In less than a month, more than €2 billion euros has been wiped off the market value of C&C while the share options owned by Chief Executive Maurice Pratt have been devalued by up to €7 million euros. Not a good month by anyone’s standards.
So what has caused the mass exodus of shareholders from the “golden child” of the Irish Stock Exchange? After all this is a share that has increased in value from €2.50 to €13 and now back down to €6.20.
There are two main reasons; one is the undeniable effect the weather has had. After all, Cider is a fair weather drink and markets itself heavily on being an ice cold refreshing drink in the height if the summer. Until we do finally see that elusive summer, we can safely say that sales of Magners in the UK and Bulmers in Ireland will not increase dramatically.
The second reason is that while C&C has been shaking up the UK market by making Magners a sexy drink choice, other breweries have sat up to take notice of the groundswell of support being generated and have been quick to take action.
Scottish and Newcastle , which owns the Bulmers brand and Strongbow brand in Britain, said yesterday that it recorded a 24.7pc rise in cider sales in Britain in the first half of 2007 – days after C&C was forced to issue its second profit warning in two weeks. This has been helped by their agressive pricing strategy in undercutting Magners, causing many publicans to stock Bulmers instead.
Is there a future for C&C or is it time for shareholders to cut their losses and make a run for it? Some analysts think now is the best time to buy….what do you think?
