Hornsbys deal with Gallo to make C&C Group number two cider player in US

Hornsby's deal with Gallo to make C&C Group number two cider player in US

C&C Group is set to become the number two player in the US cider market by acquiring the Hornsby's brand from E&J Gallo Winery for an initial EUR16.4m (US$22.5m).

The price tag could rise by a further EUR3.6m depending on the performance of Hornsby's between now and April next year. Ireland-based C&C said today (8 November) that the deal will give it a 20% volume share of the US cider market, making it the number two player behind Woodchuck Cider.

While the market is small, accounting for just 0.2% of volume sales of long alcoholic drinks (LADs), the Magners producer believes that the US holds significant potential. The market is expanding at a rate of 20% per year and currently stands at sales of between 400,000 and 500,000 hectolitres per year, it said.  

C&C's current COO, and incoming CEO, Stephen Glancey, said that the Hornsby's deal "represents a significant step towards the development of the group’s international, cider-led strategy". He added: "The transaction more than doubles our volume in a growing market; broadens the scope of our cider portfolio; and, presents significant opportunity to develop the Hornsby’s brand throughout North America.”

Launched by Gallo in 1994, Hornsby's does not have its own sales and marketing teams, although it is already distributed across the US. In 2010, Hornsby's sold 61,000 hectolitres, which translated into net sales of US$11.7m and represented low single-digit growth on the previous year, C&C said. 

Gallo, which currently produces and packages Hornsby's at its Modesto winery in California, has agreed to provide C&C with sales support on the brand for a further six months. It will provide production and distribution support for 12 months following completion of the deal.  

C&C expects that Hornsby's will fit well into its existing US business, because the brand's stronghold is on the country's west coast, compared to Magners, which mostly sells on the east coast.