C&C defends US acquisition dubbed a ‘disaster’

Drinks company C&C defended its foray into the North American cider market to shareholders at its annual general meeting in Dublin yesterday, with chief executive Stephen Glancey promising its investment would bear fruit in the long term.

C&C’s share price jumped – rising as high as €5.20 in 2012 – when it acquired Vermont Hard Cider Company for €235 million, but the prospects for the business were hit by the advent of competition from rival brewers. In May, C&C wrote down the value of its business in North America by €150 million, while its share price now trades at about the €3.50 level.

Mr Glancey said it would continue to invest in its core US cider brand, Woodchuck, and he showed shareholders its first television advertisements for the drink. He also cited “improved prospects” following the launch of a new brand called Gumption.

The problem for C&C, the company behind the Bulmers, Magners and Tennents drinks brands, is that it is “having to invest an awful lot of money to get growth” in the US, he said. The group’s brand investment in the market arrives at about $7 million a year.

One small shareholder claimed C&C had “gone precisely nowhere” under its current leadership, described the US acquisition as “a disaster” and argued it should pull out of this market.

However, another shareholder at the meeting advised the board to “carry on regardless”, warning only that directors should “make sure you’re not taken over by the Americans... or the Russians.”

C&C chairman Brian Stewart admitted the company's management was "disappointed" in its recent financial performance, which included its first full-year decline in operating profits in five years.

“We on the board are confident in the executive team,” he added, asking for patience on the “multifaceted issue” of the North American market.

The AGM was also notable for the presence of Mattie McGrath, the Independent TD for Tipperary South. Mr McGrath, who has concerns about how C&C workers in Clonmel have been treated by management, was refused entry to the drinks company's AGM last year.

This year, he was “delighted” to be invited to attend the meeting by Tom McCusker, who runs the group’s Irish business. He is scheduled to meet Mr McCusker on Monday about matters including the honouring of redundancy terms and its future in Tipperary.

However, Mr McGrath told the AGM Mr Glancey had “refused to engage” with him on his questions. “All we want is engagement,” he said.

Mr Glancey, who is part of a Scottish team that took over the management of C&C in 2008, said he would “be more than happy to have a coffee” and shake the hand of the TD after the AGM had concluded.

“The thing we have in common – apart from both of us coming from small countries and maybe having a view on the English – is that we both want Clonmel to succeed,” Mr Glancey said.