Analysis - Woodchuck weakness puts dent in C&C Group's US plans
C&C Group bought Vermont Hard Cider in December
C&C Group's US cider acquisition Vermont Hard Cider has got off to a slow start, an analyst has flagged.
Vermont's cider brand Woodchuck grew Q1 volumes by just 3% despite strong category growth in the US, Nomura's Edward Mundy said today (5 July). However, Mundy added that the fiscal year will be a transitional one for Vermont and “it is too early to conclude on the longer-term prospects.”
C&C completed its purchase of Vermont in December with hopes of tripling its international business within four years.
But while in C&C Q1 results released this week, international sales and volumes both increased by about 77%, Mundy said the growth came mainly from the first-time impact of Vermont.
Woodchuck has suffered market share loss since its acquisition from disruption caused by combining sales forces and delistings in “large on-trade restaurants”, Mundy said.
“We would not view these de-listings as permanent, however, we believe that they could run for as long as six months,” he said.
The analyst agreed with C&C predictions of a tough year ahead for the Irish owner of Magners and Gaymers because of competition in UK cider, but said pressure would ease when the weather in the UK and Ireland improves.
Trends would remain unchanged for the Tennent’s UK division, Mundy said, with soft volumes, good overall price/mix and continued margin momentum.
In Wednesday's Q1 results, C&C's UK cider volumes fell by 22%, while in the Republic of Ireland, total volumes were down 11.5%.
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