Latest sales figures leave C&C feeling flat after bumper heatwave

magners cider brewer C&C has suffered a sales hangover following bumper trading during the spring heatwave.

Volumes jumped 14.9 per cent in the three months to May, but the Irish firm said sales were “relatively weak” in June, as the weather turned, though it still expects to hit its operating profits target of between 108 million and 115 million euros for the current year.

The Magners brand was the driver for the good volumes as the warm weather, the brand’s ‘Method’ advertising campaign and benefits of off-trade promotions boosted activity in the three months to May.

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In Britain, which is the core market for the brand, volumes rose by 14 per cent but there were also strong gains in the export market as volumes picked up by 32 per cent, with most of the growth coming from the United States and Australia. Magners’ revenues rose by 10.1 per cent.

The story in Ireland was less cheery, with lower prices cutting the revenues at Bulmers, its key brand, by 3.3 per cent despite revenues increasing.

Own brand supplier Gaymers had an even tougher time as volumes tumbled by more than a fifth, which cut C&C’s cider volumes overall by 7.2 per cent in the quarter and revenues by 0.4 per cent.

Beer brand Tennent’s, the sponsor of Scottish football clubs Rangers and Celtic, got a seasonal boost with volumes up by 4 per cent and higher revenues.

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“The beer category also enjoyed the benefit of the more favourable trading environment,” said the company.

Broker JPMorgan raised its share price target after the update, adding it expects the strong growth at Magners to continue for the rest of the year.

“We think the Magners cider business in Britain will accelerate to 8 per cent volume growth in 2012 in a cider category which should grow at least 10 per cent given 50 per cent more marketing investment by key brand owners,” it said.

C&C said that if the improvement from the first quarter is sustained, the current intention is to invest more into Mag- ners.

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“While first quarter performance was strong, the performance in June has been negatively impacted by poor weather which could disappoint the market,” NCB stockbrokers said in a note, which reaffirmed its buy recommendation.

The group also distributes a number of beer brands in the Scottish, Irish and Northern Irish markets, primarily for Anheuser-Busch Inbev, the brewer of Stella Artois, Hoegarden and Beck’s.

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