Tennent's switches to lighter cans but price hikes not ruled out

Tennent’s owner C&C Group has reported strong sales of its Scottish lager which will now come in a lighter weight pint can as it looks to keep a lid on soaring costs, though price hikes have not been ruled out.

Reporting a swing to a full-year operating profit, the Irish drinks group said its vast Wellpark brewery site in Glasgow had “continued to build its sustainability credentials”.

During the COP26 summit in the city, the brewery hosted dignitaries and events, showcasing the investment the site has made in removing CO2 - 4,000 tonnes in the past financial year - and removing 150 tonnes of single use plastic over the same period.

C&C added: “With the inflationary pressures, especially around aluminium and energy, we have introduced a lighter weight pint can for [the new financial year] and continue to focus on efficiencies at the site to drive down energy usage of which 100 per cent is now generated from renewable sources.

“Together this will ensure that we have a competitive manufacturing cost base whilst delivering on our sustainability commitments.”

The group said Tennent’s performance had been aided by Scotland qualifying for the first time in 23 years for a major football championship - the Euros.

A “multi-channel” advertising campaign and associated on and off-trade promotional activity helped in part to drive brand health improvement.

Tennent’s off-trade volume share of 24 per cent was down slightly on the year before (24.6 per cent), a reflection of the lager benefitting in the previous year from “disruption that competitor brands experienced as well as growth of the premium category”. However, the most recent share figure is up from two years ago (22.9 per cent).

Tennent's, which is brewed in Glasgow, is Scotland's biggest selling lager brand. Picture: Andy Buchanan

Details of Tennent's performance came as C&C, whose other brands include Magners cider and Heverlee lager, posted an operating profit of €47.9 million (£40.3m) for the 12 months to February 28. That compares with an operating loss of €63.6m a year earlier.

The group also noted that its premium beer portfolio had continued to strengthen with penetration in Scotland growing to 40 per cent of independent free trade outlets from 35 per cent in 2020.

C&C Group chief executive David Forde said: “Following a period of unprecedented challenges for the hospitality sector, we are delighted to be back serving our customers and delivering our iconic and much-loved brands to our on-trade and off-trade partners.

“Looking forward, we are operating in an evolving and challenging inflationary cost environment and will continue to monitor this closely.

“We have already taken action to afford the business a degree of protection, nevertheless we are susceptible to further increases in our cost base which would necessitate further price increases.

“Despite the current positive sentiment in the hospitality sector post reopening, we are mindful of the pressures being faced by consumers and its potential impact on future demand.”

Damian McNeela, an analyst at brokerage Numis Securities, said C&C had “clear strategic growth opportunities in cider and premium beer as well as the scope to drive operational leverage from its leading distribution business”.