SLIGHTLY LOWER THAN EXPECTED 2Q04 EBITDA. FY ESTIMATE TRIMMED BY 2.5%.

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1 Campari Italy Food & Beverage HOLD (unchanged) TARGT 44 September 9, 2004 Price : BCI Index: 1,306 N 317 SLIGHTLY LOWR THAN XPCTD 2Q04 BITDA. FY STIMAT TRIMMD BY 2.5%. Campari 2Q results were generally in line with our estimates, confirming organic sales growth (+4%), bottom-line expectations (1H net profit at 31 mn, +10%), and net debt (FCF at 20 mn in 1H). The only disappointing item was BITDA performance (then offset by lower depreciation and financial charges). BITDA was up 6% vs. +8% exp., with BITDA margin down by 80 bp despite a lower than expected incidence of advertising investments (down by 100 bp vs. +20 bp exp. due to different timing of some advertising campaigns and to termination of investments for Campari Mixx in Germany, where this product is no longer sold). The difference is explained by a stronger negative impact from sales mix (due to a lower than expected contribution from Skyy Spirits, dampened mainly by the tough comparison base for flavours launched in 2Q03) and a negative seasonality effect - now that the bottling phase for Cinzano has been internalised in the new Novi Ligure plant (2H is instead usually the most important period for Cinzano s sales). Overall we estimate that organic BITDA performance (after adjustment for the forex effect, external contribution of Barbero, and termination of guaranted royalties linked to Skyy Blue) was substantially in line with the organic trend in sales, vs. our estimate of +30 bp in BITDA margin. We have adjusted our FY estimates as follows: - FY sales trimmed by 1.5% because of a) higher forex effect (-3% vs. prev. 2%) as reported in 1H; b) lower organic sales trend now expected (+5% vs. prev. +6% factoring in a lower contribution from Skyy, although assuming acceleration in 2H, and for Soft Drinks and Campari in Germany, due to weak summer sales for these products as anticipated by management during the conference call: this performance is due to a cooler summer than in 2003) - FY BITDA trimmed by 2.5% following disappointing 1H performance (we underline however that our estimates were at the top of consensus on both a 1H and FY basis). Our new estimates factor in 2H development similar to 1H, despite the projected increase in advertising incidence, thanks to (a) an expected improvement in sales mix (possible higher contribution from Skyy Vodka and further decline of Soft drinks), (b) the absence of one-off negative items affecting 1H performance (legal costs and change in management), and (c) the improved scale effect in Cinzano production during the winter months. Overall, our net profit estimate has been trimmed by 4%. In our DCF model this is offset by lower medium - term maintenance capex now expected ( mn per annum vs. 15 mn in our previous estimate) as per management guidance provided during the conference call. Our new target price of 44 (vs. prev. 41) therefore simply reflects the buy-back of Skyy minorities (expected to take place at the beginning of 2005), which we estimate will have an accreative impact on Campari s accounts. We confirm our HOLD recommendation due to the modest upside. STOCK DATA PRIC PRFORMANC Bloomberg Code CPR IM 1M 3M 12M 52-week range Absolute Daily Volume 32,200 Rel. to BCI Index Paola Carboni p.carboni@eurosim.it CAPITALISATION FORCASTS/VALUATION 12/ /2004 Market Cap. 1,177 mn PS Latest Net Debt 297 mn ADJ. PS Free Float 49% ADJ. P Shares Outstanding 29 mn V/BITDA IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

2 Campari September 9, SCOND QUARTR RSULTS Group/ mn 1Q03 % 1Q04 % 2Q03 % 2Q04 % 2Q04 % 1H03 % 1H04 % 1H04 % * pre-tax income on a quarterly basis Source: uromobiliare SIM estimates xp. Act. xp. Act. Sales Incr. % 6% 12% 10% 10% 9% 8.6% 11% 10% BITDA Incr. % 2% 10% 6% 8% 6% 5% 9% 7% BIT Incr. % 6% 1% 6% 6% 3% 6% 4% 2% Pre-tax income Incr. % 6% 21% -7% 2% 6% -3% 9% 12% NF Position (191) (271) (233) (301) (303) (233) (301) (303) Organic growth confirmed, but weak summer season suggest caution on 3Q performance Sales were slightly lower than expected but were of decent quality considering that organic growth (+4%) confirmed our estimates. The difference instead came from a stronger currency impact, particularly in the spirits segment. Looking at organic growth by individual divisions, lower-than-expected performance by spirits (mainly attributable to Skyy and to Campari in the German market) was offset by stronger soft drinks performance, driven by Crodino. 