercial capabilities, we will further develop our digital capabilities across the organization with a view to accelerating our digital transformation programs, particularly leveraging data and analytics, pricing, and RGM, revenue growth management. We will continue to make investments into route-to-market companies to increase our scale in local markets by effective commercial and marketing execution. Last but not least, we will bring to an end over time our focus CapEx programs to boost both our capacity expansion as well as support the expected brand growth trajectory in our core markets and core categories in years to come.
Now, with regards to M&A, you know, this year, we will expand into premium cognac via Courvoisier. Clearly, what we're looking at is also at accelerating and, you know, improving integration. So we've set up a strengthened organization and a very clear and multifunctional dedicated function responsible to accelerate the integration of the sales and marketing activities of the brand. And we will continue to focus on premium M&A. We both have the appetite and the means to do so, continuing to deliver superior returns for our investors. Now, on page seven, delving back into 2023, you see that we have positive growth across all of our regions, significantly outperforming our respective reference markets, with clear drivers being the aperitifs, tequila, and premium bourbon. In terms of regions, North, Central, Eastern Europe, and APAC grew strongly double-digit, and the rest of the world grew in the high single digits.
So a very, very nice combination. Global priorities grew by 10.8% and regional priorities by 13.4%. So clearly, we're growing the right stuff. Moving on to page 8, starting off with the Americas. The Americas are our largest region, 44% of sales, growing organically by 7.7%. We're actually very happy that our largest market, the U.S., grew double-digit last year, which is a remarkable feat, organic growth of 10.1% with an acceleration in Q4 to 12.8%. Your key drivers, as you can expect, are Espolòn, the aperitifs, Russell's Reserve, which is doing a great job premiumizing our bourbon offering, as well as Appleton Estate. Grand Marnier returned to growth in the last quarter, but clearly, destocking impacted the overall U.S. numbers.
Now, if we look at our performance from a consumption standpoint, we're also very pleased to underline that we've outperformed the overall market and our peers in terms of both the Nielsen indicators as well as the NABCA sellout indicators. One interesting statistic is that we are confirmed as a top-value growth driver as a supplier for our partners, Southern Glazer's Wine and Spirits. And as you know, you know, they represent, you know, the best and the finest in the country. And even more so that Aperol and Espolòn were two out of the top 10 growth-value drivers for Southern in 2023. So having two out of the top 10 brands is very positive. Jamaica only grew by 2.4%. Clearly, there was a very tough comp base. We grew by almost 30% last year.
But also, the country was constrained from a product availability standpoint, particularly on Wray & Nephew White Overproof. The rest of the region grew also respectable 4.9%. Actually, we had very strong double-digit growth in Brazil and Mexico, which offset the weakness in Argentina, as you can expect, impacted by macroeconomic issues. Our second-largest region, SEMEA, grew, representing 28% of our sales, grew in high single digit, 6.8%. An overall positive performance in Italy, up 5.5% on an annual basis, so consistently outperforming the reference market. Positive year-end. You know, we were negatively impacted by weather in Q3, so we were able to regain momentum in the key Q4 quarter. And again here, the key drivers is our strength in the on-premise and the outperformance of our aperitif portfolio, which was also boosted by pricing and the expansion of usage occasions.
Our second-largest market in the region, France, grew by a nice 7.2%. Q4 was a little bit softer due to a very tough comp base. Here, the drivers are the aperitifs as usual, aperitifs, Aperol and Campari, but also Riccadonna Sparkling Wines, Trois Rivières Rums, Picon, which we only acquired a short while ago and managed to return to growth, as well as Champagne Lallier. Regarding the rest of the region, despite very weak and actually, you know, negative performances in, you know, key markets such as Nigeria and South Africa, the rest of the region grew by 10.6%. So clearly, this was driven by the other key markets, particularly Spain and Greece, where we continue to generate very positive momentum thanks to our aperitifs. Global travel retail also did very nicely.
Moving on to the following page, North, Central, Eastern Europe, 21% of our sales growing at very strong 18.7%. Now, this region has gone from strength to strength, outperforming all reference markets across the board, no question. In Germany, outperformance across the board, with very strong, you know, 23.9% growth. So clearly, this shows there's a very nice return on investments on the commercial capabilities boost we activated in the past two years. And you can see that in the results. Now, moving on to the U.K., up 19.1% organically. Again, a very big delta versus the reference market, which was down around mid-single digit. So, again, within a context of a tough consumer environment, we're able to perform very nicely, with a very positive end of the year. Q4, we were up 32.6%.
key drivers, aperitifs, but also our Jamaican portfolio, Magnum Tonic Wine and Wray & Nephew overproof. We actually had made a decision to allocate more product to the UK, and constrain Jamaica as we're still in a building mode in that key market. The rest of the region, again, very good performance, double-digit growth across the board, 14.5%. key drivers, aperitifs. Last but not least, APAC, our smallest but one of the fastest-growing regions, up 20.7%. Australia, nice 5.3% organic growth. Again, Aperol playing an important role as well as the Wild Turkey RTD, the bourbon, and Espolòn off a small base. We had a weak Q4, but that is explainable via the very strong 2022 comp base, which was up by 31.1%.
Now, if we look at the rest of Asia, very positive growth, with very nice traction in the highly profitable and premium South Korean market driven by the high-end Wild Turkey offering, plus X-Rated and SKYY. China also registered positive growth overall, but that against an easy comp base. And key drivers here are SKYY and Aperol. And Japan, we're also excited to see growing very strongly thanks to our brown spirits, our SKYY ready to drink as well as Campari. Moving on to dissect the performance by brands, we'll start with our key brand, Aperol. And I think this, this chart is probably one of the most important ones of the, of the whole presentation. You can see that, you know, 20 years post-acquisition, we continue to grow this brand double-digit. In 2023, it's up 23.1%, reaching 24% of our group sales.
And we see that the growth is actually very broad-based and came in despite the weaker Q3, which was impacted by unfavorable weather in Europe. Price repositioning and strong consumption obviously helped. Core Italy grew in the high single digits, 8.2%. Germany by a whopping 32.9%. The U.S., and this is becoming a very, very meaningful market for the brand, grew by 52%. France, 11.7%. And the U.K. by 29%. Now, this strong momentum is across all other markets. In Europe, again, Spain, up 29%. Scandinavia, 32%. Austria, 16%. Belgium, 16%. Poland, 56%. So very nice traction. But what's even more, I think encouraging is to see the next engines of growth reaching new heights. Mexico, up 48%. Canada, 31%. And very strong growth across APAC.
In Australia, where we returned to sponsor the tennis in Melbourne, returned to grow double digits, 27%, and growing triple digits in the rest of Asia. Now, the most important, I think, chart is the one on the bottom on the left, where, as is our habit, we look at per capita consumption across our markets. But this time, we did it a little bit more interesting because, as you know, Aperol sources from beer, roughly, you know, two-thirds or 75% depending on the market of consumption is consumers moving over from beer. And even if you look at Italy, which is our most penetrated market from a PCC standpoint on the brand, Aperol's percent PCC as a percentage of beer PCC is only 1.2%. So this clearly shows there is still a long and an important opportunity ahead of us.
If you look at once you establish, or set Italy as an index 100 in terms of Aperol's PCC, you see where all the other key markets are. You know, one of the largest markets, the second-largest market on the brand, from a volume perspective, Germany, has only half of Italy's penetration. Now, if we look at the, you know, third-largest market, the U.S., we're only at 4% of Italy's penetration. This, I think, sets in mind what I've been telling investors and analysts for a long time, is that we're really only at the beginning of the growth trajectory of this brand. Here are the markets which where we launched first. You know, if we start looking into the Asias and South Americas of this world, you'll see that the opportunity is even stronger.
Moving forward, Campari, our second-largest brand with 11% of our sales, growing double-digit, 10.7%. This despite, you know, weakness in, in Jamaica and particularly, very, very poor results in Nigeria due to the overall environment. So very positive, performance overall. This brand, clearly also boosted by our successful repositioning. And, our growth is driven by some key markets. Italy, high single digit, 8.9%. Same with the U.S., 8.5%. Brazil, very, very vibrant for us, up 34.8%. Germany, up 18.1%. So, the cocktail which we have or the cocktails which we have, which are a combination of the Campari Spritz, which is a big volume driver, and then the image drivers like the Negroni are working very, very well for the brand.
Now, with regards to the Campari Spritz, what is interesting to underline is that if you look at a market like Italy, 25% of Campari's consumption comes from the Campari Spritz. And what's even more interesting to see is that if you look at it in terms of does it cannibalize Aperol, only 15% of that consumption comes from actually Aperol Spritz. So what we're doing is bringing in more consumer into the Spritz category via Campari Spritz and taking from beer as well as wine and other categories. Moving on to Wild Turkey, up high single digit, 8.8% on an organic basis, representing 8% of our sales. Here, we have strong brand momentum. In a premiumizing category, we're probably premiumizing faster than the rest. You know, since we've acquired the brand, we've taken it to another place.
