just On Call - We're ready for minimum pricing - C&C Group CEO
C&C Group has increased value on its Tennent's brand
Minimum pricing in the UK and Ireland won't affect C&C Group's off-sales and could increase revenue in the company's pub trade, the group's head has said.
In a conference call with investors, in which he also indicated the Irish drinks company could soon buy into the soft drinks market, C&C Group CEO Stephen Glancey said his firm was well prepared for minimum pricing. On Monday, the Scottish government confirmed plans to set a minimum alcohol price of GBP0.50 (US$0.80) per unit. The UK government has proposed a GBP0.40 threshold to start in 2014 while Ireland has discussed similar measures.
Glancey said that, in response, C&C Group has increased value on its lower-margin products in Scotland, such as Tennent's, which is now just GBP0.05 shy of the incoming threshold.
He said the company could easily implement the same strategy elsewhere.
“As a small local operator in the Republic of Ireland, Northern Ireland and Scotland, we feel we are better placed to adapt to whatever minimum prices come along,” he said. “So, we don't see any commercial disadvantages at C&C to minimum pricing.”
Glancey said C&C Group could even benefit from minimum pricing through its on-trade investments.
“We are significant investors in the independent free-trade, i.e. we invest in pubs,” he said. “So, anything that moves the dial in terms of customers coming back to pubs is plainly good for our business.”
Earlier today, C&C Group posted strong full-year results, with net profits up 37% year-on-year. The results showed C&C sitting on a EUR68.3m war chest, which the group said was earmarked for future acquisitions.
“International cider would be our first port of call, though there are not too many out there,” said group CFO Kenny Nieson, adding that a domestic bolt-on is also a possibility.
Glancey said C&C Group would not limit its search to beer and cider brands and highlighted soft drinks as a viable target.
Glancey denied that C&C Group itself was up for sale following reports claiming that big brewers are circling.
“We get this every time a set of results come out,” Glancey said today.
Drinks companies in the UK are looking forward to a crowded calender of summer events, including the Queen's diamond jubilee and the London Olympics.
However, Glancey said it was “very difficult to predict” how these one-off occasions will affect C&C Group sales.
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