2Q03 SALS GROWTH DRIVRS BY BUSINSS SGMNT 2Q04 xp. 2Q04 Act. SPIRITS Organic growth 15% 7% 4% 14% 4% 9% 8% 7% 5% xchange-rate impact -14% -1% -3% -12% -4% -7% -6% -4% -5% xternal growth 8% 6% 9% 9% 10% 5% 5% 7% 8% Total Growth 10% 12% 10% 12% 10% 8% 7% 11% 8% WINS Organic growth 21% 1% 11% 10% 15% 1% 5% 5% 9% xchange-rate impact -2% -1% -2% -3% -2% -3% -1% -1% xternal growth 0% 19% 9% 0% 10% 2% 12% 16% 11% Total Growth 20% 19% 18% 7% 23% 0% 16% 21% 18% SOFT DRINKS Total Growth (= organic) 15% -3% 1% 6% 3% 16% 2% 2% 2% TOTAL Organic growth 14% 4% 4% 11% 4% 9% 7% 6% 5% xchange-rate impact -9% -1% -2% -8% -3% -5% -4% -2% -3% xternal growth 5% 7% 7% 6% 9% 4% 5% 8% 8% Total Growth 11% 10% 9% 9% 10% 8% 9% 11% 9% Source: uromobiliare SIM estimates - Spirits: organic growth did not match our optimistic expectations due to a lower contribution from Skyy Spirits (pure Vodka brand confirmed depletion data anticipated by management, posting 12.6% growth in 2Q, but new flavours, launched in 2Q03, suffered more than expected from the difficult base of comparison, posting a 35% decrease) and from Campari (which has suffered in the German market, also in July and August, because of a cooler summer than usual: Campari is usually consumed during the summer season in that market). These trends more than offset the positive surprise in the Brazilian brands performance (+25% in 1H after +11% in 1Q), which however can be considered as a temporary boost, driven by the price-list increase started last May (thus causing traders to increase their stocks before the raise). A higher contribution from external growth made up for the difference in organic growth; we highlight particularly the performance of Aperol, which was up +19% in volume terms during 1H04, as a result of the stronger attention by the trade channel to this brand now that it is part of Campari s portfolio. Obviously such a strong growth is not sustainable in the long run; we are projecting a low double digit increase, betting on a further penetration of the Italian market where Aperol is today concentrated in the northern area and in continental uropean markets (such as Germany and Switzerland) where there is spontaneous demand for this kind of product. 1H03 1H04 Act. 2H03 2H04 xp. FY04 Prev. FY04 Curr. IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

3 Campari September 9, Wines: organic growth was well above expectations, suffering less than expected from the more difficult base of comparison vs. 1Q04 (1Q03 3% vs. +21% in 2Q03). Cinzano, both sparkling and vermouth, showed a healthy trend (+5% and +5.5% respectively) but the main surprise came from Sella & Mosca (+12% vs.+5% in 1H, despite a more difficult comparison base - performance was driven by positive mix effect and volume growth, after the bad 2003 season). The stronger organic performance was then offset by a lower than expected external contribution from the Barbero 1891 wines, which suffered not only a negative forex effect but also a decline in sales volume compared to last year. - Soft drinks exceeded our estimate, primarily thanks to Crodino performance (still up 9% in 1H after +8% in 1Q, despite the more difficult comparison base in 2Q). This offset the decline in carbonated beverages (Oransoda, Lemonsoda, Pelmosoda), down by 5% because of the tough comparison with strong sales in 2Q03 driven by the unusually hot 2003 summer. On a FY basis we have factored in 2Q04 performance, trimming our FY estimates by 1.5% as a result of the: (a) higher forex effect (-3% vs. prev. 2%) as reported in 1H and (b) lower organic sales trend now expected (from prev. +6% to current +5%, now in line with management guidance). The new organic growth estimate in turn now envisages: - More cautious assumptions for the Spirits division, factoring in a lower contribution from Skyy (+5% pre-forex vs. prev. +12%) although accelerating vs. 1H (-1%). According to management, recovery is in fact achievable in 2H, considering that (i) depletion data are confirming a low double-digit trend for pure vodka, (ii) the comparison base for flavoured vodka will be easier in 2H, and (iii) a new flavour (Orange) has been launched in recent weeks. At the same time we have also trimmed our estimates for Campari (+3% after forex vs. prev. +5%) considering the weak summer season in the German market (involving also 3Q performance, as anticipated by management during the conference call, and also reflecting a still difficult consumer climate in Germany). - More optimistic expectations for the wines segment, in the light of the stronger than expected performance reported in 2Q04. - Unchanged expectations for the Soft drinks segment, where the better performance now expected for Crodino is offset by more prudent estimates for the 3Q04 trend of carbonated beverages, whose sales have continued to suffer during the summer because of cooler weather compared with the long and severe heat wave of Operating profitability slightly below our estimates, despite lower advertising expenditure SCOND HALF AND FULL YAR RSULTS Group/ mn 2H03 % 2H04 % 2H04 % Prev. Curr. Prev. Curr. Sales Incr. % 7.7% 12% 9% 8% 11% 9% 6% BITDA Incr. % 7% 9% 5% 6% 9% 6% 7% BIT Incr. % 7% 9% 4% 6% 7% 3% 4% Net Income n.a. n.a. n.a Incr. % -8% -14% -18% 17% NF Position (297) (230) (235) (256) BITDA was up 6% vs. +8% exp., with BITDA margin down by 80 bp despite a lower than expected incidence of advertising investments (down by 100 bp vs. +20 bp exp. due to different timing of some advertising campaigns and to termination of investments for Campari Mixx in Germany, where this product is no longer sold). The difference is explained by a stronger negative impact from sales mix (due to a lower than expected contribution from Skyy Spirits, dampened mainly by the tough comparison base for flavours launched in 2Q03) and a negative seasonality effect - now that the bottling phase for Cinzano has been internalised in the new Novi Ligure plant (2H is instead usually the most important period for Cinzano s sales). Overall we estimate that organic BITDA performance (after adjustment for the forex effect, external contribution of Barbero, and termination of guaranted royalties linked to Skyy Blue) was substantially in line with the organic trend in sales, vs. our estimate of +30 bp in BITDA margin. IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

4 Campari September 9, After the lower than expected advertising expenditure reported in 1Q and also in 2Q, we have cut our FY estimate from 20.5% (previously indicated by the company) to 20.1% (now simply consistent with yesterday s indication by the CO Mr. Visone of an incidence above 20%). This is partially explained by the termination of Campari Mixx sales in the German market (due to increased duties on ready-to-drink), together with a lower budget in the soft drinks segment (the 2004 summer campaign was simply a replay of the one created in 2003). Our new advertising estimate still envisages an increase in incidence in 2H (to support the spirits segment, in particular). But despite that, our new BITDA estimate (trimmed by 2.5%) factors in a 2H trend similar to 1H: this is thanks to (a) expected improvement in sales mix (possible higher contribution from Skyy Vodka and further decline of Soft drinks), (b) absence of one-off negative items affecting 1H performance (legal costs for a trademark suit and costs for management changes, when Mr. Perelli Cippo left the company in 1Q), and (c) the improved scale effect in Cinzano production during the winter months. Overall, on a FY basis, our new BITDA estimates factor in a substantially flat BITDA margin after adjustment for currency impact, external contribution of Barbero, and termination of previously granted royalties linked to Skyy Blue. VALUATION INCRASS BY 7% FACTORING IN TH XPCTD BUY BACK OF SKYY MINORITIS We recall the fact that, according to the agreements signed in December 2001 for acquisition of the 59% stake in Skyy Spirits currently held by the group, as from January 2005 and up to December 2006 Campari can buy back the 30% interest in Skyy Spirits owned by the founding shareholder Maurice Kanbar (who in turn has a put option at the same conditions) at a multiple of 10x pre-tax earnings achieved in the most recently ended fiscal year at that time (with a minimum value for 100% of Skyy equity of USD 415 mn). The option to buy back the remaining 11% stake owned by management can instead be exercised as from January The company