Magners cider owner reports profit drop

The owner of Irish cider brand Magners has warned its operating profits will be €10m lower than expected after a near 10% drop in sales in England and Wales.

C&C, the owner of Magners, saw cider sales drop 9.8% toward the end of 2014 in England and Wales.

Sales of cider dropped by 9.8% in England and Wales in the three months prior to November 2014 and net revenue by 18.2%, with continued supermarket price wars blamed for tougher trading conditions “intensifying competition at both retail and brand owner points in the supply chain.”

In Ireland, cider sales were down by 3.4% and in Scotland by 2.4%, however overall volumes of cider in Europe increased by 18.6% with Magners up 7.1% and Tennent’s up 62.1%. In the US cider volumes declined by 16.2%, however C&C is confident in the sector’s long-term growth potential in the US.

In an interim management statement, C&C said: “We believe that the opening of the new cidery in August, product innovations and better sales execution are having a positive impact. The US cider category remains very attractive and the Group is firmly committed to capitalising on the long-term growth potential.”

Profits for the group are now expected to fall below market expectations with operating profit set to be about €115m (£89m), €10m less than expected, and down from €127m the previous year.

“Looking beyond FY15, the Group expects the core markets of Ireland and Scotland to continue delivering resilient performance through strong, brand-led multi-beverage operating models. In the US, the significant investments and focussed activity in FY15 should begin to have a positive impact on performance in FY16”, the group said.

“In England and Wales, C&C is advancing plans to significantly reduce costs which will return the cider business to acceptable levels of profitability, expand margins and increase investment behind the brand portfolio.”