UK cider slump drives focus overseas

C&C has reported an 11.9% volume decline in its third quarter UK cider sales, adding weight to recent moves within the sector to pursue growth in other markets.

Although the Magners brand owner pointed out that this result represented an improved performance on first half sales, which it attributed to increased off-trade promotional activity, it remarked: “There has been little discernible improvement in the trading environment for UK LAD [Low Alcohol Drinking] in the third quarter.

“It remains a tough market for brand owners and the increased competition in cider is adding to pricing pressure.”

By contrast, C&C enjoyed 28.1% growth in its international beer and cider volumes, with Magners achieving 16% growth in North America. Although C&C is battling “distribution issues” in Australia, the company described growth in other markets as “encouraging”.

While C&C has moved to take advantage of these growth opportunities abroad with last year’s acquisition of US firm Vermont Hard Cider, its competitors have also been taking similar steps.

Herefordshire-based Westons confirmed in October 2012 that it had bought drinks distributor World Brands Australia, since renamed Westons World Brands. Only last week, Swedish brand Rekorderlig announced its own move in Australia by agreeing a distribution deal with Coca Cola Amatil.

One area for the UK cider category that continues to show promise is the fruit variants introduced by a number of brands in recent years. The 2012 CGA Brand Index showed that, in the UK on-trade alone, fruit ciders have seen “exponential growth of nearly 250% in the past two years.”

This opportunity was reflected in the “relative improvement” achieved by C&C’s Gaymers brand. The group reported: “The introduction of new Gaymers fruit variants has had a positive impact on volumes but the other brands in the Gaymers portfolio continue to drag on overall performance.”