The chief executive of C&C Group has said the group saw “some variability in consumer demand” during the six months to 31 August.
He said the company remained cautious on forward consumer reaction to political and economic conditions in its core market but stressed that the Magners producer was capable of weathering the challenges.
The group saw net revenue in its domestic markets for the combined Bulmers, Tennent’s and Magners brands decline by 0.8% in the first half. Reported operating profit before exceptional items for the first half of €55.1m was also down 7.9%. the group said incremental investment in marketing (+€3.6m in core brands) and price support were significant factors.
Glancey said: “In the first half Bulmers grew by 6%, Tennent’s by 2% and Magners by 11% supported by increased brand investment and organisational focus. It is also pleasing to note continued growth in export with Tennent’s volumes particularly strong up 50% in the period. While reported earnings have been impacted by a combination of accelerated investment and currency we believe that this level of investment ultimately underpins long term brand values.
“Our portfolio of premium and craft beers and ciders such as Heverlee, Menabrea and Chaplin & Cork’s is developing well, growing volumes by 24% in the first half. This portfolio supports our three core brands by providing customers with an authentic, compelling and differentiated range tailored towards increasing experimentation amongst modern consumers. Our local manufacturing and route to market capability make C&C an attractive distribution partner for local craft producers and International brands alike.
“Our consolidation and efficiency programme is going to plan with minimum disruption to the broader business. This is testament to the skill, professionalism and hard work of our people. As part of the operational consolidation we invested €9m in a new PET bottling line at Clonmel in the first half and sold our bottling operations in Shepton for €9m. Last week we also completed the disposal of our cidery in Shepton Mallet. We remain on track to deliver the €15m of targeted cost savings and efficiency gains. With improving utilisation rates and stable input cost environment, we now have a well-invested, low cost manufacturing platform that will enable our brands to compete effectively in price sensitive markets.
“In the first half we have seen some variability in consumer demand and are cautious on forward consumer reaction to political and economic conditions in our core markets. However, we have a business that is capable of weathering these challenges and our confidence in the medium to long term outlook is based on the strength of our key brands, our business model and leading positions in Ireland and Scotland – where fundamentals remain strong. We also have a growing export business; a broadening portfolio of premium and speciality beers and ciders; and the right partner for our US brands. Our cash generative nature and balance sheet strength should ensure attractive returns for shareholders. We are well placed to either capitalise on the opportunities which may arise from the current phase of consolidation in our industry or return capital to shareholders.
“We note the recent decision of the Scottish courts to support the Government’s plan to introduce minimum pricing on alcohol as one of a range of initiatives to reduce the harmful effects of irresponsible consumption. C&C is a supporter of this initiative and we will work with the relevant authorities in Scotland and Ireland to ensure that we meet our obligations to the consumers and communities we serve.”
