Bass benefits from booming Caffrey's sales

SALES of Caffrey's Irish ales surged 58 per cent to 426,000 barrels in the 12 months to the end of September, making a significant contribution to growth in brewing profits at the Bass hotels to drinks combine.

"Caffrey's has quickly become one of the premium ales in the market, only three years after its launch," said Bass chairman Sir Ian Prosser. Ahead, too, growth is expected to continue with the backing of a £10 million sterling media campaign on the "strong words, softly spoken" theme involving an Irishman in the middle of a South American carnival.

Bass's Irish subsidiary, Tennants Ireland, is to spend £2 million on a major advertising campaign for Caffrey's next year. The new television commercial entitled "Occasions" will be aired on RTE from this week.

"Caffrey's achieved nationwide distribution during the summer and, therefore, it is now appropriate that we advertise on RTE," Tennants managing director Mr Liam Meaney stated.

But growth rates may flatten following the hectic pace of expansion. Average sales per outlet are declining as distribution extends into pubs with lower turnover and competition from Kilkenny's, brewed by Guinness, increasing. Caffrey's is now sold through 14,000 pubs in Britain, while Kilkenny is sold through 5,000, providing scope for Kilkenny to attack the Caffrey's market.

Annual pre tax profits of Bass increased 12 per cent to £671 million on turnover up 12.5 per cent at £5.11 billion, mainly driven by sharply improved results achieved on hotel and leisure activities. Earnings per share rose 16 per cent to 50.4 pence providing strong cover for total dividends up 10 per cent at 25p per share.

Operating profits of Bass Brewers increased 9 per cent to £157 million on turnover up 14.4 per cent at £1.78 billion. Sales volumes grew 2.7 per cent. Operating margins were boosted by the continued growth of Caffrey's and by the phenomenally successful introduction of Hooper's Hotch, a low alcohol "alcopop" which achieved first year sales equivalent to 300,000 barrels following its introduction to the market in June, 1995.

The brand accounts for 70 per cent of the new "alcopop" market. Although the Bass financial results were ahead of expectations, the share market's response was restrained by some concerns that group margins may be affected by an expansion involving around 7,000 new jobs. Bass shares closed 2p higher at 813p.