UK/US: C&C Group mulls Vermont Hard Cider export
C&C said it will focus on the US market with Vermont Cider brands initially
C&C Group has hinted it could export Vermont Hard Cider brands to markets outside the US, but said it will initially focus on developing the soon-to-be-bought company within America's fast-growing cider sector.
In a conference call with media earlier today (23 October), group CFO Kenny Neison said C&C will focus on boosting Vermont's production capacity and also its marketing efforts in the US. But, asked whether he thought the brands could be exported abroad, he said: "There's no reason why we can't bring Woodchuck through in established markets, like the UK."
The Irish group announced earlier today that it has agreed a deal to acquire craft cider producer Vermont for US$305m, subject to regulatory clearance. Neison said the US' cider boom has so far been "biased towards domestic brands, rather than international brands". But asked about this situation by just-drinks, Neison said C&C expects to see that position shift. "There's more we could be doing with Magners (in the US)," he said.
Nieson said that, overall, C&C sees the growth in the US cider market as a "positive development", pointing to figures showing that it grew 20% by volume in 2011.
However, analyst Cannacord Genuity questioned the wisdom of the Vermont deal. In a note, it suggested the 20.8x EBITDA being paid for the cider firm is "too high" and branded it a "value-destructive acquisition", as ROIC will be less than WACC for "at least five years".
C&C reported first-half figures today, which revealed a dip in EBITDA and sales. The group cited poor summer weather as a reason for its performance. Nieson also revealed to journalists that the London Olympics "failed to provide a volume uplift" for its core cider brands. However, he said Magners' volumes are expected to improve in the country in H2.
Meanwhile, C&C's group volumes in Asia rose 24%, with China, South Korea and Thailand performing particularly well for the group.
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