We're seeing very positive performances across core markets as well as new markets such as South Korea and global travel retail. As I mentioned at the beginning, the high-margin Russell's Reserve is going from strength to strength, clearly outperforming premium. Very strong double-digit growth in the core U.S. And as, you know, volumes become available, we start also seeding the brand in key markets such as Australia, South Korea, and Japan. Moving on to our Jamaican rums, despite, you know, some supply chain limitations, up high single digit, 7%, 5% of our growth. Very excited to see Appleton Estate growing double-digit, 13.5%. So it's clearly becoming one of the leading brands in the aged dark rum category, which is where all the action is in rum with the exception of white overproof.
White overproof was a little bit handicapped, but once we have our dunder treatment plant in line, functioning at the end of this year, early next year, I think we'll be able to really let this brand express its, its potential. So it only grew by 1.9% last year as it was severely constrained in the first half of the year. Moving on to Grand Marnier, that's the only sore note, but it's hardly a surprise. As we proactively decided to destock our distribution network, on a shipments basis, we're down 16.5% organically. Clearly, this is all focused around the U.S. market. But despite the destocking, we continue building the brand for, for the long term, investing behind the right initiatives from a marketing standpoint, and highlighting the incredible versatility of the liquid.
With regards to premiumization, we very successfully continue that journey via the cuvées across all of our core markets. Moving on to SKYY, I'm very pleased to report that actually we managed to grow the brand up 1.5%. And it only represents now 4% of group sales. That's a clear indication on how we've been able to diversify our portfolio successfully over the years. A key driver here, obviously, are the international markets, particularly China, Italy, and global travel retail, whereas in the U.S. it remains a challenged category. And most importantly, though, is that international is picking up pace. Now, international represents 1/3 of the brand's sales. And we expect that to continue growing going forward. Our last but not least new arrival to the global priority brands, Espolòn, up 35.7% organically in 2023.
Again, you know, very proud to report 14 years of consecutive and significant double-digit growth behind the brand one after another. The core U.S. continues to do very well. We were up 30.9% in Q4, in the U.S. And we're continuing to gain market share, which is both a combination of volume share as well as positive pricing. International markets, now we're benefiting from the increased volume availability. So we started to successfully seed the brand in Australia, Canada, and Italy, and soon we'll expand it to more markets. So out of nowhere, you know, this is a really cooked-in-our-own-kitchen brand. It's grown in 14 years to represent 8% of our sales. And this is not the end of it, because we do expect strong international growth. And also, it'll become more appealing from a profitability standpoint as the agave prices have significantly come down.
Moving on to regional priority brands, they represent 26% of our sales, and they grew 13.4% overall. Sparkling wine and vermouth benefited from clearly our cocktail strategy, the Spritzes as well as the Negronis of this world. The Italian specialties were slightly down, 3.9%, behind significant price increases in the Italian market. But it's also good to see that, you know, our main priority, Braulio, despite the significant price increases, continued to grow and helped offset quite a bit of the decline on the other ones. Crodino, up 3.6%, organically. Aperol Spritz, Aperol Spritz, 6.6%, noting both together because these are two brands which benefited from significant pack architecture changes last year. So both in terms of the size as well as the number of bottles in the clusters.
And clearly, this creates a little bit of a transition effect, particularly in the main market, Italy, which slowed down, but we expect that to regain momentum. The Glen Grant, benefiting from premiumization and the big focus in Asia, growing double-digit, 13.8%. And Magnum Tonic Wine also doing very, very nicely, up 21.2%. Closing it up with our local brands, which now represent only 8% of our sales and, you know, have been growing 3.9%. Campari Soda grew only by 2.3%. Again, here, pricing impacted it in Italy. But we'd expect that to recover in the medium terms. Wild Turkey ready to drink, up 3.4%. We're starting to regain the promo slots we lost in 2022 due to product unavailability. So we'd expect this to build momentum. X-Rated, up 4.3%, again, thanks to China and South Korea.
SKYY ready-to-drink, which, you know, maybe when we talk about the SKYY franchise, we should also include those numbers, because we're talking about significant volume here, growing by a very strong 35.5%. This is it in terms of the top-line performance. A few bullet points on our business development initiatives and new investments before handing over to Paolo. First of all, one important move is that we will transition to a new route-to-market model in China. And obviously, we're doing this ahead of the Courvoisier integration. So as of April 1st, we will go direct to our customers. And we'll no longer be distributing via Telford. So this will impact, I think, very positively our whole portfolio of brands, as we believe that we have ample opportunity in China.
With regard to Courvoisier, we're pleased to announce that yesterday, we signed the sales-purchase agreement, and we're perfectly in line with our timings. We expect to close, obviously, this year and hopefully within Q3 as planned. Now, one last item, and this will be new to the market. We've also decided to, over time, relocate the group's headquarters, Sesto San Giovanni, back to Milan. This will require new investments in a real estate project. And the key reason why we're doing it is clearly where we need more space, particularly that now we're relocating the newly formed Europe, Middle East, and Africa, region together with the, group, headquarters together. You know, this will just result in a fully modernized working environment. We'll be able to also leverage our proprietary brand houses and academies in the city center.
I mean, that will be particularly beneficial for the Campari brand, to have the Galleria Campari in a stone's throw from the Duomo. And also, we believe that for the long term, I think image of the brand and the company, reestablishing our bond with Milan is important. Now, this is it from our end. And I'll pass on to Paolo.
Thank you, Bob. If you follow me to page 21, we have, you know, the analysis of of EBIT performance. EBIT adjusted organic growth in in full year 2023 accounted for 15.5% in value with 90 basis point organic margin expansion. If you look at the fourth quarter in isolation of last year, the EBIT adjusted organic growth accounted for 45.5% with 350 basis point EBIT margin accretion.
Back into, you know, the comments for, for the full year, the EBIT, the gross profit increased in value by 11.2% with 30 basis point margin accretion in full year. If we look at the fourth quarter in isolation, gross profit grew in value by 13.7% with 160 basis point accretion. The positive uplift in gross profit as a percentage of revenues was supported by pricing, positive mix, and initial benefit from the agave cost reduction. Those factors more than offset in total the persisting input cost inflation and incremental fixed production costs that are tied to the extraordinary CapEx program, which we've just commented. The AP increased by 5.5% in value with 80 basis point margin accretion. If you look at the first quarter in isolation, the accretive effect of A&P on revenues was worth 180 basis point.
The increase, sorry, the margin accretion driven by A&P was driven by reduced activations due to very poor weather condition in peak aperitive season as well as some A&P phasing that I will comment in a second. Now, if you look at, you know, on a normalized basis, you know, aside of the reduced activation in the programs in the aperitive portfolio in the peak season, on a normalized level, the A&P would have been, you know, 20 basis points accretive. And to the right-hand side, you have, you know, the magnitude in value of the 60 basis points reduction in A&P on revenues that is, you know, EUR 18 million. So that the, you know, reported EBIT of 618.7 million adjusted normalized by the EUR 18 million A&P reduction accounts for EUR 600.7 million of EBIT adjusted and normalized for the reduced A&P.
Though, you know, notwithstanding the adjustment, the delivery of EBIT normalized is still, you know, extremely positive with a 12.3% organic and 30 basis point organic margin expansion. If you look at the first quarter in isolation, on a normalized basis, EBIT grew by 22.3% with 120 basis point accretion. On a reported basis, including, you know, Forex and Perimeter, EBIT grew by 8.6% in value. The negative Forex effects accounted for 8.1% versus 3.5% negative impact of currencies on top line. And that was, you know, largely driven by transactional effect of the Mexican pesos, as well as the depreciation of the dollar, and other emerging currencies versus the euro. In Perimeter, the positive contribution of, at the level of EBIT was 1.2% in line with top line at 1.2%.
And that, you know, clearly reflects the first-time consolidation of Picon acquisition as well as the Wilderness Trail Distillery acquisition. The adjusted EBIT came in at EUR 729 million with a reported change of a positive 10.4%, of which 15.5% comes from organic performance, 2.1% from Perimeter, and a negative 6.1% due to Forex. You know, if we normalized the EBIT results for the reduced A&P, the normalized EBIT would be EUR 710.9 million, up 12.7% organically as opposed to 15.5% organic on a reported basis. If you follow me to page 22, the performance of the different region in the Americas region were, the regional profit accounts for 42.2% of the overall group profit. The increase in the organic increase in EBIT accounted for 9% with a margin accretion of 30 basis point.
The gross margin as a percentage of revenues grew by 50 basis points due to favorable price mix that more than offset the cost of inflation. The A&P in the Americas region was slightly accretive, basically, you know, in line with top line, + 10 basis points. While, you know, SG&A on revenues in the Americas region drove 40 basis points dilution due to sustained investments, particularly in the front office, in commercial and marketing infrastructures. In the SEMEA region, which accounts for 20.3% of the overall group, EBIT was up by 20.8% with margin improvement of 180 basis points. Gross margin expansion accounted for 20 basis points driven by strong pricing, pricing that includes the increases introduced last fall as well as the favorable sales mix.
