Overall sales of Magners have fallen for the first time in a decade, cider manufacturer C&C Group has said, as a result of poor weather and intensified competition.
Volume sales of the Magners brand were “disappointing”, the group said in its annual report today, with a weak consumer market and significant above-the-line spending from new competitors. Volumes declined 13.9% - attributable partly to reduced promotional activity in the grocery channel, C&C said.
However, C&C said the brand remained in good health and there was intention to invest in advertising in 2014, after a year of reduced marketing investment.
The Gaymers portfolio also fell 16.4%, losing ground to premium and fruit-flavoured cider brands.
Continued cold weather may start to affect the cider category by delaying the apple growing and pollinating season, cider producers fear.
However, the company maintained that core brands remained in “good health”, buoyed by strong international performance of lager brand Tennents. In the UK, the lager saw volume declines of 5.9%.
Operating profit for the year ending 28 February 2013 rose 2.4% to €113.9m (£96.3m), although net revenues declined 0.8% and operating margin rose 23.9%, up 0.8 ppts on previous year. In cider, UK operating profit declined by 15.9% to €30.9m.
CEO Stephen Glancey said it had not been an easy year but that the “resilient performance” had been in line with expectations. He also pointed to significant investment during the year to strengthen the business in new and existing markets, including the creation of a trading division at Shepton Mallet to focus on the development of craft and specialist cider brands.
Authenticity and heritage will be key features of the cider market in future, Glancey said.
The company acquired Irish wholesaler Gleesons to increase its domestic growth, as well as the US-based Vermont Hard Cider Company – which owns leading US brand Woodchuck – to boost international performance.
This, it said, would reduce the exposure of C&C to the more challenging cider category in the UK.
The UK cider category fell 2% during the year to March, with off-trade volumes declining 4% to March 2013. However value in the off-trade grew by 2%, driven by a trend towards premium drinks in the category, C&C added.
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