C&C suffers as taste for Magners ebbs
Thursday 17 January 2008
The Irish beverage maker C&C said that its revenues were down 15 per cent yesterday as an ebb in Britons' taste for cider ate into its bottom line.
The company, which manufacturers the Magners branded cider, revealed that while its spirits business had grown by 1 per cent over the last quarter, its cider division suffered a decline of 18 per cent.
Business in Britain, where C&C faces stiff competition from Scottish & Newcastle, which ownsthe market-leading Strongbow and Bulmers Original cider brands, was worse as the year-on-year decline in the division intensified to 30 per cent.
C&C said that it expected overall revenue for the year to the end of February 2008 to decline, peggingthe final figure to come in 10 per cent below the last fiscal year.
Operating profit margin, an important gauge of profitability, is also expected to suffer and drop by 10 percentage points this year.
The company reiterated the impact of the unseasonable summer weather, which was a blow to the entire sector in 2007.
"The performance in Great Britain primarily reflects the impact of a loss of the on-trade market share during the period to 31 August, the negative carry over impact of poor summer weather on recruitment to the premium cider category and a very weak overall on-trade market," it said.
The Sanford C Bernstein beverages analyst Trevor Stirling said that C&C faced an uphill battle against its chief rival in the UK.
"Previously, the weather has impacted them,"he said. "But now it's really a lot about the challenge from Scottish & Newcastle and their brands which compete directly with C&C's Magners."
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