Those, you know, two components more than offset the cost inflation. The A&P in this region was highly accretive, 170 basis points due to the cancellation of the summer activation programs, due to very poor weather conditions. And this is, you know, all tied to the aperitifs. The A&P phasing into 2024, and some of the A&P phasing from, you know, as I said before, from 2023 into 2024, the EUR 18 million. The SG&A is slightly dilutive by 10 basis points with a strengthening of commercial capabilities in key markets, which, you know, the investments you know, the dilutive effect of those investments was partly mitigated by the strong top line delivery in the SIMEA region.
In Northern and Central Europe, which accounts for 35.9% of group EBIT, EBIT organically grew by 23.7% last year with a margin accretion again of 150 basis points, not far from the accretion we registered in SIMEA. The dilution in this case at the level of gross margin accounted for 70 basis points. That was impacted by cost inflation, which was partly offset by positive pricing. Also, in this region, the A&P was highly accretive by 150 basis points again due to the cancellation of summer activation programs due to poor weather conditions as well as some phasing of the A&P spend from 2023 into 2024. The SG&A were accretive by 80 basis points, again here due to the very strong top line delivery in that market.
In the APAC region, which accounts for 1.6% of the overall EBIT, the EBIT declined by 11.7% with a margin dilution of 2%. Actually, in this region, you know, very solid results in terms of gross margin accretion, 210 basis points thanks to extremely strong pricing, very favorable sales mix, driven by continued premiumization of our offering in that market, which more than offset the cost inflation. On the other hand, you know, the disproportionate investments in A&P as well as the investments in new route-to-market capabilities drove a drift in A&P and SG&A, which accounted for 50 and 360 basis points, respectively. If you move on to the following page 23, the operating adjustments in fiscal year 2023 accounted for EUR 78.5 million.
Those were merely attributable to provisions linked to the restructuring initiatives, including a change in route-to-market, some non-recurring costs connected to IT programs, CapEx programs, which were meant to strengthen our system supporting commercial and marketing organization, you know, impairment of fixed assets, intangible, as well as last-mile long-term incentive schemes. The total financial expenses came in at EUR 75.6 million with a significant increase versus a year ago of EUR 44.9 million. If we carve out the unrealized exchange losses, the financial expenses came in at EUR 56.4 million versus EUR 21.4 million of last year and showing a EUR 35 million increase year on year. Such increase was due to the combined effect of, on one hand, a higher level of average debt, EUR 1.7 billion versus EUR 1 billion in fiscal year 2022.
On the other hand, a higher average cost of net debt, 3.3% versus 2.1% of last year. We then had unrealized exchange losses of EUR 19 million linked to cross-currency transactions involving intercompany transactions involving certain emerging market currencies, particularly Argentine pesos, for which the hedging would not be cost-efficient and hence has not been activated by the group. Hyperinflation and earn-out effects accounted for a positive EUR 10.3 million. While losses related to associates accounted for EUR 8.3 million. PBT, profit before tax, on a reported basis came in at EUR 466.5 million, slightly lower than prior year at EUR 475 million. On an adjusted basis, PBT came in at EUR 544 million, up 1.2%. If we actually, you know, adjusted the PBT also off the unrealized exchange losses, the adjusted PBT would be EUR 563 million, with a year-on-year growth of 3.8%.
If we move on to page 24, in year 2023, taxation total EUR 134 million on a reported basis, with recurring income taxes amounting to EUR 151.8 million. The group net profit on an adjusted basis came in at EUR 390 million and was up 0.7%. The recurring tax rate came in at 27.9% in fiscal year 2023, 30 basis points lower than fiscal year 2022, when it came in at 28.2% due to favorable effects from Argentina. Now, if you look into 2024, we flag a, you know, deterioration of recurring tax rate of 200 basis points, of which 100 basis points are coming from lower deferred taxes. And another 100 basis points is due to the termination of certain tax incentives, in the Italian market that were meant to favor, you know, investments in infrastructures.
Excluding the impact on non-cash component linked to the deferred taxes, in year 2023, the recurring tax cash tax rate stood at 24%, down 100 basis point thanks to the combination of lower recurring tax rate and higher deferred taxes. Group net profit reported came in at EUR 330.5 million, slightly down, 0.7% down, EUR 349.7 million excluding the unrealized exchange losses, with an increase of 3.6%. Basic EPS, earnings per share on an adjusted basis came in at EUR 0.35, up 0.5%. Basic earnings per share came in at EUR 0.29, down 0.9% versus a year ago. If you move on to page 25, the recurring cash flow from operating activities before changing working capital came in at EUR 582 million, up EUR 19 million versus a year ago or 3.4%, as you can see to the right-hand side of the chart.
Actually, the increase in recurring cash flow from operating activities was, driven by underpinned by an increase in EBIT adjusted of EUR 68.6 million, up 10.4%, as you can see. We, of course, had higher taxes paid of the EUR 67.7 million, reflecting, on one hand, the positive business performance, but on the other hand, you know, unfavorable geographical mix and, you know, different phasing and of the timing of the tax disbursement from 2022 into 2023. The effects from hyperinflation accounting in Argentina and the impairment of, brands is a positive of EUR 14.6 million, as you can see in the, fiscal year 2023 recurring cash flow. And the variation in accruals and other changes from operating activities is worth another positive EUR 26.7 million, primarily related to, you know, the share-based, incentive plan.
The recurring free cash flow was positive at EUR 66.9 million, down, you know, significantly, EUR 293.6 million versus a year ago. You know, the key drivers of that, you know, recurring cash flow compression are, you know, the factors that you can see below, a negative cash effect from operating working capital step-up that is worth, as we can see in a second, EUR 362 million, significantly higher than a year ago when the operating working capital increase accounted for EUR 83.9 million.
We have, you know, higher net interest paid for the reason I've mentioned, of EUR 40 million. Net interest paid of EUR 40 million, you know, higher, by EUR 29.5 million versus a year ago. We then have in recurring CapEx, EUR 112 million but, you know, we also, you know, flag extraordinary CapEx in fiscal year 2023 of EUR 183 million, you know, leading to the overall CapEx that is in the reported, cash flow column of, EUR 295.7 million. If you move on to page 26, changing working capital over operating working capital as a percentage of revenues came in, you know, significantly ahead of, you know, last year at 37.9%, versus, 28.8% in, December 2022. The overall, operating working capital increase accounted for EUR 327 million. Now, if you look at the, organic, operating working capital drift, that accounted for EUR 362 million. If you look at the, increase in inventory, which is, you know, most of which, speaks to most of the, operating, working capital increase, the inventory was up EUR 252 million with an increase of EUR 96 million in aging liquid across, you know, the whole portfolio. Whisky, rum, tequila, and cognac.
But, you know, that was also coupled with a step-up of other inventory, primarily finished goods that is worth EUR 149 million. And that, you know, additional step-up of other inventory is mainly consistent of additional product of finished goods due to the temporary safety stock that we built, in connection with the significant CapEx, extraordinary CapEx, expansion, program. So, you know, actually, here, we wanted to maintain business continuity in the first quarter of this year. And so, you know, we wanted to clearly bridge, you know, any, any, potential issue we may have, as we, you know, go live in, primarily in, in Europe with, with, with the new, bottom lines and new and new and the new, you know, equipments.
You know, this is, you know, all stock that is sitting in our, you know, owned warehouses, and that we intend to run down in, in the first half of, of next year or sorry, of this year. We then had, you know, a, you know, cash outlay due to increase in receivables of EUR 80 million that is clearly driven by positive business performance. Another, you know, cash outlay that is due to decrease in payables of EUR 30 million. We have, you know, EUR 10.8 million of perimeter effect on operating working capital and EUR 24 million on Forex. If you move on to page 27, you know, as said before, total CapEx accounted for EUR 295.7 million, where extraordinary CapEx was worth EUR 183 million and the maintenance CapEx EUR 112 million.
We reiterate our commitment towards the three-year, extraordinary CapEx program that started, you know, last year and is meant to end next year in 2025, total, total amount of EUR 550 million- EUR 600 million. So, basically, you know, the EUR 183 million of that, you know, program has been spent in 2023, and the remainder would be spent this year and next year. On top of that, we have additional CapEx to support the move of the headquarters to Milan center, as Bob just mentioned, that is worth EUR 110 million plus, you know, the innovations.
Page 28, net indebtedness came in at EUR 1,853 million, up EUR 298 million versus last year, reflecting the negative free cash flow of EUR 180 million, largely due to cash absorption for inventory buildup, extraordinary CapEx, as well as cash outlays for the dividend of EUR 67.5 million, as well as, acquisition of minority stakes and other investments for investment for EUR 30 million. We're still sitting, you know, at December and on healthy, cash position, positive, you know, cash and cash equivalent of EUR 620 million. Worth noting the long-term, and Eurobonds and term loan overall amounted for EUR 1,907 million with an average coupon of 3.77%. In terms of leverage ratio, net debt to EBIT adjusted came in at 2.5 times, you know, with a slight increase versus 2.4 times of, of a year ago. In terms of, you know, environmental, and, we've clearly, scored, you know, pretty well in 2023.
