Off-trade volume shares underpin C&C through pandemic year

(Sharecast News) - Drinks manufacturer C&C Group reported growth in off-trade volume share for its three core brands in a trading update on Tuesday.
The FTSE 250 company said Tennent's Scottish lager volume share grew 1.2 percentage points for the 12 months to 24 January to 26.6%, while Bulmers volume share of Irish cider increased 3.3 percentage points to 50.2% for the year ended 31 January, and Magners volume share of apple cider in the UK increased 0.3 percentage points to 9.6% for the 12 months to 24 January.

It said the "strength" of its final mile distribution was reflected through a number of exclusive distribution deals completed during the financial year ended 28 February, including the extension of its partnership with Budweiser Brewing Group in Ireland to include exclusive distribution of Budweiser, as well as Tito's Handmade Vodka in the UK, and most recently Scotland craft brewer Innis & Gunn.

C&C said it received an 8% equity stake at the cost of nominal share capital, in return for supplying Innis & Gunn with access to the independent free trade in its core markets.

Going forward, the board said its objective was to continue to position the company as the preeminent brand-led drinks distribution business in the core markets of the UK and Ireland.

During the 2021 financial year, C&C divested its non-core asset Tipperary Coolers in Ireland for €7m.

In addition, it announced the sale of its wholly-owned US subsidiary Vermont Hard Cider Company to Northeast Kingdom Drink Group on Tuesday, for total consideration of $20m, with the transaction set to complete in the coming weeks.

The board said the sale was expected to result in a net book profit for C&C, with the total net proceeds from the divestments to be applied to reducing net debt.

It said it had taken a "series of proactive steps" to mitigate the negative financial and operational impacts of the Covid-19 pandemic, including taking action in addressing its fixed cost base with a cost reduction programme expected to deliver annualised savings of €18m against its pre-Covid cost base.

As a result of that, said its liquidity stood at €315m and pre-IFRS 16 net debt totalled €362m at year-end.

Notwithstanding the current trading conditions, the group said it saw the current 2022 financial year with "increased optimism", as continuing progress with Covid-19 vaccine programmes was expected to see an eventual easing of on-trade restrictions across the UK and Ireland.

"C&C has an inherently strong business model, with admired brands that embody provenance and have a real affinity with their markets, coupled with a leading distribution infrastructure in terms of scale and reach," said group chief executive officer David Forde.

"These are supported by the quality of our people who are dedicated, agile and passionate about our brands."

Forde said that while the company's ability to trade had been "severely restricted" in hospitality, its brands had performed "strongly" in the off-trade.

"The group has been working hard to ensure that we are primed and ready to serve our on-trade customers as and when the hospitality sector is allowed to reopen, from a more streamlined base and with new brand partners, in the post pandemic market."

C&C said its would announce its preliminary results for the 2021 financial year on 26 May.

At 0928 GMT, shares in C&C Group were up 2.04% at 300.5p.