has repeatedly stated its commitment to exercise the option to buy back Skyy minorities as soon as possible, and the market seems to be discounting this event assigning a high probability to it: we have thus factored this investment into our model as if it were to happen at the beginning of 2005, despite nothing having been announced thus far. Based on our estimates, Skyy s 2004 pre-tax earnings should be around USD 48 mn, and are expected to grow by 12% in A 30% buy-back would therefore cost an estimated 115 mn and in 2005 would make it possible to bring some 13 mn of Skyy pre-tax profit back into the group. Continuing to assume 10-12% growth, this could amount to about 17 mn in Considering also the tax effect, we get ROC of some 10% for this investment vs. 7.5% group WACC, with a positive impact on valuation of some 6-7% (once additional contribution is capitalised with 7.5% WACC and 3.5% perpetuity growth), leading to a new target price of 44 per share, vs. prev. 41. Obviously the main bet is the sustainability of a low double digit growth for Skyy, considering the ever difficult competitive environment in the US market. Below we present our simulation of buy-back of Skyy minorities, showing the impact on 2005 P&L. IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

5 Campari September 9, P&L ACCOUNT ( MN): STIMATD IMPACT OF SKYY MINORITIS BUY-BACK Change old new Sales Change% 9% 6% 6% BITDA % % % Change% 6% 7% 7% Goodwill and Trademark amortization (35) -4.4% (35) -4.2% (40) -4.9% Depreciation (19) -2.4% (19) -2.3% (19) -2.3% BIT % % % Change% 3% 9% 4% Financial Charges (9) (6) (9) Forex Pre Tax Profit % % % Change% -15% 12% 4% Minorities (16) -2.0% (18) -2.2% (5) -0.6% Pre tax profit after minorities Change% -15% 12% 16% Taxes (36) -4.6% (40) -4.8% (41) -5.0% Net Profit % % % 4% Change% -18% 12% 17% Adjusted Net Profit % Change% 9% 8% 16% Tax rate 36% 35% 35% Investments for acquisitions Net Fin. Position (235) (137) (256) Adjusted Net Profit calculation Net profit stated Goodwill Tax saving on deductible goodwill (6) (6) (8) Adjusted net profit DCF VALUATION (INCLUDING SKYY MINORITIS BUY-BACK) CAMPARI DCF MODL ( mn) Beyond Sales Growth 9% 6% 5% 5% 5% 1% BITDA margin 23.0% 23.2% 23.4% 23.5% 23.6% 21.1% Tax Rate 36% 35% 35% 35% 35% 32% BIT Taxes on BIT (45) (46) (50) (54) (58) (59) Depreciation & Amortisation Operating Cash Flow (1) Incremental Fixed Capital Invest. (29) (129) (12) (12) (12) (18) Increase in Working Capital (14) (12) (12) (13) (14) (12) Total investments (2) (43) (141) (24) (25) (26) (30) Operating Free Cash Flow (1+2) Operating FCF after minorities Discount Factor Discounted Free Cash Flows FCF of perpetuity 1,219 Source: uromobiliare SIM estimates DCF: SNSITIVITY ANALYSIS ( mn) LONG-TRM GROWTH WACC 0.5% 1.0% 1.5% 7.0% % % Source : uromobiliare SIM estimates IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT VALUATION ( mn) PV Free Cash Flow 383 PV of Perpetuity 1,219 nterprise Value 1,602 Net Debt 12/ Dividend paid during quity Valuation 1,279 No. of Shares (mn) 29.0 Value per share ( ) 44.0 Source : uromobiliare SIM estimates

6 Campari September 9, MULTIPL COMPARISON (INCLUDING SKYY MINORITIS BUY-BACK) MULTIPLS COMPARISON (September 8 th, 2004) Stock perf. Price V/BITDA P/ Adj. Last 3 months DIAGO -5% ALLID DOMCQ +1% PRNOD RICARD -2% RMY COINTRAU 7% AVRAG ex Diageo CAMPARI (curr. price) +2% Premium/(discount) vs. Avg. -13% -22% -22% -18% -23% -20% CAMPARI (our tgt. price) Premium/(discount) vs. Avg. -7% -17% -17% -11% -16% -13% Source: IBS consensus & uromobiliare SIM estimates. V/bitda multiples adjusted proportionally to the weight of minorities on PBT (which is expected to go down in 2005, after the buy-back of 30% in Skyy Spirits). MAIN FIGURS ( mn) COMPANY VALUATION: DCF method 2002 % 2003 % 2004 % 2005 % 2006 % NPV of cash flows 383 Sales NPV of perpetuity 1,219 Change 34% 8% 9% 6% 5% Dividend paid during the year -26 BITDA Net Debt (Dec. 2003) -297 Change 40% 6% 6% 7% 6% Company Valuation 1,279 BITA Valuation per share ( ) 44.0 Change 42% 6% 7% 7% 6% BIT WACC 7.5% Change 29% 6% 3% 4% 8% G factor 1.0% Pre Tax Inc Change 31% 12% -15% 4% 11% SALS BRAKDOWN BY PRODUCTS (2003) Net Income Change 37% -8% -18% 17% 11% Wines Free cash flow Spirts 14% Change -9% -1% 65% 21% 9% 66% FINANCIAL FIGURS Cap. xp NWC Net Fin. Pos D/ Cap. employed ROC 13% 13% 12% 12% 12% PR SHAR DATA ( cent) ps Change 37% -8% -18% 17% 11% Adj ps Change 29% -8% 9% 16% 8% Dividend ord MARKT RATIOS P Adj P PBV Yield ord. 3.0% 2.2% 2.2% 2.2% 2.2% FCF yield 7.1% 5.1% 8.4% 10.2% 11.1% V FIGURS V/Sales V/BITDA V/BIT V/C Soft drinks 20% GOGRAPHICAL BRAKDOWN OF SALS (2003) Americas 31% U Italy RoW 19% 48% 2% A&P % 20.1% 20.1% 17.0% 18.3% 18.5% A&P % of sales Source: uromobiliare SIM estimates IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

