C&C GROUP, the owner of Tennent’s Lager, has highlighted the continuing impact of Scotland’s tougher drink-driving laws as its first-half profits slumped by 9.5 per cent.

And the brewer warned that the lower drink-drive limit, alongside other factors such as poor weather and the integration of the former Wallaces Express wholesale business in Scotland, would hit full-year profits by €10 million in its current financial year.

C&C, which owns Magners cider, cited difficult trading conditions in its core Scottish and Irish markets as it booked operating profits of €62.6m in the six months ended August 31.

The company, which hailed a strong export performance by Tennent’s and Magners over the period, insisted the challenges it faced in the first half were “transitional”.

“We expect an improvement in Scotland and Ireland going into the second half,” said chief executive Stephen Glancey. “Some will come from cost savings, some will come because you are losing [comparison with] the drink-driving stuff in Scotland from November onwards.”

Mr Glancey admits the reduction in legal drink-driving limit has brought about permanent change in consumer behaviour in Scotland.

He observed that drivers no longer risk having one pint and getting behind the wheel, which is believed to have had an acute effect on rural outlets and pubs and bowling clubs.

While C&C has attempted to mitigate the effects of the lower limit by offering lower and alcohol free beers, he said the “reality is that people just aren’t going to the pubs.”

Mr Glancey said: “An unintended consequence of the drink-driving change has been to impact lots of rural pubs, bowling clubs, golf clubs – places where people didn’t drink and drive but they might have had one or two pints and got into the car.

“I don’t think that is going to come back – I don’t think there is any sign it will come back.

“If you listen to Paul Waterson, the guy who leads the [Scottish] Licensed Trade Association in Scotland, their research suggests pubs in Scotland have been hit by about 10 per cent. That’s quite transformational for them.”

Mr Glancey was more bullish about other parts of the hospitality market in Scotland. Although “volume-led” outlets have struggled in light of the change, he pointed to the vibrancy of the casual dining market, which has informed its investments in craft beer and cider. Those include its Drygate joint venture with craft brewer Williams Bros in Glasgow, and continental beers Heverlee and Menebrea.

Meanwhile, Mr Glancey highlighted AB InBev’s £68 billion takeover of SABMiller as “transformational” for the brewing industry. Asked if the deal could bring takeover opportunities for C&C should the merged entity be forced to sell off assets to meet competition requirements, Mr Glancey, whose firm brewers Stella Artois for AB InBev at Wellpark in Glasgow and is also a distribution partner for the brewing giant, said: “They are a good company and a good partner of ours. We will work on any opportunity that might come out.

“In terms of M&A (mergers and acquisitions) activity, any time there has been a consolidation in the past things [have] come loose over time, brands or businesses – things that the big guys don’t necessarily want, like Tennent’s. That was an orphan asset that was owned by AB InBev.

“We’d always be on the look-out for anything around that, as long as it first our jigsaw puzzle, which is British Isles [and] reinforces either Scotland, Ireland or [the] market.”

Mr Glancey dismissed as “probably not true!” speculation linking it with a bid for the UK business of Carlsberg, and distanced the company from any deals to buy pub groups.

C&C highlighted its strong cash generation, which it said was reflected in its balance sheet strength, having reduced net debt by €38m over the period.

It is looking to achieve annual cost savings of €15m this year, with Mr Glancey noting this will not have specific implications for its operation in Scotland.

C&C has also launched a €100m share buy-back programme between now and July, which he said was currently its most optimal route for capital deployment.

The interim dividend was increased by 5.1 per cent to 4.73 cents.

Shares in C&C Group closed…