Tennent’s drinkers help to ease C&C troubles as cider sales falter

By KRISTY DORSEY
Published on 28/06/2012 00:23

STRONG sales of Tennent’s lager allowed parent group C&C to reassure investors yesterday even though poor weather extinguished thirst for Magners and other cider brands owned by the Irish company.

Overseas shipments of the Scottish brand, produced at Tennent Caledonian’s Wellpark Brewery in Glasgow, contributed towards a 47 per cent rise in C&C’s export revenues during the three months to the end of May. Meanwhile, sales of Tennent’s in Ireland – which together with the UK is regarded as C&C’s home market – nearly doubled despite tough economic conditions.

The group is now predicting a rise in full-year operating profits even though sales of its Magners, Bulmers and Gaymers brands plunged by more than 21 per cent in the UK. Irish cider volumes were also down, falling 5.4 per cent during the first quarter.

C&C admitted that the cider figures in its home markets were “weak”, and vowed to increase support for those brands. Stephen Glancey, chief executive of C&C, said last month that Euro 2012 followed by the Olympics later this summer were likely to boost sales.

“Despite a challenging quarter and tough consumer backdrop, we are confident that our resilient business model and strong brand market combinations will deliver continued earnings growth for the full year and maintain our business momentum,” Glancey said.

Analysts said the group’s anaemic overall performance was not surprising, with sales gutted by the wettest April on record and continuing weak consumer confidence.

Despite those difficulties, C&C said it expects to report an operating profit of between €112 million (£89.6m) and €118m for the year to the end of March, in line with analysts’ consensus of some €114m. Operating profit, excluding some items, was €111m last year.

Volume sales of Tennent’s, which C&C bought from Anheuser-Busch in 2009, fell by 6 per cent in the UK during the first quarter as the overall beer market continued its steady decline. However, rising prices compensated for volume declines, leading to a 5.4 per cent rise in net revenues.

The brand’s continued introduction to the Irish market saw sales there rise by 47.6 per cent while the company’s Caledonia Smooth ale, launched in Ireland in March, has received “encouraging” feedback.

Exports of Tennent’s – which recently began selling into Australia, Italy, North America and Russia – have been helped by the opening in April of a £4m bottling line that gives the flexibility to produce different products for various markets. The brand now accounts for 12 per cent of C&C Group’s total exports.

Despite weak sales at home, demand for cider in C&C’s key overseas markets continues to show strong growth, particularly in Australia and North America. Exports were boosted by last year’s acquisition of Hornsby’s, making C&C the second-largest player in the US cider market.

Investors shrugged off the weak domestic performance, choosing instead to focus on the Dublin-based group’s potential abroad.