Exclusive - CAGE 2013 - Developed markets still developing for C&C Group
The head of C&C Group was presenting at day one of the CAGE conference in London today
The head of C&C Group has claimed that the Ireland-based firm is well-placed for growth, despite its historical dependence on the the developed beer and cider markets of the UK and Ireland.
The company, which owns the Magners cider brand, has targeted expansion both internationally and in other long alcoholic drinks categories in recent years. In its fiscal 2009, 49% of its EBIT came from the cider category in Ireland, while 34% of its profits were derived from its cider sales in the neighbouring UK.
In January, however, C&C expanded its international footprint by acquiring Vermont Hard Cider Company for US$305m. Coupled with the purchase of the Tennent's lager brand from Anheuser-Busch InBev in late-2009, C&C has subsequently estimated that the share of profits from cider in Ireland in this fiscal year will be down to 34%, with cider from the UK lowering its profits share to 29%.
Profits from international operations should hit 7%, and are forecast to reach around 18% in fiscal-2014.
Presenting at day one of the CAGE conference in London today (18 March), CEO Stephen Glancey argued that the company is well-placed to meet these targets. “We're often asked how we can possibly win when we're so UK and Irish-centric,” he told delegates. “It's easy to explain that the developed markets of the world are developing markets for cider.
“Markets like Australia, Canada and the US are fantastic for cider, and that's the long-term prospect.”
Glancey highlighted that the cider market in the US, which has recorded growth of around 57% in the last six months – albeit from a relatively small base – has so far afforded C&C only 0.3% cider penetration.
C&C's model can also prevail in the so-called developed markets, Glancey said. “We have very strong brands in local markets where we have power because of the consolidated nature of the market.” Glancey cited Tennent's in Scotland and its Bulmers cider brand in Ireland as examples.
In a trading update earlier this year, C&C saw the UK struggle in the nine months to the end of November, with sales falling by high double-digits in the period.
Glancey also noted that C&C will spend the coming months introducing “a range of initiatives to give us cost leadership”, while upping investment in its international capacity in fiscal 2014.
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