Tennent's prospers at home and abroad

Greig Cameron

Deputy Business Editor

Wednesday 24 October 2012

A "strong" performance at home and abroad from Tennent's helped to offset weaker cider sales at C&C Group.

ON A ROLL: The Wellpark Brewery makes Tennent's which is performing well in Italy and Canada Picture: Martin Shields

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GREIG CAMERON DEPUTY BUSINESS EDITOR

The Dublin company also announced a major expansion of its international ambitions with a $305 million deal for United States cider market leader, the Vermont Hard Cider Company.

That acquisition came as C&C reported a 2% decline in net revenue to €263.4 m (£215m) with pre-tax profits rising from €59.7m to €63.7m in the six months to August 31 this year.

The drinks company said it had been a tough summer period with poor weather and no noticeable uplift from major sporting events such as the Euro 2012 football championships or the Olympics, leading to an overall drop in volume of 8.2%.The UK cider category was the worst performer with an 18.6% fall in volume coupled with an 18.4% slip in revenue to €115.7m. Cider volume in Ireland dipped 6.6% with revenue declining 9.8% to €73.6m.Tennent's UK volume was down by 6.3% but revenue grew 2.2% to €121.3m thanks to more premium products, renegotiations of loss-making legacy contracts and higher average pricing.Kenny Neison, C&C finance director, said: "Tennent's continued to outperform in the period."International revenue increased 40.8% to €23.8m with €11.2m in North America, €6.5m in Europe and €6.1m to the rest of the world.International volume rose 52.9% with new destinations including China, Thailand and South Korea. In Ireland C&C's beer portfolio grew volume by 20% in a market which dipped 1%. Tennent's lager and Caledonia Smooth increased by 40.5% overall.In Scotland Tennent's lager volume grew by 3% while Caledonia Best performed ahead of expectations and is estimated to have secured around 10% of the on-trade ale market.Internationally Tennent's, which is made at the Wellpark Brewery in Glasgow, is performing extremely well in Italy and Canada. It has recently been launched into new markets such as Russia and Ukraine.Joris Brams, managing director of C&C's international business, said: "The most successful country right now is Italy. "We have done a tremendous relaunch of Tennent's in the past four or five months, including a higher [alcohol by volume] one. We are following tourism markets and football activity. Russia has just opened up and we had our first containers shipped into Moscow."C&C said it was committed to supporting the on-trade and had invested around €7m in loans to customers.In March this year C&C bought a 25% share in Scottish operator Maclay Group, which runs 26 pubs. C&C said it had earned net revenue of €700,000 through the deal.Mr Neison said: "We see the absence of banks, in terms of their interest in the licensed trade, as an opportunity for a brewer to put in traditional brewery loans. "It is not just about Maclay as we invested some €7m into our trade loan book. We are very much friends of the ontrade in Scotland and investing cash to help the trade through difficult times."At the moment we are seeing customers crying out for cash and we are more than happy to help them."Analysts at Canaccord Genuity said the half year results were "weak" and questioned whether C&C was paying too much for the Vermont Hard Cider Company.Although the broker viewed the further expansion into the United States as positive it thought the deal was "expensive".C&C bought Tennent's from Anheuser-Busch Inbev in 2009 in a deal worth around £180m. Since then C&C, which employs more than 300 at Wellpark, has invested significant money in a training academy and bottling line in Glasgow.C&C's shares ended the day up six cents at €3.82.

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Tennent's prospers at home and abroad

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