We've been upgraded from CDP Climate Change from B to A minus, which is, you know, well above the food and beverage processing sector average rating of B minus. Looking at the specific targets in terms of Scope 1 and 2 on greenhouse gas emissions intensity, actually, we are 47% below reference year of 2019. You know, the next target is, you know, to further squeeze the emissions to 55% by 2025. So there is another, you know, 8 points to go. With regards to Scope 1, 2, and 3, still on greenhouse gas emissions, we've compressed, you know, emissions by 19% versus 2019. And by year 2030, we need to squeeze emissions by 30%. So there is another 18 points to achieve. On renewable electricity, we achieved, you know, a 93% from renewable sources.
Whilst the target was 90%, so we were ahead of that of that. Water usage intensity, you know, compression of 54% versus 19%. The next target is in 2025 where compression should be 60%. So another six points to go. Waste to landfill down 90%, so quite meaningful versus 2019. And target in 2025 is zero waste to landfill. In terms of responsible practices, as you can see to the right-hand side, a lot of mandatory internal training on code of commercial communication and responsible alcohol consumption. Digital brand our digital brands campaigns do contain responsible drinking messages. We've introduced QR codes on physical labels containing nutritional information, the ingredients, and again, messages on responsible drinking. And, of course, we're partnering with the International Bartenders Association to develop responsible serving initiatives for the bartenders that we serve. People and community, again, you know, very positive results.
Injury frequency index declined by 11%, and the severity index declined by 26%. So, you know, top scores here. We have a target of 40% for female representation at all managerial levels by 2027. We did, you know, some nice progress. We're at 36%. So, you know, definitely achievable. Voluntary turnover, again, positive scores, a decrease from 9.2% to 7.4%. We have a new and more inclusive parental leave policy that will be ready to go; it has been released in 2024. We have a gender fair pay program that is extremely important to us. Then, of course, in local markets, we operate in many emerging markets. We have community projects that are extremely, extremely, important. I think I'm done with the numbers and the ESG. I'll leave the floor to you, Bob, for conclusion announcement.
Thank you, Paolo. With regards to the conclusion, I think it's pretty straightforward. Thanks to our very healthy brand momentum, we continue to achieve best-in-class organic top-line performance. This despite the macroeconomic situation remaining quite challenging and taking into account the expected consumption normalization after the exceptional post-pandemic growth. Our trend in operating margin reflected positive mix as well as the initial benefits from agave, which more than offset the persisting input cost inflation as well as the incremental fixed production costs linked, as you can expect, to the extra CapEx as well as the A&P phacing. Now, looking at 2024, we expect to continue outperforming our industry by leveraging our strong brands in growing categories, albeit in a normalizing macro environment. The agave trends in moderating inflationary environment are expected to gradually reflect across the P&L from the second half of the year.
On the other hand, they will be partially offset by incremental fixed production costs resulting from the setup step-up in production capacity as well as the carry-forward effect related to the safety stock, which we built in 2023 with obviously higher input costs. The negative forex from the Mexican pesos will also continue to weigh. We will maintain sustained investments in brand building, reflecting also the A&P phasing from 2023. We will provide investments in front-end infrastructure. You all know that we have a high comparable basis in Q1. We had significant price increases at the beginning of Q2. So in many markets, customers anticipated their orders to Q1. But this will, you know, peter out over the year. The negative forex trends are expected to continue, but they will ease, though, versus previous year.
The perimeter will start reflecting the addition of Courvoisier, hopefully sooner than later. Clearly, we'll put a very strong focus on integrating the brand and relaunching it. Now, with regards to our medium-term outlook, we're quite confident in the continued healthy brand momentum in our key brand-market combinations as well as to continue our industry outperformance, leveraging both the strengthened portfolio, our geographic exposure, as well as our heightened focus on revenue growth management. We expect to have consistent operating margin expansion driven by sales mix, pricing, input cost inflation easing, as well as operational efficiencies, with enabling us also to have continuous reinvestment into brand building and marketing and commercial capabilities to fuel organic top-line growth for the medium to the long term. So this is it on our side. We're happy to take your questions.
This is the ChorusCall Conference Operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the dual-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. We will pause for a moment as participants are joining the queue. The first question is from Andrea Pistacchi with Bank of America. Please go ahead.
Yes. Hi, Bob. Paolo. Matteo. And I look forward to meeting you, Matteo. So as I think this is your last call, Bob, before the questions, I just wanted to really congratulate you for what you've achieved at Campari, which is impressive, of course.
Just to say, it's been a real pleasure to work with you over the years, get your valuable insights and perspectives. I wish you a really enjoyable retirement and also with some good traveling and skiing in between Campari Board meetings . Now, I have three questions, please. The first one is on top line. Now, you've had another year of strong growth despite the more difficult environment. You seem quite confident about 2024. Of course, you don't give specific sales guidance. Could you maybe provide a bit of color on how you're thinking about growth in 2024? What regions are you more or less confident about? And also, what are you expecting directionally for volume growth? I think you've got an easier volume comp this year and directionally for pricing in terms of carryover and new pricing.
Then the second question, probably for Paolo, is about trying to frame your medium-term consistent margin expansion aspiration. Now, you clearly flagged the potential to recover and continue to improve gross margin. But I wanted to ask about A&P and SG&A, which you've been growing well ahead of your peers in recent years as well, you said, investment in capabilities, salespeople, etc. And I think you've grown SG&A around 10% CAGR since 2019. I mean, does there come a point where SG&A growth normalizes, where you start to get leverage over SG&A? Is this part of that also consistent margin expansion medium-term? And is the A&P still flat as a percentage of sales medium-term? And then quickly, the last question is on what you were saying about the China route to market changes. If you could put a bit more color on that, please.
What will it mean for you in terms of feet on the ground and whether there could be any short-term disruption around that?
Yeah. Well, first of all, thank you very, very much for your kind words, Andrea. I mean, it's really been a pleasure for me as well as a privilege. I know we'll be able to spend some time together next week. So I look forward to that. And we can lift a few Negronis to our good health and other things as well. Now, with regards to adding some color, I think if you look at all of our top brand market combinations, the top 20 of them, I mean, they're all very extremely healthy. If you look at the internals, we look at brand health. We track and monitor them constantly. We see that they're improving over time.
At the same time, we're really prodding our marketing team to raise the bar constantly and to improve ROI on our investments as well as to stay one step ahead of competition in terms of what we do with regards to brand building. So when you put all those together, I think the good momentum will continue. Now, clearly, as I'd also mentioned in the previous call a few months ago, we were also not living on Mars. So we're part of an industry. And our industry is normalizing. And there are certain headwinds. So net in net, there's no question that we'll continue outperforming our industry. But clearly, it will normalize versus the immediate years post-pandemic. With regards to volume versus value, clearly, 2023, value was a bigger driver than volume.
We've taken between 2022 and 2023 quite a bit of pricing across the board and very successfully also in very tough markets such as Germany and France. Now, moving forward, I think it's more the time that we return to normal pricing. We're talking probably 1%-2%. It's much more price mix and RGM, which will impact the overall value headline. We expect volume to start accelerating. This is it, I think, on the first question. Now, with regards to the second question, do we expect any disruption? Probably not. We've over the past 18 months significantly strengthened our team both in terms of capabilities as well as in terms of headcount in China preparing for this day to come. Courvoisier, the acquisition, clearly enables us to accelerate that. We already have signed agreements with our tier one distributors. They're ready to go.
We're finalizing the hiring of the sales folks who will be actually hitting the pavement as of Q1 to start dealing with the tier two wholesalers. So might there be here and there some hiccup, yes. But overall, I think the situation is pretty much in control. And importantly, this will benefit not only Courvoisier but also the rest of the portfolio.
Yeah, Andrea. Vis-à-vis the margin guidance, prior to tackling the midterm margin guidance vis-à-vis A&P and SG&A, your point, I think it could be fair and nice to set solid ground vis-à-vis 2024 margins and thereafter project our expectations. And in that, I'm a little bit preempting Paola Carboni , who I'm sure will ask for margin guidance for the year 2024. So on margins, it always boils down to net sales, COGS, and A&P. These are the three factors that we all know may make the difference.
Looking into 2024, in net sales, you have clearly the two drivers, price and mix. Of course, volume, as you pointed out, might be an opportunity given the poor weather conditions on aperitifs in Q2 and Q3. But on price, on the other hand, we signal lower price effect. We've had, as Bob just said, two consecutive years, 2023 and 2022, with high single-digit price increase. Actually, the first quarter of last year did surprise us on the positive side where the price can mean stronger than even expected. For the whole last year, we had a very low problem intensity. Of course, in fourth quarter, also a very positive mix driven by strong performance of aperitifs. Now, looking into 2024, and I said price is what Bob just mentioned, 1%-2%.
