Magners loses its fizz as weather dampens demand
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Your support makes all the difference.Magners has continued to lose its fizz after C&C, the cider brand's Irish owners, issued its third profit warning this year and warned that a major restructuring plan is needed to revive its fortunes.
Magners was the toast of the market in 2006 and was widely credited with reviving mainstream interest in cider. The sweet, fizzy version of the traditional apple alcohol proved a massive hit last summer but the wet weather over the past few months has hit the brand hard. The company has also suffered from the re-emergence of Bulmers, one of the cider brands owned by Scottish & Newcastle, which has taken market share from its Irish rival.
Analysts are also worried that UK consumers' appetite for cider poured over ice could prove to be but a brief flirtation due to the British love for lager and real ale, a concern echoed by the company for the first time. The company admitted: "Consumer preferences may change and demand for existing products may decline or be replaced by other products which the group does not produce."
Regarding the company's current plight, Maurice Pratt, chief executive of C&C, painted a grim picture. "The financial performance reflects a number of factors such as exceptionally poor summer weather; increased competition; and additional costs in marketing and cider manufacturing capacity."
C&C's profits declined by nearly a third to €52m (£36m) in the first half of the year as sales declined slightly to €376m. Shares in the company declined nearly 11 per cent after it said that it expects cider revenue to decline in the high single-digit percentage range in the second half of the year. Shares in the company have more than halved over the past six months.
Mr Pratt warned that after conducting a review of its market position, C&C will implement a "comprehensive restructuring and cost-reduction programme". It will reveal the extent of its plans in November after consulting with its staff over the coming weeks. The drinks company has already halved its investment in expanding its production facilities in Tipperary as a result of the slowdown.
The company is bracing itself for more competition from Bulmers which plans to launch a perry – or pear cider – brand next year.
C&C's plans to repeat the success of last year across the continent also took a knock after it said marketing tests in Munich and Barcelona suggested there would be "significant challenges" in rolling out the brand.
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