UK: Magners owner hit by price squeeze
- Credit: PA
Sales of Magners have slumped by 17% after the cider brand lost market share and felt the impact of supermarket price wars.
Dublin-based owner C&C added that Magners’ sales volumes were down by 10.3% in the six months to August 31 as it warned that conditions in England and Wales were likely to remain volatile for the medium term.
Rivals have weakened its position in the pub and club sector, while over-supply in shops and off-licences is also having an impact on pricing.
The company said: “Mainstream grocers are under huge pressure as they strive to compete with discounters, leading to price deflation and rationalisation.”
C&C also makes Irish cider brand Bulmers, Gaymers cider and the Shepton Mallet Cider Mill range of English ciders, as well as Tennent’s lager.
It does not own any pubs, which is why the company has been looking at Chef & Brewer owner Spirit as a way of providing a new platform for its products.
C&C, which is run by a number of former executives of brewer Scottish & Newcastle, last week tabled an approach to Spirit but has been unsuccessful in gatecrashing Spirit’s talks with Greene King over a £750 million takeover.
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In its half-year results today, C&C said profits were down 2.6% to 64.3 million euros (£50.7 million) as growth in its core businesses in Ireland and Scotland failed to offset the tougher trading conditions elsewhere.
In England and Wales, C&C is reviewing the “optimal structure” of the business after profits dived by 36.8% to 7.2 million euros (£5.7 million) following a fall in its operating margin of nearly four percentage points.
Chief executive Stephen Glancey said: “The overall UK cider market remains challenging. Magners underperformed the market in the first half and we saw only modest improvement in our Shepton Mallet division in volume and value.”
C&C said its Tennent’s brand in Scotland posted a solid performance with revenues in line with the previous year as operating profits in the country rose 14.3% to 22.4 million euros (£17.7 million), helped by the acquisition of wine and spirit wholesaler Wallaces.
Profits in Ireland improved 11.6% to 36.7 million euros (£29 million).