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C&C Group has said it is confident that Magners, its Irish cider brand, will ‘continue to grow volume and value’ after benefitting from a new distribution partnership with Anheuser-Busch announced in December.
The Dublin-based company noted that it was ‘still early days’, but said that it believed Magners could grow within Anheuser-Busch’s ‘strong beer portfolio and distribution infrastructure’.
Internationally, Magners saw strong growth in Europe – up 12% – opened new markets in Africa and Asia, and returned to growth toward the end of the fourth quarter in the US.
It comes as C&C Group announced net revenue for the year to the end of February of €559.5 million – down 6.9% – and stable operating profit of €95 million. That’s despite volume growth of 2.6% and ‘a significant increase in brand investment across our core brands’.
The partnership with Anheuser-Busch, a continuation of a previous agreement, sees AB responsible for the sale and trade marketing of C&C’s cider portfolio including brands such as Magners, Chaplin & Corks and Blackthorn in England and Wales.
In exchange, C&C Group brews, kegs, bottles and cans certain Anheuser-Busch products, including Stella Artois. It also distributes Anheuser-Busch’s beer portfolio including Becks, Stella Artois, Budweiser and Corona in Ireland, Northern Ireland and Scotland.
“The AB InBev beers performed well for C&C during the year with Corona once again proving to be the star performer,” C&C Group said. “The extended AB InBev distribution partnership signed in December 2016 reaffirms our long-term distribution rights to their current and future beer portfolio.
“As part of this agreement, we traded some of the value we derive from distributing their beer brands in Ireland and Scotland for value we will derive from AB InBev distributing our cider brands in the UK. The five year extension of brewing arrangements for AB InBev brands in our Glasgow site further cements the relationship.”
The company reaffirmed the belief that “Magners and our other cider brands will benefit greatly from AB InBev’s best-in-class distribution capabilities in the UK off-trade and from being marketed alongside AB InBev’s leading portfolio of beers”.
The ongoing consolidation activity currently taking place across retailers in the on and off-trade further reinforces the strategic rationale for the partnership, it claimed.
A tale of two partnerships
But C&C Group’s optimism will be little consolation in the face of decline in key markets – 6.5% in Ireland, 4.% in C&C Brands, and almost 34% in North America.
The group’s revenue in North America fell to €24.5 million and its operating profit to €0.7 million.
It pointed to a continued downturn in the North American cider category, with consumers converting to adjacent categories including alcoholic soft drinks, flavoured malt beverages and fruit beer. Cider volume was down 17.6% throughout 2016 after a spike in product development between 2010 and 2015, though recent figures suggest that this has levelled out at around 10-11%.
C&C Group said that the near-term volatility in the category pushes out the prospects of Pabst – the California brewer with which it enjoys a deep relationship, and signed a UK and Ireland distribution agreement last March – being able to deliver a meaningful recovery in the short- to medium-term.
Despite the woes, the company celebrated impressive growth in its craft and premium portfolios.
“Our premium propositions in cider and beer (Chaplin & Cork’s cider, Menabrea Italian beer and Heverlee Belgian lager) increased volume by over 60% in the year,” it said. “Menabrea made good progress in the licensed restaurant trade and secured its first grocery multiple listing. This should help underpin brand awareness and volume growth going forward.”
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