Matthew Clark chief gets reprieve

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Peter Aikens and his embattled management team at the cider maker Matthew Clark have been given a stay of execution to solve the problems that forced the company to issue a damaging profits warning earlier this month.

It is understood they have been given until the end of the year to come up with a credible strategy to take on the increasingly popular alcopops that have devastated demand for Clark's Diamond White and K cider brands.

Mr Aikens has just completed a two-week programme of briefings with Clark's largest shareholders in an attempt to reassure them that the wilder speculations about the future of the company were wide of the mark. He encountered some resistance from shareholders who were left fuming by a collapse in the company's share price following the profit warning, but it is thought most large shareholders have taken the view that the current team is best placed to solve the problems.

After a week in London, Matthew Clark took its roadshow up to Scotland this week where its presentation is thought to have gone down badly. One analyst said: "The trouble is Peter Aikens hasn't got a strategy in place. All they've been able to do is tell investors what went wrong, not what they plan to do about it."

Shares in Matthew Clark have been in free-fall since 10 September when the acquisitive company warned that its profits had suffered severely from the rapid rise in popularity of alcoholic lemonade drinks such as Bass's Hoopers Hooch and Merrydown's Two Dogs. Analysts slashed their profit forecasts for the year to next April from about pounds 70m to pounds 50m and the shares tumbled 35 per cent on the day to 435p.

The shares have continued to fall and yesterday, after a volatile trading session, closed at 318.5p. They have lost more than half their value since reaching a high of 801p as recently as May. At current levels, the market appears to be holding back until more information becomes available. According to one analyst: "If nothing suspect is going on, the shares have been oversold. But the market is not convinced and that uncertainty means the shares could fall another pounds 2 or bounce pounds 2."

It also emerged yesterday that Clark is about to appoint a marketing consultancy to help devise a promotional strategy to replace the price- led marketing that analysts believe has left the company open to attack from competitors. Unlike many of its peers, Clark has avoided expensive brand-building advertising on television in favour of price discounts.

Attention focused on the importance of building brands this week when Guinness admitted that it had been wrong to focus on price rather than brand promotion. It promised a big increase in marketing spending to rebuild brand awareness.

Matthew Clark's strategic rethink is understood to be focusing on three main areas: a look at the existing brand range to decide which drinks should be most heavily promoted; a study of possible new products; and an analysis of whether recent changes in drinking patterns of young consumers are part of a permanent shift or merely a passing fad.

The industry has been caught on the hop by the rapid emergence of a new class of alcoholic drink. It is estimated that alcopops are selling more than 100 million litres a year from a standing start only a year ago. Market researchers say the market is worth pounds 250m a year.

When Hoopers Hooch and Two Dogs, an Australian drink, were launched last year, few analysts took them seriously. Sales were expected to drop as winter set in but instead other drinks companies jumped on the bandwagon and the sector's momentum merely accelerated.

HP Bulmer, a rival to Matthew Clark in the cider market, has launched flavoured ciders to attack alcopops head on and Guinness has been quick to launch ready-mixed drinks such as Ginzing, gin and fizzy herbal water, and Bell's with Coke, lemonade and even Irn Bru.