Tennent’s puts in ‘solid’ showing as higher prices offset sales drop

By KRISTY DORSEY
Published on 17/01/2013 00:00

Higher pricing boosted revenues at Tennent’s during the nine months to the end of November, even though the amount of lager sold by Scotland’s best-selling brand continued to decline.

Tennent’s, which is made at the company’s Wellpark Brewery in Glasgow, put in a “solid” performance – despite what continues to be a tough UK market, Irish owner C&C said yesterday. The brand is also benefiting from growing international sales, particularly in the US.

C&C, which has owned the Scots lager since 2009, said the value of UK sales during the first three quarters was 7.3 per cent higher than in the same period a year earlier.

The total volume of beer sold fell by 5.5 per cent during the nine months. However, the decline slowed from 6.3 per cent in the first six months to 3.6 per cent in the third quarter.

Tennent’s has been bringing its pricing in line with rivals by cutting back on promotions and bringing in a higher mix of premium products. Caledonia Best, launched last year and recently named the official beer of Scottish Rugby, is said to have performed well.

Commenting on its performance since December, C&C said trading at Tennent’s UK had remained “resilient”. Sales of C&C’s Magners and Gaymers cider brands in the UK continued to fall in the third quarter, but at slower rates than previously. More encouragingly, C&C reported signs of improvement in its home market of Ireland.

“As anticipated, trading conditions stabilised following an unseasonably wet summer period and volumes benefited from trade buy-in ahead of the December duty rise,” C&C said.

Phil Carroll, an analyst with Shore Capital, said the key point was the confirmation that C&C still expects to meet the lower end of an earnings forecast that it set at between €112 million and €118m (£93m-£98m).

“So, despite very challenging conditions in C&C’s core markets, it should still deliver profit growth year on year, which … is commendable,” Carroll added.

However, analysts at Canaccord Genuity were less favourable, noting there had been no “material” improvement in C&C’s core markets of the UK and Ireland, which account for about 70 per cent of group earnings.