Tennent’s takes on international markets but owners C&C still see profits fall
Tennent’s owners C&C Group, in their results to the 28th February 2017, have revealed that net revenues decreased 6.9% to €559.5m, mainly due to declines in wholesale and US markets, and said that the devaluation of sterling after the Brexit vote had cost the company €8 million (£6.9m). Despite operating profit coming in at €95m, in line with last year, and growing in the second half, the company reported a pre-tax loss of €62.9m compared to a profit of €56.3m, due to write-downs.
However the company reported volume growth in core brands (Bulmers, Magners, Tennent’s) of +2.6% with its Premium and Craft portfolio growing rapidly up +60%. Stephen Glancey, C&C Group CEO, commented, “FY2017 has been a period of significant activity for the Group. While trading remained tough, we invested in and delivered volume growth across our core brands; completed a major rationalisation of our production foot print; drove efficiencies across the business; continued to grow our Premium portfolio and Export business; and secured an important new long-term distribution arrangement with AB InBev. After this year of consolidation, we are in materially better shape to meet the ongoing challenges and opportunities within our industry.”
He revealed that the double-digit volume increase behind the Magners brand in the UK had provided the right foundation to extend C&C’s distribution partnership with AB InBev. Glancey said, “The rationale for expanding the relationship is compelling for both parties, allowing each other to play to our route to market strengths, backed by a combined high quality beer & cider portfolio. This partnership has the potential to drive volume and value in Magners for years to come as the category rationalises and distribution synergies are delivered.”
He also said that further progress had been made in growing the company’s premium and craft portfolio commenting, “Heverlee, our authentic Belgian lager, grew +41% to over 20kHL and is now the fastest growing World beer in Scotland and the No.#1 import lager in Northern Ireland. We launched Pabst into the Millennial market in GB and Menabrea, our authentic Italian imported lager, secured UK-wide listings with major supermarket and casual dining groups. Our investment partnerships with some of the most exciting craft breweries across the UK and Ireland, such as Five Lamps in Dublin, Whitewater in Northern Ireland and Drygate in Glasgow, all had a good year.”
As to the coming year Glancey remarked, “ FY2018 has started in line with expectations but we do remain cautious given the outlook for the consumer across our markets. Political uncertainty continues into the current year making forward predictions on trading patterns and consumer behaviour particularly challenging. However, our core brands of Bulmers, Magners and Tennent’s are well positioned to convert their volume momentum in FY2017 into revenue and value growth in FY2018.”
Glancey concluded, “C&C is a resilient business with strong local brands that have stood the test of time and a growing Premium and Craft portfolio. We are confident that the combination of our strong market positions, well- invested brands, flexible low cost production assets and expanded partnership arrangements will deliver value for shareholders over the longer term.”