Honestly, we believe probably the problem intensity might be a notch higher than what we saw last year. On the mix, clearly, we're all dependent, particularly on the aperitifs that are very high in margins on the weather condition in their peak season, Q2 and Q3. But ideally, we see mix as a positive given the easier comp in 2023. Espolòn, worth noting, and then I'll talk to the agave driver, is in 2024, is still diluted. No, it's still lagging behind for very good reasons. So the staggering growth of this brand at 30% still drives dilution, although at a more moderate pace. Now, looking into COGS, of course, you have, as always, tailwinds and headwinds. Among the tailwinds, the biggest one are agave.
On agave, clearly, we had a very good year in 2023 where, as a reference versus the MXN 29 per kilo average 2022, we landed with an average of MXN 25 per kilo last year with an overall procurement saving of EUR 25 million in 2023. Now, if you look in 2024, what we're targeting is an average procurement of MXN 15 per kilo. Now, here, we need to distinguish between procurement savings and COGS savings. COGS savings is what we see in the P&L.
That takes into consideration, basically, the carryforward effect of 22 high cost into sorry, 23 high cost into 2024 and the negative effect as well of the low 2024 second half costs that are or, say, Q4 costs that are capitalized in the balance sheet as you have distilled liquid that is not still sold but is sitting in tanks or in finished products. So basically, hypothetically, the saving on agave might be EUR 50 million in 2024. But EUR 20 million of those EUR 50 million has to be seen as a phasing effect into 2025. So this is still a tailwind, agave, EUR 13 million, but not to its full potential because EUR 20 million are sitting in 2025. Worth noting that the spot price on agave at the moment is around MXN 10 per kilo.
So directionally, from 2025 onwards, on top of the EUR 20 million I've mentioned, there is another tailwind that plays in our favor. And then on top of the agave, among the tailwinds, you have a number of our positive impacts on raw materials and packaging, including glass. On the other hand, there are a number of headwinds. For example, we have a lower fixed production cost absorption that is due to the fact that as we run down the high stocks of last year, we use less production. And therefore, fixed production costs remain unabsorbed. This is worth a negative EUR 15 million this year that is clearly a positive in 2025. Then we have higher depreciations that are tied to the extraordinary CapEx, about EUR 15 million.
We have, again, on the safety stock, the rundown of last year's safety stock that has been produced at high cost, at the 2023 high cost. This is a headwind vis-à-vis 2024. Then, of course, you have the aged liquids impact because on brown spirits, the inflation for us, we're less exposed to aged spirits but on brown spirits. The inflation is normally capitalized on your balance sheet and is visible in your P&L whenever you dump the liquid. Not to mention the negative impact of Mexican pesos versus euro that is creating another EUR 15 million negative impact in our P&L. So on COGS, there are tailwinds. There are headwinds. And there is also a phasing effect from 2024 into 2025. On the A&P, clearly, we've seen last year, the A&P as a percentage of revenues came in 60 basis points below.
So the intent is, depending on weather condition in 2024 and consumer confidence, is to rebuild this saving into 2024 and 2025. So take it as a reference a year before when you project the mid-term. So coming to your point, how do we see A&P as a percentage of revenues in, say, 2025 onward flat? So we think the business model we've implemented is a solid one, is paying big dividends. So there's no reason why to change it. And on SG&A as a percentage of revenues, as you pointed out, the 10% CAGR, which is clearly high. This has been driven by our investments in commercial capabilities, marketing capabilities, and new route to markets. Most of the new route to market initiatives have been completed. We did Greece recently. So I do not expect a meaningful drift in SG&A as a percentage of revenues.
Cautiously, we can assume those to grow in line with top line. But potentially, there might be opportunities of containing the SG&A increase below the top line cost rates.
Thanks for the very exhaustive answer. Yeah, yeah. No, very exhaustive. Just on the fixed cost absorption and the higher depreciation, did you say those were headwinds of EUR 15 million each? Is that what you said?
Yes. Yes. Thank you.
Yeah.
We move on to the next question.
The next question is from Mandeep Sanga with Barclays. Please go ahead.
Hi. Good afternoon, Bob and Paolo and Matteo as well. I'd also like to echo Andrea's comments just earlier in the call. And congrats on your time at Campari and all the best for retirement. I guess really sort of my first question is probably continuing on the COGS theme.
You previously mentioned that glass would be a tailwind for 2024. When we spoke at the FY Q4 results, you said you're in the process of finalizing your glass contracts. I don't think you singled out glass in your answer to Andrea's question. So could you maybe share some color on the glass benefit for 2024 and whether they should expect any phasing for 2025 also? My second question is actually looking at Espolòn. You pointed out that it will now join one of your Global Priority Brands. The brand has benefited in the U.S., particularly, from some downtrading. We can see that in the industry data. How do you think about the competitive dynamics in the category, particularly as agave prices come down in 2024 and potentially the U.S. consumer continues to normalize through 2024? Those are my two questions. Thank you.
Thank you for the question. I'll take the first one on COGS. Yes, all COGS components, most of the COGS components, they are clearly declining as the commodity prices are coming down, including logistics. On glass, the way the contracts are structured is basically, as you very well know, those contracts are indexed to reference indexes. And basically, you have a phasing effect of the positive impact into the following year. So the adjustment of the glass price is delayed by one year. So basically, if you look at 2024, so basically, we would be benefiting, actually, of the COGS compression of the benchmark index that is as a base for 2023 year. With that said, clearly, there is an opportunity of pulling forward the adjustment of the price if, for three consecutive months, the index falls below a given threshold, which triggers the anticipation of the contracts review.
This is what exactly happened two years ago when, following the hyperinflation effect on TTF Index, the glass manufacturers knocked at our doors to ask for a price increase. So we'll see how it goes. But ideally, there might be opportunities of pulling forward that revision. We will see. But yes, overall, the inflation is over. Costs are coming down. Here, I think the message that we wanted to vehicle is more not the magnitude of the opportunity but a little bit the phasing of that opportunity from 2024 into 2025. That's the overall message. Clearly, visibility is still low. This is why we're not signaling a precise operating margin target for year 2024.
I'll take the second question regarding Espolòn.
Now, first of all, I think it's worth underlining, as I said during the presentation, that Espolòn has been growing at very strong double-digit rates for the past 14 years, year in and year out, irrespective of where the price of agave was and what the competitive pressure is. The reason for that, it is a very unique and distinctive proposition with excellent liquid. And we've developed, as I said, also a proprietary marketing model, which is very different from our peers. And we'll continue doing that. Now, with the agave prices coming down, could there be more competitive pressure in the category? Most probably, yes. The $30-$40 range where we're positioned is actually the one benefiting the most. Our aim is to continue building brand image and building value.
At the same time, I wouldn't be surprised if some of the celebrity-named brands, which have been launched to be pumped up and sold to industry players down the road, use that as an opportunity to aggressively build volumes. We'll see what it is. But I think the brand is very solid and will continue to do well.
The next question is from Simon Hales with Citi. Please go ahead.
Oh, thank you. Good afternoon, Bob, Matteo, and Paolo. I'd also just like to wish you all the very best, Bob, for the future. And of course, Matteo, a very warm welcome to you. Three questions on my side, if I can. I mean, Bob, I wonder if I could come back and ask you to talk a little bit more about the strategic organizational changes you're making in EMEA.
I just wondered, what are we talking about in terms of the potential scale and the sort of benefits you hope to see from that move? Secondly, just on shorter-term trading trends, as we've come into Q1, I think we've all seen some recent European Nielsen data last week that suggested some sharp slowdowns in the performance of some of your brands. You've clearly flagged the tougher comps that we know you're facing in Q1. Is that all that's driving that Nielsen data that we've seen? Is there anything else we should be aware of? And then maybe a final one for Paolo around financial expenses into 2024. Clearly, 2023 expenses were a little bit higher than I think the market expected, largely due to some of those EMFX losses. How should we think about the financial expenses line for 2024?
I know there's a lot of moving parts in there, given Courvoisier coming in and everything else. But any more color you could give us on that would be helpful, Paolo.
Thank you, Simon. With regards to the organizational change, what we're doing is effectively, we've merged North, Central, Eastern Europe with SIMEA, the European part of SIMEA. And that is a very important move, I think, from a marketing and commercial standpoint. It will bring quite a bit of synergies. It will enable us, I think, to interact in a more efficient way with our European customers. And it will also enable us to allocate A&P, I think, in a more interesting way. I mean, if you think about it now, for the aperitifs, the summer is a major recruiting moment.
We'll be able to more consistently, I think, invest across the Mediterranean in all the right resorts, overinvest there so that the sender countries benefit from it after time. These are things which can happen more efficiently when it's one business unit.
