British drinkers' thirst for Magners provides a massive tonic for C&C

The Irish drinks group that has made cider the surprise hit of the summer admitted yesterday it could not keep pace with demand for its British brand Magners, which quadrupled its sales over the summer.

C&C said it was having trouble supplying enough take-home packs, sold in supermarkets and off-licences, to satisfy the new generation of cider drinkers spawned by its £20m nationwide launch of Magners. To avoid missing out on the cider boom it has been instrumental in fuelling, C&C intends to bring forward the "next phase of its cider expansion plan" to boost capacity at its plant in Clonmel, Co. Tipperary.

The phenomenal success of Magners, whose UK campaign has been the most successful Irish promotion since Kerrygold butter, has vindicated the promises made by Maurice Pratt, C&C's chief executive, when he brought the company to the stock market in May 2004. Then, Mr Pratt, the former boss of Tesco's Irish operations pledged to give cider a similar status in the UK as it enjoys in Ireland, where it has made a serious dent into sales of Guinness and other drinks.

At the time, sceptics noted the woes of HP Bulmer, the Strongbow cider maker that was taken over by Scottish & Newcastle. They recalled the faddish popularity of bottled cider brands such as K and Diamond White in the early 1990s that died a similar death to the alcopop concoctions of the era that have long since disappeared from the market. Indeed, C&C was forced to pull its first attempt at a London listing in June 2002 because of a combination of stock-market cynicism and turbulence in the IPO market.

Yet yesterday, shares in C&C, formerly known as Cantell & Cochrane, leapt 13 per cent to €9.8 after the company said its operating margin soared by more than 4 percentage points during its first half despite its hefty advertising bill.

This better-than-expected performance prompted analysts to upgrade their profit forecasts for a third time this financial year. Merrion, the Irish stockbroker, now expects earnings per share to be at least 50 cents, up 20 per cent from its previous forecast. It predicts a similar increase in the dividend payout.

C&C is expected to invest about €140m (£94m) over the next two years to upgrade its Clonmel plant, which should enable it to double the amount of cider it produces. The company recently told apple growers it would need 160,000 tonnes next year, three times the amount it expected to press in 2006.

An Irish apple shortage this summer forced it to ship in crops from the UK, France and the Netherlands. The cider revival has resulted in acres more British fields being turned back into apple orchards, prompting a the National Farmers' Union spokesman to declare apple growing wasone of the few fields of British agriculture with a "stable and exciting future".

C&C said Magners' volumes rose 250 per cent in the six months to 31 August, compared with the 200 per cent growth rate reported in July. Since March, Magners has been available in the UK after a trial in London and Scotland was a hit.

C&C sells the drink as Bulmers in Ireland, where volumes grew 7 per cent during the period in a flat drinks market. By contrast, Diageo, the world's biggest drinks group, said volumes of Guinness slumped 8 per cent last year, partly blaming sales lost to wine and cider drinkers.

Bulmers was originally an English brand, made in Clonmel under licence by William Magner since 1935. The company later became Showerings, before being taken over by C&C. As the group owned only the rights to the Bulmers name in Ireland, it opted to call the drink Magners in its export markets.

Total interim turnover at C&C, which also sells a range of soft drinks, snacks and liqueurs, is expected to be up by more than 25 per cent, the group said.