Tennent’s owner C&C sees value in craft beer

Operating profit was up 7.9 per cent. Picture: Dan Phillips
Operating profit was up 7.9 per cent. Picture: Dan Phillips
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Tennent’s lager-maker C&C Group has toasted higher half-year profits as the good weather helped drive a pick-up in the UK and Irish beer and cider markets this summer.

Operating profit was up 7.9 per cent to €71.1 million (£60.8m) in the six months to the end of August, while revenues grew 27.8 per cent to €336.7m.

It said sales of Caledonia Best were up 39 per cent, making it “the UK’s fastest growing smooth ale”. It claims the ale now has a 12 per cent share of sales in the independent pub sector.

C&C, which took a 50 per cent stake in Irvine-based drinks wholesaler Wallaces Express earlier this year, recently unveiled plans to tap into Scotland’s burgeoning craft ale market.

In a joint venture with Alloa-based craft brewer Williams Bros, plans have been filed with Glasgow City Council to build a brewery next to C&C’s sprawling Wellpark site.

If approved the brewery, which would be built in a 1940s box factory, could open in the spring. It would include a visitor centre with a restaurant, bar and brewing school.

Chief executive Stephen Glancey said: “Our model in Scotland continues to evolve towards a full multi-beverage platform and further progress has been made in the period with the investment in Wallaces Express in March.”

Glancey yesterday declined to say how much the firm was investing in Drygate, but said the business would be led by Williams Bros co-owner Scott Williams.

He added: “It’s a 50-50 investment of initial capital and resources.

“The reason we are investing in a craft brewery is that we are looking to participate in the growth of craft in Scotland.”

C&C’s key Tennent’s brand produced a mixed performance over the the half-year. Sales volumes declined by 5.8 per cent but price rises in both the off-trade and pub chains limited the net revenue decline to 2.4 per cent.

In Scotland Tennent’s enjoyed volume growth in what the firm describes as its “key channels” despite a cut in marketing spend. C&C said it beat the wider beer market, which declined by 5 per cent declined by 5 per cent north of the Border.

The group introduced its premium Belgian beer brand, Heverlee, to the Scottish and Northern Irish on-trade, “with a strong rate of sale to date”.

UK-wide, the firm’s Magners cider label underperformed the market, with volumes declining by 10.4 per cent. C&C said that was because it was offering fewer promotional deals in off-licenses, and is instead reinforcing the brand with a TV advertising campaign.

Glancey said: “Tennent’s provides a degree of balance to a competitive UK cider market. While Magners volume performance improved in the second quarter, fundamentals in the UK cider market remain challenging.”

Analyst Phil Carrol, at Shore Capital Stockbrokers, said: “Overall, we are reassured by the unchanged profit guidance and it is pleasing to see some improvement in the core Irish business but this is offset by a weak UK cider performance and slower progress in terms of Woodchucks volumes.”