Poor domestic apple crops mean Merrydown, along withother cider makers, will be forced to buy concentrated apple juice from continental Europe to meet production targets. Analysts believe this could prove very costly as rising demand for concentrate could push prices up sharply.
One analyst said yesterday; "This is bad news for cider makers who will be forced to bid for apple concentrate on the spot market. Merrydown is likely to be particularly badly affected."
Richard Purdey, Merrydown's chairman, attempted to play down the impact of the dire apple harvest but admitted it could have an effect. "We will not know the full impact until November. Until the apples have been processed we will not know how much concentrate we will have to buy."
Matthew Clark, another struggling cider producer, is also particularly vulnerable to a rise in the price of concentrates. "Taunton Cider [a subsidiary] suffered badly from a rise in concentrate prices a few years ago and still buys more than its fair share of concentrate," one leading drinks analyst said yesterday.
Any rise in costs will come as a big blow to Matthew Clark, which has seen its shares collapse after a profits warning last year, and which has been forced to launch a multi-million pound marketing campaign to try to boost sales.
Every cider maker is likely to be affected to some extent by the poor apple harvest. "No cider maker has sufficient fruit to meet all its own needs," Mr Purdey pointed out.
However, some companies may escape relatively unscathed. HP Bulmer, the world's largest cider maker, grows most of its own apples in orchards spanning thousands of acres throughout the West Country. These orchards have escaped most of the bad weather and frosts which decimated crops in Kent and the South-east. "Our orchards in the Hereford, the Midlands and the West have not been hit by the frosts around the South-east. This will not have a significant effect on our business," said a spokesman for HP Bulmer.
Merrydown's poor profit performance has culminated in a management shake- out which has seen Alan Rutherford, its sales director, and finance director Stephen Burke leave the group in the last few months. Sales of Two Dogs, its alcoholic lemonade, plummeted as dozens of rivals entered the market, forcing Merrydown to give brewing giant Scottish and Newcastle the contract to distribute the drink in a desperate attempt to reverse its flagging performance.
Experts believe that about 50 per cent of the apple harvest is likely to have been wiped out by poor weather this year.Reuse content