Tennent's owner braced for 'challenging' winter as hospitality sector faces lockdown

The owner of Scotland’s best-selling lager has warned of a “challenging” outlook for the on-trade sector as lockdowns shut pubs or reduce opening hours.

Tennent's, which is brewed in Glasgow, remains the best-selling lager in Scotland. Picture: Andy Buchanan

C&C Group, the Irish firm that owns Glasgow-based Tennent’s, said the business had returned to profit alongside the reopening of the on-trade in July.

However, interim executive chairman Stewart Gilliland also had a warning to investors, saying: “The outlook for the on-trade sector remains challenging with limited near-term visibility.

“We expect to see reduced volumes in the on-trade continue for the near term partially offset by increases in the off-trade.”

He added: “We are adapting to this temporary change in consumption dynamics and whilst it will invariably reduce short-term profitability, we fundamentally believe in the medium and long-term outlook for the on-trade channel.

“The scale, reach and customer focus of the group’s brand-led distribution model should, in time, enable us to translate any improvement within this channel into superior profitability.”

Releasing interim results for the six months to the end of August, C&C said Tennent’s off-trade volume share of lager in Scotland had increased, delivering volume share of 26.4 per cent for the latest six months.

The closure of the on-trade sector during the initial spring lockdown resulted in the lager brand’s on-trade volumes plunging 64.8 per cent compared to the same period last year.

Volumes recovered strongly since trade recommenced, the group noted, but with a rate of sale reduction due to physical distancing and lower footfall.

C&C, which is also behind the Bulmers and Magners cider brands, added: “We have continued to invest and strengthen our brand innovation, with the launch of Tennent’s Light in March to meet evolving health conscious and wellbeing consumer trends.

“The brand is in over 300 outlets in the on-trade and was launched in the off-trade in July with products listed in over 1,000 multiple retail and convenience stores. In addition, Tennent’s Zero, a zero per cent lager was launched in the off-trade in October with multiple retailers.”

Mr Gilliland added: “Importantly, in terms of ensuring the group’s ability to trade effectively through this extraordinary period, we have enhanced our liquidity position, diversified our sources of funding, extended our borrowing facilities while reducing operating costs and maximising available cash flow.

“We remain confident in the inherent strength of our local brands, our unparalleled route to market and the medium to long-term prospects for C&C.”

Shore Capital analyst Greg Johnson noted: “The coming weeks and months are likely to be challenging given the backdrop. Longer-term we see a stronger and leaner C&C emerging with an opportunity to gain share.”

In August, the group confirmed that its new chief executive would be joining the firm on 2 November.

It had earlier revealed that David Forde, who has served as the boss of Heineken UK for the past seven years and been with the beer-maker for 32 years, was set to join the Irish group at the latest in early 2021, after seeing out his notice period. Forde played a key role in Heineken’s acquisition of Edinburgh-based Scottish & Newcastle in 2008.

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