C&C Group CEO calls on Scotch whisky to end minimum unit pricing fight

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C&C Group CEO Stephen Glancey has urged the Scotch whisky industry to drop its legal battle against minimum unit pricing (MUP) in Scotland.

C&C Groups Woodchuck cider is heading for the Spring "sets" in the US

C&C Group's Woodchuck cider is heading for the Spring "sets" in the US

Glancey, whose company has held a firm line in support of government moves to set a baseline price for alcohol in both Ireland and Scotland, told just-drinks today that C&C was "on the right side of the community". 

He said: "We're looking for clarity more than anything... If local people think it's the right thing then let's have a go at it."

The fight over MUP erupted again this week after the Scotch Whisky Association, which represents the Scotch industry, said it may appeal to the UK's highest court after Edinburgh's Court of Sessions ruled against its challenge to legislation. The Scottish Government now has a clear path to implementing the policy, which would see the baseline price for a bottle of whisky set at GBP14 (US$17) and a four-pack of beer at about GBP4.

Today, Glancey said "it would be great if the whisky guys dropped this long legal case", adding that Ireland and Scotland "matter to us". 

Asked if he believed the Scotch industry risks finding itself on the wrong side of history over MUP, the CEO said: "I do, actually. There is a problem with cheap alcohol. You can't argue with the price elasticity model because they [the alcohol producers] all use it.

"It's been quite a reasoned approach from the government."

C&C Group's MUP support is backed by UK brewer Greene King. Meanwhile, the SWA, the Wine and Spirit Trade Association, the British Beer & Pub Association and the Association of Licensed Multiple Retailers have all spoken out against moves to introduce a minimum alcohol price.

Glancey's comments today follow the release of C&C Group's first-half results, which saw sales and profits drop amid currency headwinds.

The company said FX translations, caused by Sterling's post-Brexit-vote dip, hit the top and bottom lines. However Glancey denied the fallout from the referendum would disproportionately affect C&C. 

"I don't see why we would be more affected than anyone else," he said. "It's a translation issue, not transaction issue. We buy our apples in the north of Ireland, even for the Republic [of Ireland], so we broadly match our Sterling and Euro input and outputs."

The CEO said C&C's production bases in Ireland and Scotland insulated the company from Brexit, and that rivals that import beer to the UK will fare much worse.

"If you were dragging Peroni from Italy to the UK, you have a 20% reduction in your operating margins in a market where the average operating margins are mid single digits," Glancey said. "Or if you're in Sweden bringing in Kopparberg, where margins are 5%, imagine the impact they've got?

"The big guys with the pan-European supply chain will be the most impacted. What they do about it is a different question. I imagine they will put prices up next year."

Meanwhile, C&C's CFO, Kenny Neison, said work to turn around Vermont Hard Cider's Woodchuck brand was ongoing, with focus now on the US retail industry's Spring 2017 "sets", when producers target national accounts. 

"In terms of dynamics, the category has gone into negative territory in cider and a lot of the big guys are moving on or have moved on. It's not dissimilar to what's happening in UK, where Stella Artois Cidre and Carling cider are disappearing out of the market. We see the same dynamics playing out in the US."

Neison forecast that the US cider category will be bigger in five years time, with C&C Group and smaller cider makers the big winners. 

"We're the people that are genuine cider players and have interest in long term," Neison said. "We won't disappear off next week and invent a sparkling alcoholic water."

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