Vis-à-vis the question on Q1 comp base, I think last year, we disclosed precisely the number of related in terms of net sales and EBIT relating to the phasing effect, which was due to some accelerated shipment phasing ahead of huge price increases that we've introduced, particularly in the European markets, some restocking in the US market that clearly makes first-quarter profit extremely tight, as well as early Easter calendar. So the impact was EUR 35 million on top line and EUR 22 million on the bottom line. So this is the normalized level of Q1 last year.
In terms of expectations on the interest charges, clearly, as you correctly pointed out, there are many, many moving parts, including the most importantly, the closing date. That is still unknown because on the liquidity, the extra liquidity we got on the back of the accelerated book offering and the convertible bond launch, we have excess cash that is getting in a very interesting yield. But assuming a ballpark, a closing in Q3 of this year, the total interest, including the positive effects of the investments, would be in the region of EUR 85 million negative interest. And if you take as a base year 2025, what you have, the full year effect of the negative interest, excluding the positive effect of the liquidity investments, the total interest would be in the region of EUR 105 million. So it's EUR 85 million for this year and EUR 105 million for 2025. Yeah.
Simon, sorry, I forgot to answer your question with regard to the European Nielsen's. I mean, as you know, the Nielsen's do not actually cover the on-premise, which, particularly in Europe and particularly in large markets like Italy, are really the bulk of our sales. So I can assure you that the momentum of the brands is good. We're seeing some strange one-off things with regards to off-premise sales in different countries. I think that is more retailer-related than consumer-related.
That's really helpful. Thank you for that.
The next question is from Mitch Collett with Deutsche Bank. Please go ahead. Mitch Collett, your line is open.
Sorry. Hi, Bob. Hi, Paolo. Hi, Matteo. And I'd also like to say, Bob, congratulations on your tenure. And thanks for all your help.
Over the last decade or more, I don't think there's been many CEOs who've created more value for shareholders in their time than you have. My first question is on the slightly different wording of the medium-term outlook. I just wondered, should we read anything into the use of the words consistent margin expansion? Underpinning that, this time, you've added a few extra words. I think last time, it was about mix and cost inflation easing. Now you're talking about mix pricing, inflation easing, and also operational efficiencies. That's my first question. Then I guess my second one is, given that you held back on some of your marketing activities in the peak summer season, how easy is it to turn those activities back on and get that reinvestment back up?
And I guess, given that you managed to achieve double-digit organic sales growth without that peak season, without that investment, I suppose I could ask, why would you need to step it up again? Thank you.
Yeah. Thanks, Mitch. I'll first take the second question because I'm not so sure I understood the first one. But it's age. Bear with me. 17 years has it told. Now, with regards to the marketing activities, I mean, these are clearly large-scale activations and events. And these are all planned for this year. So they will start kicking in from Q2 onwards. And we don't expect to have any issues. To prepare them, obviously, there's some phasing coming in from the prior year. That's about EUR 6 million, which we will invest additionally this year. But we feel good. And hopefully, we won't have two summers in a row where the weather is bad.
Now, with regards to the double-digit growth rate, it's to a large extent due to, one, the use as extension of our aperitifs, which are going outside of the aperitif moment to becoming a whole-day phenomenon, and particularly go into other moments such as meals. And whether it's raining outside or not, people like to have a little bit of sunshine in their glass. The other point was that Germany, which is the second-largest market, was particularly strong. And that's due to the fact that Germany is an off-premise market. And I think the weather has been consistently bad over the summers there. So it has less of an impact on consumer psyche than Southern Europe, the Mediterranean, where also tourists are affected when the weather is bad.
Yeah. On the margin question, I think if I get it correctly, a little bit understanding from Mitch, from your end, what are the key changes, if any, vis-à-vis where we stood before? So nothing macro. The point that we wanted to highlight is, on one end, we had two consecutive years of extremely high price increases that have been implemented. On average, in two years, we've basically lifted the pricing by 15%, 15%. It's a lot in two years with very solid volume momentum across the whole portfolio. If you look at 2024, clearly, the lever of price is less strong. That's a fact. Still, the good news is that we're not going backwards. We're progressing on price. But this is not what really moves the needle in 2024. On the other end, we remain extremely vigilant because the market is becoming more and more competitive.
That's a fact, particularly for some of our other market participants. So we are embedding in our numbers a higher promo intensity than we were originally forecasting. On the mix, mix has always been a positive factor in our development model. It has to stay like that because the aperitifs are in good health. And prospectively, Espolòn will no longer be a diluted brand. That said, a little bit, the question mark is, when we look at the peak season, Q2 and Q3, it could be essential to have very good weather conditions because this is where we can really extract positive gross margin expansion, as well as, of course, as always, a very positive consumption pattern across consumer confidence, I would say. On the cost side, managing agave in Mexico is clearly not the easiest thing in the world.
So what has changed? The compression of the spot price is still there. That's exactly where we were thinking should go. And probably, there is a physical effect into 2025 because it's not easy to extract or not easy as we expected to extract the efficiencies and the savings with the timing that we had in mind. So there might be a little bit of drift into 2025. This is also due to the fact that, technically, what I've alluded to is the carry-forward effect of last year high agave cost into this year and the carry-forward effect of low agave cost in Q3 this year into 2025. That's technical. But aside of that, there is also the fact that we took commitments with long-term agreements with loyal suppliers that we want to honor. So this is clearly delaying the benefit. And then I've mentioned things that are new.
The fact that we landed with high inventory levels is causing the double whammy of heavy. On one end, the higher cost of last year finished goods that will be sold this year. And secondly, the lower absorption of fixed production costs in 2024 because we will produce less, given the existing stock available. And on top of that, the higher depreciation that was in the map. On the other end, clearly, the Mexican peso, we have two consecutive years of negative transactional effect, is to a certain extent eroding the positive agave effect. That said, as you know, in SG&A, we don't see that as a big mover. Why is the A&P? Clearly, the base of last year is higher as we on a normalized basis, there is EUR 18 million contribution to EBIT that is coming from reduced A&P spend.
So this is clearly a negative looking forward between 2024 and 2025. So I think these are, if I understand it well, what are the key changes vis-à-vis where we last stood when we met.
Understood. Thank you both.
Thank you.
The next question is from Sanjeet Aujla with UBS. Please go ahead.
Hi, Bob, Paolo, Matteo. Thanks for the questions. And my congratulations to you as well, Bob, for the last 17 years and best wishes in retirement. Two questions, please, from me. Firstly, on the U.S., can you share a little bit about where you are on distribution on Aperol, if you're able to share any KPIs and how you're feeling about distribution build into 2024 against a weaker industry backdrop? And then my second question is just on the heightened focus on revenue growth management you alluded to in the medium term.
Can you share a little bit about what sort of capabilities you're building there, where you see the opportunities coming through on that? Thank you.
Yeah. Thank you for your question, Sanjeet. I'll take the one on Aperol. Now, with regards to off-premise distribution, I mean, Aperol is widely distributed in the U.S. That's not an issue. Clearly, there are opportunities in the on-premise because we're much more skewed to the coast. I mean, all our activities, our activations, our events, they're all around the eastern coast and the western coast, as well as in the Chicago area. So that is where we're continuing to concentrate. That's in line with our growth model. We'd like to build the brand to a certain penetration in the regional markets where we go. And once we've achieved that, we move on to other markets.
They're coming also a lot faster because, obviously, the brand has a lot of appeal. The two major, let's say, sponsorships we had last year with Coachella and the U.S. Open have significantly boosted trial rates and made the brand visible and available to people coming from all over the United States. Now what we're starting to see is actually also in the heartland of the U.S., on-premise customers asking for the brand. There's still quite a bit to do. I think we're going in the right trajectory. Most importantly, we're right on trends because, clearly, the lower ABV refreshing bubbly drinks are where the action is right now. Aperol is a very distinctive proposition in that area. With regards to the RGM, revenue growth management, at Campari, it all starts with marketing, with global strategic marketing.
It all starts defining what is the adequate, the appropriate price for any given brand. So this is what we did, for example, in the last two years when we repositioned Aperol and Campari, seeing a big opportunity. So the brand equity of those two brands, people thought that we were of course, there was inflation. But in reality, there was also an opportunity in terms of price point for our brands in the relevant market. So once we identified the target price point in the competitive side, then it comes to the execution. It is more channel and customer marketing team, still central, where basically, we define the product architecture, the price architecture, the country mix, the channel mix, the customer mix, and on and so forth. And then, so to optimize the gross margin, essentially, with the products that are available.
And that was particularly true in periods where we had products on allocations. It was an extremely powerful tool to offset the shortages of products. But even in the future, clearly, there are opportunities of improving the mix. And then when it comes to the execution is the promo efficiency. So we measure, for each and any promo that we run, the effect in terms of volume uplift, gross profit uplift in comparison to the money that has been spent to generate that volume uplift. And we measure the cannibalization effect following the promotion and, essentially, the sellout data. So we are a company that is driven by external data, by sellout. So basically, whatever is not delivering accelerated sellout data sustainably is basically canceled.
