Since its formation last August to look after C&C Group’s growing cider portfolio, Magners GB has been decidedly quiet. Until now.
Boss Gordon Johncox tells Anna-Marie Julyan how Magners returned to growth and what Stella’s leap into cider means for the category
Situated slap bang in the middle of London’s West End, Magners GB is never far from the spotlight. But the cider giant has done a good job of dodging the glare since setting up shop in Leicester Square last August.
The company has kept its head down for good reason. Magners’ sales were in decline, it had the purchase of AB InBev’s Tennent’s brands to digest and its £45m buyout of the Gaymer Cider Co was under close scrutiny by the OFT.
Last month, yet more was heaped on as AB InBev announced plans to launch Stella Cidre this spring. There’s timing for you. No sooner had Magners’ Irish owner C&C Group announced a return to growth for the brand latest volume sales of Magners are up 22%, and value 13% [Nielsen 12w/e 22 January] than the world’s biggest brewer set up shop in its back yard.
One man who knows exactly how Magners regained the front foot is Gordon Johncox, boss of C&C’s business in the UK since October 2009. A down-to-earth rugby fan from Surrey, his first priority has been addressing past failings. Although the brand’s 2005 launch and the way it was marketed over ice kickstarted the cider boom, by 2007 sales were sliding. Enter ex-Scottish & Newcastle boss John Dunsmore, who took over C&C’s reins in 2008 and set about rescuing the ailing business. Swift action followed, with C&C buying Tennent’s from AB InBev and Gaymers from Constellation, culminating in the formation of Magners GB last September.
Operating as a business unit within the decentralised C&C model, the new company sells Magners cider, the Gaymers portfolio and Tennents lager in some off-trade channels. “We wanted this business to be a very different business from the old Magners,” says Johncox. “There were failings in terms of customer service and focus, and actually having proximity to customers. One thing we were determined to do when we looked at getting it right in Great Britain was learning from those mistakes.”
Magners’ sales slid because two key things were out of kilter, he believes: its relationship with customers and its pricing.
“If you took Christmas 2009, Magners was at a 37% price premium to its biggest competitor,” says Johncox. “Through not having the right levels of engagement with customers we’d allowed ourselves to become far too expensive. We’ve done some very careful modelling on price elasticity, identified where we need to be in the market and got that balance between price premium and volume right.”
As a result, last Christmas Magners brought the gap between itself and nearest competitor Bulmers down to 26%, making it less expensive in comparison and boosting sales. Further impetus has come from altering pack formats and the 2010 advertising campaign, Method in the Magners. Being “fleet of foot” and responding quickly to market challenges has also been crucial, says Johncox.
“Our opportunity to be agile and quick is much greater than others’, because of our size and the fact we have far fewer layers. It’s a small line of command and we don’t have to wade through corporate treacle to make things happen. Joining Magners UK was a fantastic opportunity for me because it was a new company, a category that was in growth and, of course, a very different working environment. It’s much smaller and flatter than a large global brewer.”
Talking of global brewers, they don’t come any bigger than AB InBev, whose Stella Cidre is set to be in-store by Easter. C&C has been remarkably upbeat about Stella’s arrival, saying the entry of such a big brand will help grow the category in the UK and with AB InBev’s global reach open up new overseas markets for cider.
He does express some caution, however. With Magners’ newly expanded portfolio of 15 cider brands and the growth Stella’s arrival is expected to inspire, Johncox says action is needed from retailers. In short, the cider fixture needs to expand.
“If retailers try to squeeze a quart into a pint pot in terms of space that would be my concern,” he says. “The worst thing they could do is try to squeeze the fixture space. I don’t want to be critical, but cider is regularly out of stock in multiple grocers due to there not being enough space, and in independents you’ll regularly see ranges that reflect the way cider was and not the way it is.”
The good news for Johncox is that with the acquisition of Gaymers he now has a portfolio view, meaning retailers “look to us in a way they didn’t before”.
Future strategy for the former Gaymers brands, including Blackthorn and Addlestones, won’t be finalised until the summer, he says, but he can confirm that the brand’s successful relationship with music festivals will continue. In fact, Gaymers’ association with music is one reason why he doesn’t think it competes directly with Magners, as some might assume.
“Gaymers appeals to a younger consumer than Magners, it’s quite music centric and high energy, whereas Magners is more laid back,” he says. Moreover, Magners’ status as “the original” over-ice cider and its Irish provenance still resonates, so there are no plans to move production to the Gaymers Shepton Mallet Mill.
With interest in “super-premium” cider growing, niche brands like Addlestones may yet prove to be the company’s “best kept secret”, he adds. And, with a cupboard stuffed full of such cider potential, it’s a case of watch this space.
Gordon Johncox snapshot
Lives: In a small village outside Bath with his wife and two sons, aged 14 and 11
Career: Entered the drinks industry in 1987, when he joined Grand Metropolitan Brewing. In 1991 Courage bought Grand Met’s brewing interests and from 1995 he worked for Scottish & Newcastle after it acquired Courage. From 2005-2008 he worked as group commercial director of S&N and in 2008 became MD of Waverley TBS after the buyout by Heineken. Hobbies: Rowing and rugby he’s a keen Bath and England supporter. He also spends his spare time “auditing” the local pub to check the cider is OK.
Thoughts on duty: “I stand full-square behind the NACM. Over the last 10 years 8,000 acres of new orchards have been planted and from planting to breaking even on an apple tree is nine years. If investment’s going to continue, we need a category that’s in growth. Having a stable and sensible duty framework is a really important part of that.”