Switching production from County Clonmel in Ireland to Gaymer's Shepton Mallet cider mill bought by C&C this week as part of the £45m deal with Gaymer owner Constellation would improve supply of Magners and cut export costs, sources claimed.
"C&C has been struggling for capacity at Clonmel," said Steve Howarth, buyer for beer, cider and spirits at Spar. Gaymer's own-label production could be turned over to making Magners, he suggested.
"Magners will be made in the UK," said another senior industry source.
C&C had historically suffered problems meeting off-trade demand for Magners, admitted COO Stephen Glancey, with latest figures showing a 7.8% fall in off-trade sales to £65.1m [Nielsen 52w/e 3 October 2009]. He said he expected the Gaymer deal to improve relationships with UK retailers through its longer history with the off-trade.
With a move to Shepton Mallet production, C&C would also be able to offset the weakness of sterling against the euro as well as export costs. Howarth explained: "C&C has to ship packaged Magners across the water to the UK, which is very expensive."
C&C also acquired a 300,000 sq ft warehouse in Avonmouth as part of the Gaymer deal, which will give C&C the UK infrastructure to "get them out of a third-party distribution deal", said a source.
The boss of a rival cider brand added: "C&C will want to move production from Ireland to Gaymer's plant in England to improve the effects of currency."
The deal would allow C&C to put Gaymers Cider on heavy promotion and protect the "premium appeal" of Magners.
"Gaymers has virtually been given away in the off-trade something C&C will emulate. It hasn't been able to heavily promote Magners as it sees it as a premium brand," the rival claimed. "It can now argue for bigger shelf space and drive greater deals with retailers."