Tennent's deal boosts C&C by 7m as cider market hit by tough trading

C&C'S acquisition of leading Scottish lager brand Tennent's last summer has been a strong driver in offsetting tough trading in its key cider market, the Irish drinks group revealed yesterday.

In a trading update, C&C, the maker of Magners cider, said its move into beer would boost full-year operating profit more than it had expected and cushion the challenging conditions in its cider markets.

The group, which is run by former top Scottish & Newcastle Breweries management, led by former S&N chief executive John Dunsmore, said full-year operating profit – without taking the Tennent's deal into account – would be towards the top end of a 77 million to 82m range (68m-72m).

However, C&C said including the 185m purchase last August of the Scottish and Irish businesses of Anheuser-Busch – whose flagship was Tennent's – would add 7m to operating profit this year.

Analysts said this was more than originally expected from Tennent's, which is produced at Glasgow's Wellpark brewery and accounts for one in three pints of lager sold in Scotland.

One analyst said that due to the well-aired challenges in the cider market "there was probably an expectation out there that the statement was going to be fairly poor but instead it's steady as she goes".

C&C, which is understood to be planning a major sponsorship and advertising push into Scotland this year to consolidate its expanding British position, said in its trading update to 15 January that underlying revenue fell 9 per cent in the third quarter. This meant a 7 per cent slide in the nine months to November.

The company, which also bought the UK cider assets of Constellation Brands in November, said the performance reflected a 9 per cent fall in total cider volumes for the period.

However, there was some recovery in December when C&C's cider volumes rose 3 per cent year-on-year.

This included a 17 per cent increase in Britain, an 8 per cent decline in the Republic of Ireland and a 1 per cent dip elsewhere in the world. "Cider has been an increasingly tough market", one analyst said.

C&C said: "In Great Britain cider sales benefited from late ordering in the trade, which had adversely impacted the previous month's sales, particularly in the on-trade (pubs and bars]." The company said it lost an unspecified amount of market share in the off-trade (shops and off-licences) as "C&C's brand price premium moved materially ahead".

The group, which also makes Tullamore Dew Irish Whiskey and Irish Mist liqueur, said spirits and liqueur volumes were up 23 per cent in December compared with the same period in 2008.