Fresh doubts over alcopops effect on cider

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Fresh evidence has emerged to support the widely held view that the problems affecting cider maker Matthew Clark this summer have been only partly due to the dramatic rise in popularity of alcopops. Recently commissioned research suggests that, contrary to Clark's claims, the cider market is growing fast but lack of investment in brands has quickly eroded the company's share of the sector.

Its arch-rival, HP Bulmer, has just finished a round of presentations to industry analysts in which it has attempted to reassure the City that Matthew Clark's problems are specific to the company and do not signal a bursting of the cider bubble that has seen volumes grow rapidly in the 1990s.

Matthew Clark stunned investors earlier in the summer when it warned that the exponential growth of alcoholic "soft" drinks such as Bass's Hoopers Hooch and Merrydown's Two Dogs had caused a sharp reduction in demand for its core cider brands, Diamond White and K, and for Babycham.

Shares in the company, which has expanded rapidly in recent years through the acquisitions of Gaymers and Taunton, slumped 239p to 431p on the day of its annual meeting, when it issued the warning, and have since fallen further. Bulmer told brokers that total cider consumption in the UK continued to increase this year. Adjusted for the exceptional hot weather last year that boosted demands, consumption is forecast to have increased from 110 million gallons in 1995 to 116 million this year. In 1990 the market was only 75 million gallons.

Within that overall market, however, the performances of the two major producers, who between them control about 90 per cent of the sector, have diverged dramatically. Through the supermarkets, an important outlet for cider, sales of Strongbow are running 30 per cent ahead of last year while Diamond White has declined by 24 per cent. Matthew Clark has blamed alcopops but analysts believe that does not tell the whole story. Alcopops are now thought to have taken share from across the spectrum of alcoholic drinks.

Almost a quarter of alcopop drinkers have said that were the new drinks not available they would drink bottled lagers, and 19 per cent would turn to draught lager. By contrast, only 10 per cent said they were drinking alcopops instead of bottled cider, while the equivalent figure for draught cider was 5 per cent.