C&C sales cool after spring fever

TENNENT'S lager owner C&C has suffered a sales hangover following bumper trading during the spring heatwave, the company revealed yesterday.

C&C, an Irish company largely run by top directors and managers at the former Scottish & Newcastle (S&N) Breweries, said in a trading update that volumes jumped a shade under 15 per cent in the three months to May. That period included the hottest Easter in 60 years and the royal wedding, which was an extra public holiday.

However, the group, which sponsors the T in the Park rock festival in Scotland, said sales turned relatively weak in June as the weather cooled.

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C&C told the market that it still expected to hit its operating profit target of between €108 million and €115m (94m-100m) in this financial year.

The group said: "The fine weather over a prolonged bank holiday season provided some respite from the challenging consumer and macro-economic environment in Ireland and the UK.

"Against this backdrop, the business delivered a robust performance in the first quarter."

John Dunsmore, chief executive of the company, previously briefly held the same position at S&N before it was sold via a 7.8 billion break-up bid from Heineken of Holland and Denmark's Carlsberg in 2008. He had previously done 12 years at the Scottish group, including heading its UK operation.

Sir Brian Stewart, a longstanding chief executive of S&N and later chairman at the time of the takeover bid, is chairman of C&C.

Volumes at Tennent's, which sponsors the Celtic and Rangers football clubs, were up 4 per cent, while the brand's net revenues were up just under 6 per cent. C&C said Tennent's had benefited from the better trading environment as well as price increases.

The Irish group said its Magners cider brand was the main driver for the good volumes as the warm weather, the brand's "Method in the Magners" advertising campaign and benefits of off-trade promotions boosted activity in the three months to May.

In Britain, which is the core market for the brand and where Magners goes head-to-head with Heineken's Bulmers brand, volumes lifted 15 per cent.

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There were also strong gains in the export market as Magners's volumes picked up just under a third, helped by demand in the US and Australia.Magners' revenues rose over 10 per cent.

Revenues from overall cider sales were down 0.4 per cent in the first quarter on a 3.3 per cent fall in Ireland and a 15 per cent fall in income from C&C's Gaymers brand.

Volumes at Gaymers tumbled by more than a fifth, which cut C&C's cider volumes overall by 7.2 per cent in the quarter and revenues by 0.4 per cent.

Broker JPMorgan raised its share price target after the update, adding it expects the strong growth at Magners to continue for the rest of the year.

"We think the Magners cider business in Britain will accelerate to 8 per cent volume growth in 2012 in a cider category which should grow at least 10 per cent given 50 per cent more marketing investment by key brand owners," JPMorgan said.

C&C said that if the improvement from the first quarter held up, it intended to invest more into Magners.