Bulmers down, beers up for C&C in H1

Sales of Bulmers here were down 3.5 per cent in volume in the six months to August 31st in a market that ‘remains challenging’, according to the C&C Group.

Its half-yearly figures indicate that sales of  Bulmers brought in €58.1 million in the six month period, down 8.4 per cent.

“The Bulmers brand has lost share in both channels of trade with volumes shipped in the six months up three per cent in the off-trade and down nine per cent in the on-trade,” stated the company, adding, “There has however been an absence of new news in the shape of innovation to date and this has allowed the competition to gain some market share.”

Despite over half of volume being sold via the off-trade, the channel switch impact is insignificant as far as the revenue line is concerned, reports C&C. The price deflation is entirely as a consequence of the pricing pressure in the off-trade channel stemming from growing levels of price-led promotional activity in the sale of alcohol.

“Improved operating margins of 1.9 percentage points have helped to mitigate the impact of revenue loss on cider. Re-allocation of planned marketing investment to support the Bulmers brand contributed around half of the margin improvement. The rest comes from flowthrough of continued cost and efficiency improvements on the supply side of the business.”

It continued, “According to Nielsen, the LAD market was down two per cent in the six months to August. Bulmers volumes dropped 3.5 per cent with the share loss coming from the off-trade.”

However C&C’s beer sales here increased by €1.2 million bringing in €8.3 million, up 18.6 per cent from 2010’s March-August figure of €7 million.

The contribution from the beer portfolio in the first six months has offset the loss in operating profit from declining cider sales. The distribution build for Tennent’s and Beck’s Vier in 2010 is gaining momentum and growth in beer volumes and revenues were well ahead of the market in both channels of trade.

Retail volumes of LADs were marginally down by 0.7 per cent “on a 12 months basis at the end of August (per Nielsen/CGA). However the underlying on- to off-trade channel dynamic is accelerating with growth in the off-trade of seven per cent and decline in the on-trade of six per cent. In the discrete six-month period to the end of August, the LAD category was down two per cent with the off-trade up five per cent and the on-trade down six per cent”.

According to the statement, “The Republic of Ireland remains a challenging market with few signs of a pick-up in the near-term. The growth of the off-trade channel and promotional pricing activity within the off-trade continues to exert downward pressure on retail pricing and average unit reveunes.

“The contribution from the RoI is in line with last year, increased contribution from beer offsetting the operating profit decline in cider.”

In all, RoI sales, at €81.6 million, contributed nearly a fifth of the Group’s total income of €399.3 million. In 2010 it contributed €86.5 million to the Group’s €440 million figure.

On a constant currency basis net revenue at C&C Group was down 5.3 per cent to €283.8 million. Similarly, operating profits at the Group were up 7.8 per cent to €62.5 million while Magners sales volumes were up 4.9 per cent with 2.9 per cent growth in the UK plus 22.7 per cent growth in exports.

C&C’s Chief Executive John Dunsmore is to step down at the end of December to be replaced by its Chief Operating Officer and Financial Director Stephen Glancy.

Kenny Neison, the Group’s Strategy Director and Head of Investor Relations, will replace him.

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