We redirect the funds against things that make the pie bigger and not shifting the shipments from one quarter to or from one month to the other month. So this is the revenue growth management organization. And of course, we have 50 brands, 27 geographies. And so we have multiple initiatives that are coordinated by a central team of people. But clearly, channel skew as well as pack size architecture also play quite a role.
Great. Thanks for the call, both.
The next question is from Rashad Kawan with Morgan Stanley. Please go ahead.
Hey. Good afternoon, Bob, Paolo, and Matteo. Thanks for taking my questions. And congratulations again, Bob. 2 for me. First one on Courvoisier.
As you approach the closing of the deal, how firm are your execution plans at this point for the brand once it falls under your umbrella in terms of the A&P pipeline, innovation, etc.? And in terms of the overall cognac market, do you have any updated thoughts as to when you think the market will recover in the U.S. in terms of retail consumption? And then my second question, just on kind of your broader M&A focus area, as you said, you'll continue to focus on premium M&A. With cognac now in play, where else will you be focused going forward, both kind of category and geography-wise? Thank you.
Yeah. Thank you for the question. I mean, the second one is pretty straightforward. If at all, we're always very consistent.
So we've always said we want to focus on super premium and up brands skewed to the on-premise and geographically really focused around the U.S., and then APAC. So clearly, this means the whisky arena. With regards to Courvoisier, I mean, we're running currently our health checks. We're looking at how the brand is positioned versus competition. We have some initial ideas on what we want to do from a brand range and pack architecture standpoint. But clearly, all of these, we will start actioning them much more forcefully once there is closing. And at the same time, we're maximizing our cognac knowledge via both our board members as well as our executive managers who have extensive cognac experience. And last but not least, we're also looking at hiring, clearly, a dedicated team with significant marketing team with significant cognac experience. So this is all happening.
It looks pretty good at this stage.
The next question is from Edward Mundy with Jefferies. Please go ahead.
Good afternoon, Bob and Paolo. And equally from me, huge congratulations on many of your successes over the past 17 years and leaving the business in such good shape. Three questions, please. The first is on Aperol. Continued very strong momentum. It's just a bigger picture question. I mean, it's one brand. It's one serve. There's very little innovation other than the ready-to-drink. And you essentially have a huge amount of focus in what you do well. Could you talk about how you keep the brand fresh and new in a world where family consumers can be quite whimsical and cycles can come and go quite quickly? Second of all, coming back to Courvoisier, look, I appreciate you don't have the keys yet.
But as you get ready for that business, are you seeing anything in the external data that gives you confidence in the timing of your acquisition, either in consumption or inventory, however you're looking at it? And then finally, on Courvoisier, Paolo, are you able to help us a little bit on the scope impact, assuming you are able to consolidate this from the beginning of the second half, what that impact might be on EBIT?
Look, I mean, clearly, we're interacting very closely with our distribution partners in the U.S. who really have very deep knowledge and data into the category. I think they're pretty much seeing the end of this de-stocking within Q1 and then expect stability in Q2 and then category to return to growth in Q3. Now, the good thing is there was a lot of apprehension. The cognac is losing disproportionately to tequila.
But actually, the data which shows that it's losing only its fair share. Yeah. I mean, tequila is essentially sourcing much, much more overproportionately out of vodka. Regarding to the brand itself, we've been looking at liquid quality and doing all sorts of benchmarks and tests. Those are very reassuring. Clearly, direct us towards what we would like to do over time. It's not going to happen overnight, but which is to premiumize the brand and really work on the range and price positioning. The brand heritage is there. The liquid is there. We've got to work on range, packaging, and pricing.
With regards to Aperol, one brand, one serve. I'll say that's probably the main reason why the brand has been so consistently successful over the years. I mean, the worst thing you can do, and I'm a marketeer myself.
I know how impatient marketeers get. Then after two years, they want to reinvent the wheel. The big success of Aperol was about building a success model and consistently executing it day in, day out and really focusing on the quality of the perfect serve, the right glass, right proportion, right garnish, right ice, etc. And again, a big part, I think, of the success is that we haven't confused consumers by launching tactical flankers, limited editions, all sorts of things. It is really about the brand. It is about that serve, which we know is still underpenetrated. I mean, the data which we show on the chart clearly shows that. Even in Italy, we're totally underpenetrated versus beer. So our whole emphasis is on trial, trial, trial, retrial, retrial, and to keep our content fresh. What we do, I mean, we're almost an entertainment company.
I said that many times. And the onus is really on our marketeers and trade marketeers to surprise our consumers and really engage them. And that's where the whole focus is. And that's where the whole focus will remain because we're not going to get into the deadly spiral of launching flankers of the things or adding 10 different cocktails on the brand. Having said that, there are also a few other successful cocktails which have come up. I mean, let's talk about the Paper Plane, for instance. It's fine if the bar community does that. But again, our focus will remain on Aperol Spritz. I hope that answers it.
Yeah. With regards to yeah. With regards to your question on the impact of potential first-time consolidation of Courvoisier in year 2024, but this is very difficult to say, first and foremost, because we don't know when we close. So that's the biggest conundrum. And secondly, because as we did with Grand Marnier when we bought it, we strongly believe at the beginning, you need to distock the market, make sure that the level of inventory is appropriate. And clearly, that's something we will find out as we close. Secondly, you do a cleanup of the offering. So basically, you may remember with Grand Marnier, we've cut Cordon Jaune in Germany. And so that comes at a price. So in terms of contribution at the EBIT level, overall in perimeter, I would be surprised if the contribution was higher than EUR 8-10 million in total.
So it would be still tiny in 2024. I think important to do the right things to start off 2025 with, as you said, all the initiatives in place, the market that has been cleaned up in all geographies, and also with key decisions around the SKU offering and what stays and what drops. So that's more to come. But clearly, at this stage, for us, it's very difficult to say also because given that we're not yet closed, we cannot exchange much information with the sellers, so the very basic ones. So more to come as we take control of the business.
Got it. Thank you.
The next question is from Cédric Lecasble with Stifel. Please go ahead.
Yes. Good afternoon to everybody. And congrats. Most of my questions have been answered. I just have one left about the industry and A&P spending specifically in 2024.
Some competitors and some large ones are stepping up A&P. Do you think 2024 will be, from your perspective, a normal year where you might simply rebound in A&P because of the summer, which was special last year? Or do you see structurally more pressure on adding A&P to be competitive in a little tougher market where players involve more marketing intensity?
Well, thank you for your question. I mean, for us, the name of the game is more on how do we get a higher ROI on the A&P which we spend as opposed to the absolute level. And that's where the focus is. I'm not going to comment on what competitors do.
But if there's one thing I've learned in over 30 years as a marketer, it's that what makes a difference is not the A&P in any given year, but it is the consistency of your spend over years and the consistency of your messaging. You can have very high A&P but change the message every year, and you will not get anywhere. So thank God not many people listen to that advice, and they fall into the trap. We've been very, very consistent, and we'll continue to do so.
Thank you very much.
The next question is from Trevor Stirling with Bernstein. Please go ahead.
Hello. Bob, Paolo, and Matteo. And let me just add my congratulations, Bob, on the 17 years or almost 17 years. Thanks for all your patience over those years. And best wishes for the next chapter. Thank you so much.
Look forward to catching up around a few drinks with you as well, huh? Yes. Absolutely. Perhaps more than one. A few questions, and a lot has been answered. But there's a couple of things that struck me. So first one, Bob, Aperol, Germany, up 33%. I mean, no Aperol market is really mature. But this is a relatively developed Aperol market. And is this all down to occasions and new occasions, or is there something else going on in Germany as well? Second question, probably two and three for Paolo more. There was that massive acceleration EBIT in 2024, Paolo. And you highlighted that a good chunk of that was down to A&P phasing. Then I presume there's a contribution from the stock build and the operating leverage on the production fixed costs. Is there anything else then behind that acceleration?
The final question, probably the last time I can ask this, is when I look at the margins in Northern Europe compared to Southern Europe, there's a massive difference between the two regions. And maybe, Paolo, you could just explain a little bit about why Northern Europe has been so much more profitable, why I can still ask you the question.
Thank you, Trevor. I'll take your first question. I mean, Aperol, Germany. First of all, as I said, Germany is much more of an off-premise market. And what we've done in Germany is in the past two years, we've invested actually quite a bit to strengthen our commercial capability.
So that means having more feet on the ground, more people in the stores, making sure that we have the right shelf space, making sure that when we're out of stock because with the high rotation on Aperol, that's an issue we face in many markets, and particularly in Germany, make sure we get the product back on the shelves. And at the same time, from a strategic marketing standpoint, really go into the other usage occasions. And we're only at the beginning in Germany of going into meals and all of those things. So there's more to come. The data is quite clear. The per capita consumption is a little bit less than half of what we have in Italy. And Italy compared to beer is very low. And you know what a large beer market Germany is.
