Marketing

C&C to “suffer severely” from Brexit?

Are Irish-based companies with significant sales in the UK such as C&C likely to be more adversely affected than most in the wake of Brexit?

Being Ireland/EU-based is C&C more likely to be a Brexit loser due to currency fluctuations across the Irish Sea, for example?

Through its sale of Magners cider in the UK – which accounts for around 50% of the company’s income – C&C is expected to “suffer severely” from the UK’s decision to pull out of the EU according to Andrew Holland, a financial analyst with Sociéte Générale.

“Since the EU referendum result, we see more downside for C&C, especially given its exposure to the UK market,” he stated recently.

The decision to Brexit has devalued Sterling and fuelled increasing uncertainty in global markets.

C&C’s situation may well be complicated by its decision to close its Shepton Mallet plant in England last January in order to consolidate production in Clonmel, County Tipperary.

However Goodbody analyst Liam Igoe played down the Brexit effect on C&C, believing that the transfer of cider production to Ireland should not have a major effect on the company’s fortunes.

“Yes, there’s an exposure to Sterling” he agreed, “but much of the costs are still UK-based (eg marketing and distribution).

“Overall the biggest impact will be an accounting impact of translating Sterling profits back to Ireland and in total I expect the impact, assuming a 10% fall in Sterling, would be about 6% on earnings in a full year (after all hedges have run their course). Of itself, it’s not huge,” he told Drinks Industry Ireland.

The more general issues that could impact C&C on top of this would be the potential for reduced consumption by UK consumers in the on-trade, the weather impact this year – not great so far – and ongoing competition in Ireland from Heineken’s Orchard Thieves brand.

C&C was not available for comment.

 

 

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