7 Campari September 9, This publication has been prepared by Paola Carboni. In the past uromobiliare SIM has published studies on CAMPARI. DISCLAIMR uromobiliare SIM is distributing this publication to some 600 qualified operators and to unqualified operators by mail and electronic communications systems as from November 3, uromobiliare SIM intends to provide continuous coverage of the financial instrument forming the subject of the present publication, with a semiannual frequency and, in any case, with a frequency consistent with the timing of the issuer s periodical financial reporting and of any exceptional event occurring in the issuer s sphere of activity. The information contained in this publication is based on sources believed to be reliable. Although uromobiliare SIM makes every reasonable endeavour to obtain information from sources that it deems to be reliable, it accepts no responsibility or liability as to the completeness, accuracy or exactitude of such information uromobiliare SIM has adopted internal procedures able to assure the independence of its financial analysts and that establish appropriate rules of conduct for them. However, it is pointed out that uromobiliare SIM SpA is an intermediary licensed to provide all investment services as per Italian Legislative Decree no. 58/98. Given this, uromobiliare SIM might hold positions in and execute transactions concerning the financial instruments covered by the present publication, or could provide, or wish to provide, investment and/or related services to the issuers of the financial instruments covered by this publication. Consequently, it might have a potential conflict of interest concerning the issuers, financial issuers and transactions forming the subject of the present publication. As on today s date it has been ascertained that, as regards the listed companies covered by the present publication, the Credem group (to which uromobiliare SIM belongs) does not have relationships of control or major shareholdings, either direct or indirect, with/in the same. However, Credem group could provide them with corporate finance services, could have issued financial instruments linked to the issuers stock and could have directors who are members of the issuers corporate bodies. In addition, it is pointed out that, within the constraints of current internal procedures, uromobiliare SIM s directors, employees and/or outside professionals might hold long or short positions in the financial instruments covered by this publication and buy or sell them at any time, both on their own account and that of third parties. The purpose of this publication is merely to provide information that is up to date and as accurate as possible. The publication does not represent to be, nor can it be construed as being, an offer or solicitation to buy, subscribe or sell financial products or instruments, or to execute any operation whatsoever concerning such products or instruments. uromobiliare SIM does not guarantee any specific result as regards the information contained in the present publication, and accepts no responsibility or liability for the outcome of the transactions recommended therein or for the results produced by such transactions. ach and every investment/divestiture decision is the sole responsibility of the subject receiving the advice and recommendations, who is free to decide whether or not to implement them. Therefore, uromobiliare SIM and/or the author of the present publication cannot in any way be held liable for any losses, damage or lower earnings that the subject using the publication might suffer following execution of transactions on the basis of the information and/or recommendations contained therein. The estimates and opinions expressed in the publication may be subject to change without notice. IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT