Stock up on fruity drinks

Sales are booming of fruity drinks – ciders and beers mostly. We reported in February of the meteoric rise of Kopparberg in Ireland and it seems that herb and fruit infused beers are set to become a major growth category for brewers facing dwindling sales of ale/stout, according to the manufacturer of a new range of natural flavours. Full story here. So stock up now and get in early on this growing trend. Your customers are looking for these drinks….

 

Not a cider sunset yet

If everything in life was fair Elvis would still be alive and his impersonators would be dead but life’s not like that, I know.

Even so, it has been something of a downer to witness the true extent of our abysmal summer weather as C&C – last year’s ‘most likely to’ in the UK’s long drinks category – fails to follow through on its initial magnificent success over there judging by second quarter sales.

In truth, the company could not have done much more than it did and while C&C may have been taken by surprise by Scottish & Newcastle’s robust marketing response to its initial onslaught into the cider market there, this again highlights the dangers of taking too seasonal-an-approach to the product.

Sales of C&C brand Magners Cider in the UK have fallen by around 45 per cent year-on-year to July 2007.

Bad weather and heightened competition have been blamed for the reverse in the cider brand’s fortunes which led to the issuing of two profit warnings and an announcement of 70 temporary layoffs in Clonmel.

A knock-on effect into August is anticipated as ‘seasoned drinkers’ and new converts to cider-drinking alike continue to reduce their initial intake levels.

The Bulmers brand is owned by Scottish & Newcastle in the UK which has put a heavyweight marketing campaign behind its product in response to the growth of cider drinking there, championed originally by C&C with Magners.

And the trouble doesn’t end there. Reports have appeared indicating that Tesco will be putting cans of Magners on special offer here in Ireland in a ‘three for two’ deal. Tesco has been able to pick up ‘overs’ from the UK at greatly reduced prices, it’s believed.

The recent downturn in Magners’ fortunes this Summer has been described as a ‘four month blip’ by a spokeswoman for C&C.

But it does hammer home the fact that like Baileys – which was only too aware of its seasonal shortcomings and did something about it – any brand that depends too heavily on seasonality will come a cropper now and again.

But knowing C&C and having seen how hard it has worked on and invested in its hugely successful Bulmers brand here and this brand in the UK, we needn’t look to sunset in the orchards of Clonmel quite yet.

 

2 Billion wiped off the value of C&C in one month

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?