C&C toasts strong growth in profits

C&C APPEARS to have put the troubles of the last few years behind it with its latest set of results, reporting strong profit and revenue growth for the year ended February 2011.

The drinks group underwent a period of soul-searching in the last few years. Having enjoyed huge success in the UK with its Magners brand of cider in 2005 and 2006, it failed to harness its initial momentum and entered a period of falling sales and dwindling market share.

A management spring-clean and a spree of merger and acquisition activity followed, with the company disposing of its spirits business and acquiring Scottish lager brand Tennent’s and cider business Gaymers.

That strategy has evidently paid off. While sales of Magners in volume terms in the UK is still about half of what it was in its heyday, the company is beginning to increase its market share once more. This comes as a result of clever marketing strategies and an overall growth in cider demand, with an increase in cider sales in UK off-licences and supermarkets offsetting a decline in pub trade.

While C&C is facing increased competition in the UK, particularly with the entry of heavy-hitters such as Stella into the market, chief executive John Dunsmore is confident the firm can develop further in the coming year.

The strategic decision by CC to streamline its operations, exiting the shorts and liqueurs market to focus on “long” drinks, has resulted in a tighter, more focused company. Its virtually debt-free balance sheet raises interest in the firm’s future shape.

While it may well be attractive as a takeover target, further bolt-on acquisitions look likely.