London Pride brewer Fuller’s is to enter into the premium cider market after acquiring Cornish Orchards for £3.8m, along with its flagship craft brand, Cornish Gold.
Fuller’s has acquired a 100% share of the Liskeard-based cider maker, which was established in 1999. This comprises £2.4m cash, £0.5m of assumed liabilities and £0.9m in contingent consideration payable at a future date.
“The premium cider market is a strong growth area with healthy margins, and the full award-winning range of ciders and artisan soft drinks are ideal for our portfolio,” Fuller’s said. “It will provide the opportunity to drive incremental sales through our existing sales channels.
“The production facilities in Duloe, Cornwall are well invested with potential for further expansion on the site.”
“The consumer is increasingly interested in craft products, with local provenance, quality and authenticity”
Michael Turner, Fuller’s
The acquisition, which was finalised on 4 June, marks the latest development in the company’s new beer strategy, which was launched at the end of last year. As part of this initiative, the brewer has revamped packaging and rolled out a new 500ml bottle. It has also developed Frontier, a new unpasteurised 42-day brewed “new-wave craft lager”.
In a statement chairman Michael Turner said the UK and worldwide drinks market was undergoing a period of change. “The consumer is increasingly interested in craft products, with local provenance, quality and authenticity. Social media and digital technologies are tipping the competitive landscape towards these producers and away from the mass market giants.
“Our strategy is to leverage this competitive advantage to grow our existing brands, develop new ones and expand into other craft segments.”
The company’s financial results for the 52 weeks ending 30 March 2013 showed overall revenues rose 7% to £271.5m, driven by pub acquisition and developments in the on-trade. Profit before tax (including exceptional items) rose to £35.2m compared to £28.8m in the same period the previous year, and adjusted profit also increased 5% to £31.7m. Adjusted earnings per share rose by 8% to 43.07p with the recommended total dividend also up 8%.
Off-trade and export now account for two in every five barrels sold, Turner said, and the company had made “significant” investment in additional tank capacity last year to support high growth in these areas. This resulted in operating profits falling by 3% due to an increased depreciation charge.
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