Bulmer shares tumble as profits dive

HP Bulmer, the Strongbow and Woodpecker cider maker, highlighted the tremendous problems facing the cider business when it announced a sharp fall in profits yesterday. Andrew Yates reports on industry in real trouble.

Investors in HP Bulmer took fright yesterday sending its shares down 15p to 392.5p as the group announced a 17.5 per cent fall in pre-tax profits to pounds 14.3m for the six months to October. The poor set of results sent shock waves reverberating around the industry, coming just 24 hours after rival Matthew Clark was forced to make its second profits warning in 18 months,

John Rudgard, Bulmers' chief executive, said: "There is no doubt that the market is difficult at the moment and sales have been very disappointing."

Bulmers and Matthew Clark have both embarked on multi-million pound advertising campaigns in an attempt to revive cider sales.

"There are some signs that the decline in the cider market has been halted," insisted Mr Rudgard. However, City analysts pointed out that the marketing drive had yet to show any tangible benefits and were sceptical that the cider producers' gamble would pay off. "It will be a long hard slog. It could take years for there to be any improvement in cider sales," one drinks analyst said.

The cider market has been hit by the proliferation of new beers such as Caffrey's and the emergence of alcopops. Bulmers also said that the 7.5 per cent tax hike on strong ciders last year had created turmoil in the market.

Merrydown is likely to become the first casualty of the cider industry's troubles and is currently being circled by predators. However, both Bulmers and Matthew Clark have now ruled themselves out of the running to takeover their struggling rival, leaving Pernod Ricard as the favourite to strike.

Investment Column, page 24