So this year, we'll have the tail end of our commercial capabilities reinforcement in Germany. And I think that getting the full year benefit of that will also be very, very important. With regards to the acceleration of results in the back end of the year Q4, so basically, the price was actually better than what we were envisaging. The very low promo intensity, that's us cutting the promo plan. The mix was equally extremely positive. You've mentioned the very solid performance of Aperol in Germany. That's an example. So aperitifs were extremely strong in the back end of the year. And then clearly, COGS. Among COGS, which is with a +160 basis points. Beer selection is a great positive effect.
In order to achieve the 25 MXN per kilo, which I've alluded to for the full year, we have a meaningful compression in the back end of the year, significant one, due to the fact that the price started falling off the cliff from, I would say, June, July onward, so with an acceleration in October, November, and December. So these are the key drivers of strong delivery in the back end of the year. Trevor, actually, one more point on Germany, which I forgot to mention. We've really put a big focus on the scale of the activation. So we've had probably less activations but a larger scale and in more strategic areas. And that has certainly paid off.
The next question is from Emma Letheren with RBC. Please go ahead.
Hi, everyone. I just wanted to ask, could you talk a bit more about your plans going forward in Asia? You mentioned you've doubled its value. Where do you think this business could get to in another five years? And you mentioned a lot of investment in its commercial capabilities there. Where is investment still needed in Asia to support growth over the next few years? And then secondly, I think you said pricing had been high single-digit in 2023. I'm wondering if you could be a bit more exact about this and just break out pricing, mix, and volume growth and how each of those looked in 2023. Thank you.
Let me start with our plans in Asia. I mean, as I've repeated in the past, Asia is the only, let's say, region which we've identified as a must-win battle. Clearly, it's 8% of our sales.
So half of that is in Australasia. So there is a lot of opportunity there. What has changed? What has changed is really the portfolio, our ability to really offer a wide range to Asian consumers going from high energy with X-Rated, SKYY Vodka to the emergence of the aperitifs now, but most importantly, high-end premium aged brown spirits, which we've been really focusing on and developing via both innovation as well as acquisition. And clearly, Courvoisier is part of that strategy. We've put ahead of time the RTM model there. We're in all the key markets with our own dedicated organization. Now, China is the last one which will enter that. And we've also done quite a bit in terms of raising the capability of the teams across all of the markets. So all ducks are in a row.
If things go right, hopefully, we'll be able to double the weight of Asia as a percentage of our net sales in the mid- to long-term range.
I think the question was on the price mix and volume components in 2023, if I get it right. Today, we had high single-digit price increase. As I mentioned before, we had low single-digit volume uplift. Basically, the mix was extremely poor given the dilutive effect of Espolòn and the peak season on aperitif that was not as successful as we hoped. Looking at 2024, clearly, the price is the 1%-2% which Bob just alluded to. The volume might be more benign this year, given that we're not suffering also from the headwind of the significant price increase that we've taken. The mix, we hope, will be higher than last year.
Thank you.
But I think there is a question that I've not answered from Trevor on the difference in EBIT margin of Northern and Central Europe versus SIMEA. And the answer is the cost of the headquarters structure that is sitting in SIMEA. So once that's blended, I think it will become one region with an average marginality combined of the two.
The next question is from Alessandro Tortora with Mediobanca. Please go ahead.
Yes. Hi. Good afternoon to everybody. I have two quick questions from my side. But clearly, thanks, Bob, for your time spent with us in all these years. Considering, let's say, the current level of working capital on sales, but also the ongoing capacity expansion plan, I would like to understand if there is a realistic ratio of working capital on sales, should we assume for the next two years, Paolo?
And the second question is on sorry to come back to this, but to the 2024 EBIT margin, considering all the moving parts you explained before, I understand providing a number is difficult today. But it is fair to say that the combination of plus and minus you explained before leads to some margin expansion this year. Thanks.
Vis-à-vis the operating working capital on sales, clearly, we want to go back to 32%-33% operating working capital on revenues. Part of it is clearly attributable to the finished goods. Vis-à-vis the EBIT margin guidance, no guidance is no guidance. So we cannot say what it costs. As the time goes by, clearly, once the peak season is under our belt, clearly, we'll shed more light on it.
Okay. Okay. Thanks.
The next question is from Chris Pitcher with Redburn Atlantic. Please go ahead.
Good afternoon, Bob, Paolo, Matteo.
Again, can I add my congratulations, Bob? And thanks. A couple of quick questions. In terms of your global priority brands, you'll be bringing in two: Espolòn and Courvoisier that dilute those growth margins. The old rule that they were significantly ahead of the group average. Should we assume that Espolòn, through an agave cost movement, should be able to get back to that sort of level? And over time, Bob, you talk about the repositioning of Courvoisier, that Courvoisier could aspire to that sort of level. And then second, follow up on your comment about having to hire a dedicated cognac marketing team. Matteo takes over a very different business to the Campari that you took over. There's obviously the huge Aperol engine there.
But in terms of the aged stocks and the aged products that you're doing, do you have sufficient skill set within the group once you've got that cognac team in place to deliver on that? Thanks.
Yeah. Thank you for your questions, Chris. I mean, with regards to capabilities on aged spirits, we've significantly upped the game over the years, both not only from a marketing standpoint but also from a supply chain standpoint. The other good news is that that was Matteo's bread and butter when he was working for Diageo. So I think he will be a significant upgrade versus me and going in the right direction. Now, with regards to the Espolòn and the Courvoisier margins, clearly, our objective going forward will be to improve the gross margins of those brands. And Espolòn, it's a question much more, I think, of agave pricing fully hitting the P&L.
It's just a question of time. It's not a question of if. With regards to Courvoisier, it's going to take reengineering the brand. But we've done this in the past. And with the right team and the right support, I don't see why we shouldn't be able to do that again in a mid- to long-term view.
Thank you very much.
Yeah. Yeah. With regards to Courvoisier, worth mentioning the fact that the first-time consolidation of the brand into our own P&L, of course, it drives some gross profit dilution due to the fact that the price the brand is not correctly priced. Probably, there is an opportunity of doing better in terms of price. At least, we see that as an opportunity. On the other hand, the additional SG&A tied to the first-time consolidation of the brand are quite minute.
So overall, it will be attractive to the EBIT level. So that said, the opportunity of improving the brand gross profit as a percentage of revenues is there. And we see that not for the year 2025, for sure. Because it would be the first year. But thereafter, the potential is absolutely there.
Could I follow up on one thing? You mentioned you hadn't had much ongoing contact with the seller on Courvoisier. Do you have a closing 2023 sales number? Because you gave us the full at the nine-month stage. Do you have a closing 2023 figure?
We do not. And we cannot have any figures beyond those which are publicly available.
Yes. Understood.
But there is a clean team in place that is treating the data with the utmost confidentiality. That's something we want to flag.
Thanks very much. Understood.
The next question is from Paola Carboni with Equita SIM. Please go ahead.
Yes. Hello. Hi. Good afternoon, everybody. Hi, Bob and Paolo. And hello to Matteo. I hope to have the chance to know your director very soon. I have a very quick question. The first one is on the promotional environment you have mentioned, which is probably a little bit ahead of what you were anticipating. I was wondering to what extent do you expect to follow this promotional environment given the positioning of your product? And in any case, if we should think about some pressure also on the off-trade channel or were you just referring to the sorry, on the on-trade channel or were you just referring to the off-trade channel? And which market are you seeing most pressured in this respect? And another question is instead more on the broader picture.
Let's say, since last year, you have highlighted very well the fact that you were focusing your growth on three key pillars, i.e., aperitifs, bourbon, and tequila. And then you are now adding cognac and possibly another whisky going forward. So I was wondering, in a longer-term perspective, what is the desirable exposure to aperitifs you would like to have for the group? Thank you very much.
Yeah. Look, I think aperitifs is what differentiates us from all the peers. We're clearly category captains. We've broadened our range. We also have now French aperitifs. And for all you know, we might diversify further going on. It's clearly going to remain one very key, I think, building block for this company. That's where our expertise are. It's a great business, high gross margins, high cash generation. So clearly, count on us developing this business very nicely going forward.
Now, on your question regarding the promotional environment, I think, Paola, you need to bear in mind that in 2022—well, 2021, 2022, and a certain part of 2023, with all the constraints that today were so products weren't available. They were all limited, etc., across categories. We basically cut back our promotions pressure back to zero. Now, we're not a very promotionally driven company. But having said that, for each brand in the right moment of seasonality, there is the right promo pressure and the right promo value-adding activities. And now that we have we don't have those capacity constraints anymore. Clearly, in a more competitive environment, we're going to return to what we were used to in the past. Obviously, as Paolo said, via revenue growth management, we constantly look at upping our game and improving the ROI on what we spend in that area.
Okay. Thank you very much.
Thank you, everybody. For any further questions, please press star and one on your telephone.
Thank you. I guess this is the longest session I've had in 17 years. This has been, honestly, over the years, both a privilege as well as a pleasure. I certainly took a lot out of our interactions. It really means a lot to us. And thank you so much to all of you for your support as well as your challenges. Please do stay well. And most importantly, stay long. Take care.
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