SUCCESSION IN CAMPARI

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Job Norton
6 years ago
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1 SUCCESSION IN CAMPARI ALBERTO POLETTO CAMPARI CASE

2 INTRO The aim of the research is to give an overview of how heavily this company has relied on family management and to explain why the Campari case is peculiar when it comes to succession. This brief analysis on the issue of succession in Davide Campari S.p.a. is part of a more comprehensive and exhaustive paper conducted by Bocconi Students For Family Business association. HISTORY OF SUCCESSION The history of the succession in Davide-Campari S.p.a. is a really unusual one and highlights the success of both families that were involved in it. Campari was founded in 1860 by Gaspare Campari. The company built on the basis of his revolutionary idea of a mid-range bitter alcoholic beverage was going to become one of the most successful examples of family business in the world. Around 1865 Gaspare moved from Novara to Milan with his family and opened a liquor store in the Coperto dei Figini. The Coperto was a Renaissance porticated building located in the Piazza del Duomo in Milan. In the early 19th century the Coperto was ordered for demolition and actually demolished in late 1860s to leave room for the new thrilling Galleria Vittorio Emanuele II. The liquor store was placed at its corner facing the Duomo. In this exact place Gaspare s son Davide began working and helping his father. At Gaspare s death in 1882, his sons Davide and Guido took the lead of the company. Davide had worked for his father s café for over thirty years and its was him who had the knowledge and the personality to be the head of the company. Davide gave Guido the task to manage the café while he remained focused on the lab. Under his management the company would be awarded the factory mark, industrialize its production and become international. Noteworthy and curios is how the internationalization process took place. After falling in love with Lina Cavalieri, a popular opera singer, Davide decided to follow her around the world. Love did not twist Davide s mind, which had always been business oriented and he eventually started to export Campari to each country he visited. For the joy of the costumers, Campari is now available in more than two hundred countries. 2

3 Davide Campari married at the age of fifty and did not have any children. He died in 1936 from a heart attack and left his position in the company to his nephew Antonio Migliavacca, son of his sister Antonina. Antonio continued the process put into being by his uncle, leading the company together with his wife countess Angiola Maria Barbizzoli.The couple did not have any children and the dynasty was therefore being threatened by the absolute lack of heirs. In 1976, after 25 years of leadership in the absence of her husband who died, the countess decided to put an end to the business story of a family with a remarking statement: Family jewels cannot be sold, the can only be donated. Two faithful managers, Domenico Garavoglia and Erinno Rossi acquired then ownership and in 1982 Garavoglia became president. This particular event is a watershed for Campari. The peculiarity of its succession story lies in the fact that another family, another dynasty stepped in the history of the company and from that moment on shaped its culture, its strategy and therefore its entire philosophy. When in 1992 Garavoglia died, his son Luca (a Bocconi Alumnus) took the position of president at the age of only 23 and he immediately separated ownership from management. Even if he was (and still is) a convinced supporter of this model at a theoretical level, the main reason for its implementation was practical, namely the lack of on-the-job training. 3

4 ASSESSMENT OF FUTURE POSSIBLE SCENARIOS The assessment of future possible scenarios is a hard task itself however in Campari there is an extra obstacle which is the extremely reserved personality of all the Garavoglias. Interviewing any member of the family is nearly impossible and this makes the analysis extremely hard from a practical point of view. In addition, I believe that Luca Garavoglia, being a brilliant, smart and extremely intelligent person, will still have a role in the company for many years. A person extremely close to the family (who wants to remain anonymous) talked about Luca with us and described him as an extremely committed person who takes his job over anything, even on vacation. This leads me to think he will continue his duty until the occurrence of a major event which would prevent him from performing his task. Succession is anyhow a critical topic for the company as the president has undergone a heart surgery in the United States, most likely from his commitment to job. Luca is also a really cultivated person, has attended an Italian classical high school (specialized in fields such as Latin, Ancient Greek, Literature and Philosophy) and is passionate about these topics, which are his main interest apart from family and the company. According to our source, the family is very well known for being what in Italy a good family is defined as. The mother, Rosa Anna, lives with Luca, his partner Lorange and his son Alessandro. One of Luca s sisters, Alessandra, lives with her family in the same building. The other sister, Maddalena, is not in good term with other family members. Their relations with Maddalena deteriorated in 2000 when she was victim of a so called squeeze out from the capital of the family. In early 2000 the board deliberated two equity raise for Fineos and Fincorus (tow family owned financial holdings) to be carried out in a matter of three weeks. In order for Maddalena s shares not to be diluted she had to raise 100 billion liras herself (about 51,645,690 back then or 69,508,298 inflation adjusted). Maddalena decided to then sell her shares for 180 billion liras. The two equity raise announcements were then canceled and this seemed to put even stronger emphasis on the conspiracy thesis. The defense of the family was that the company was attempting to carry out a hostile attack, therefore extremely secret, to their main competitor Pernod Ricard but the operation was not finalized precisely owing Maddalena s exit. Maddalena request to reacquire her previous portion of share has not been welcomed by the jury however in 2006 she as been assigned a reimbursement of 100 million euros from the Milan tribunal. Being Maddalena out of the succession picture, only Luca and Alessandra s offsprings could have a role in the business, if it were to remain owned by the Garavoglia family. 4

5 Luca s son Alessandro is still too young (mid-teens) to have and active role in the business. He is nonetheless very very smart and an outstandingly hard working individual. For many aspects his personality resembles the one of his father and in the future his active presence in the company is more than likely. Alessandra on the other hand is married to a very successful businessman, Forloni and has three children, two boys and a girl, Ludovica who is the middle child. Tommaso, the youngest child is still too young to be part of the business. Ludovica has one degree in Political Science and is in the process of acquiring another one (Senior year of Bachelor) in Business and Corporate Communication at Università Cattolica in Milan. This leads me to suppose she is very interested in the business environment and that she is passionate enough to have an above average GPA (27.9 out of 30). She therefore has all the potential to play an active part in the family business. We need to bear in mind that Ludovica, still extremely attached to the Garavoglia side of the family, has the business of his father as an option as well and this drives down the probability of her being involved in Campari. Additional information on the other children, especially the oldest one, could not be retrieved. Nonetheless the last remark on Ludovica holds for the other two brothers as well. Luca is very attached to Alessandra s family and the relationship between the two branches of the family is optimal. Still, by covering the role of president-chairman, he exerts more influential power for what concerns succession and he is reasonably more keen in letting his son in before anybody else. Again, he also has stated that his role in Campari would have been different had he had more on-thefield experience, which I believe is what he is going to suggest his son Alessandro to do or even ask as a requirement to enter the company. Very important to keep in mind is what is stated at the beginning of the analysis which I am going to remark here: Luca Garavoglia is a strong supported of the separation of management and ownership and the involvement of the family in the management of the firm is not an option to be given for granted. A concluding noteworthy remark is that the ownership is still under the mother Rosa Anna who is, according to the anonymous source, a loving grandmother who does not make any difference among grandchildren and could well disrupt any of our considerations. Only time will tell us what the outcome of this intriguing analysis will be. All rights reserved 5

CAMPARI GROUP EDITED BY EMANUELE DONI, MARCO FERRARI, ALBERTO POLETTO, LETIZIA ALBANESE

CAMPARI GROUP EDITED BY EMANUELE DONI, MARCO FERRARI, ALBERTO POLETTO, LETIZIA ALBANESE HISTORY Beginning - Foundation It was 1860 when Gaspare Campari, a specialist in bitters and cordials, invented the