MORE of the sparkle was taken off C&C's share price as strong sales of Tennent's lager in Scottish pubs proved insufficient to offset plunging demand for the lager brand in other outlets and poor performance by Magners cider in the drinks company's first quarter.
The Dublin-based company's shares fell 6.6% and it has now lost around a quarter of its value since the end of March.
Chief executive Stephen Glancey said: "We are pleased to guide towards continued earnings growth for the current financial year.
"We remain focused on developing our multi-beverage capability in core markets and investing in customers through our trade lending model.
"Our Tennent's business has again performed well and provides a degree of balance to a competitive UK cider market."
C&C said it expected operating profit in the year to February 2014 to be between €125 million (£106m) and €132m (£112m), compared to a consensus estimate of €132m among analysts, according to Thomson Reuters.
Tennent's, which is made at the Wellpark Brewery in Glasgow, "continued to perform well in the Scottish on-trade channel despite a weak beer market", C&C reported.
Total Tennent's volumes in the independent free trade has increased by 7% since the beginning of March, the company said. But overall UK sales of Tennent's, which the group bought in 2009, were down 12.4% year-on-year in volume terms in the three months to the end of May, implying that sales plunged in the off-trade.
Crucially, net revenues from the brand fall 6.1% on a constant currency basis. In the previous financial year C&C succeeded in increasing revenues from Tennent's by renegotiating previously low margin contracts and reducing promotional discounting.
Cider sales volumes in its core Irish and British markets, where it sells under the Magners and Bulmers brands, fell 11.5% and 22.2% respectively in the quarter C&C reported.
In revenue terms cider sales were down 13% in Ireland and off 24% in the UK.
In Ireland, the fall was largely due to lower off-trade demand with the on-trade channel proving more robust in the period.
It was a similar picture in the UK where 85% of the fall in volumes was due to the "intensely competitive" off-trade.
The company is facing competition from the likes of Carlsberg's Somersby Cider and Coors' Carling British Cider.
C&C said unseasonably cold weather had hit sales of cider, which is often seen as a summer drink, and warned that trading was expected to remain "difficult" for the remainder of the year in the two countries.
In the United States, where it has high hopes that it will benefit from a growing demand for cider, sales of its key brand Woodchuck grew a lower than expected 3% in volume terms.
C&C last year bought US firm Vermont Hard Cider, the maker of Woodchuck, to harness what it believes is potential demand from those drinking craft beers in North America. Success over the Atlantic would also help diversify away from the established and increasingly competitive cider markets in the UK and Ireland.
Mr Glancey said: "We remain confident in the attractive prospects of international cider.
"While we have not meaningfully participated in the category growth in the US this quarter, our fundamental assumptions about the attractiveness of the cider category in the US and the broader opportunity for our portfolio in international markets remain unchanged."
The company has sought ways of boosting Tennent's in the international markets and recently unveiled plans for a beer produced using whisky-flavoured woodchips, which it plans to sell in India and the Far East.
In March C&C bought a 50% stake in drinks distributor Wallaces of Ayr with plans to complete a full takeover in the next few years.
Since buying Tennent's from Anheurser-Bush Inbev for £180m in 2009, C&C has spent around £8m on a training academy and bottling line in Glasgow.
The company has backed Scottish Government plans to introduce minimum alcohol pricing.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article