Tennent’s owner C&C in £190m swoop for No1 US cider maker

Tennent's owner C&C has bought the Vermont Hard Cider Company
Tennent's owner C&C has bought the Vermont Hard Cider Company
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IRISH drinks company C&C Group have snapped up the biggest cider brand in the United States in a deal that will transform its international business and open the door to the growing Chinese market.

Dublin-listed C&C, run by former Scottish & Newcastle duo Stephen Glancey and Sir Brian Stewart, will pay $305 million (£190m) for the Vermont Hard Cider Company (VHCC), which makes the Woodchuck label.

Taking over VHCC also brings the Wyder’s cider brand into C&C’s portfolio and gives the group a 20 per cent stake in China’s Gold Hard Cider range.

Joris Brams, managing director of the group’s international business and newly-appointed main board director, said the firm would invest up to $30m in VHCC’s factory.

But Brams told The Scotsman: “We will leave the VHCC team to get on with selling their cider rather than asking them to sell Tennent’s lager as well. We already distribute Tennent’s ourselves in America, along with Magners and Gaymers.”

VHCC is expected to add about $15m (€11m) to C&C’s profits in the current year. But in its interim results, which were also published yesterday, the group warned profits will be at the lower end of current City forecasts of €112-118m due to the wet summer in the UK and Ireland.

Heavy rain led to revenues falling by 2 per cent to €263.4m in the six months to 30 August, with operating profits down 2.7 per cent to €65.6m.

Yet C&C hailed the performance of Glasgow-based Tennent’s, acquired from Anheuser in 2009, and which it said helped to offset poor cider sales in the UK and Ireland.

Operating profits at Tennent’s grew by 10 per cent to €16.1m thanks to the renegotiation of loss-making supply contracts. Revenues rose by 7.3 per cent to €57.2m despite a 4 per cent fall in volume, as the group focused on raising prices rather than “chasing volume”.

C&C said it remained committed to lending money to pub landlords in Scotland to make up in a shortfall in cash available from banks. The group lent €7m to publicans last year.

Phil Carroll, an analyst at Shore Capital Stockbrokers, said: “Given the historically poor market conditions, with the wettest weather in the UK seen in decades and the continuing pressure on the consumer, we believe C&C has delivered a very solid set of results and although guidance is now moved to the low end of the range, it could have been below.”

Carroll added that the takeover of VHCC “looks to be an exciting opportunity and given its strong growth prospects, we would not be too worried about its initial valuation multiple”.

But Canaccord Genuity analyst Wayne Brown warned that the deal looked “expensive”, although he noted that the takeover would help to reduce C&C’s dependence on the cider markets in the UK and Ireland.