In cider trading

Freed from the long-term damage that a continued strike at the Ballygowan mineral water plant in Newcastle West, Co Limerick, …

Freed from the long-term damage that a continued strike at the Ballygowan mineral water plant in Newcastle West, Co Limerick, would have caused, Showerings has embarked on a $2 million (€2.12 million) US adventure with its premier product, Bulmers Cider.

The Clonmel, Co Tipperary-based company, owned by the C&C Group, is proud of itself these days, having turned around the once-negative image of cider being "looney juice" which packed the kind of punch that inspired the song Johnny Jump Up. Showerings has standardised the alcohol content of its cider to 4.5 per cent, increased its price and made it respectable.

Mr Brendan McGuinness, managing director, was in New York and Boston this week to launch Magners, the same product as Bulmers, aimed at the Irish emigrant community and up against such brands as Hard Core, produced by the Boston Beer Company, and Hornsby's, made by Gallow Wines, as well as the British Woodpecker and Strongbow ciders.

But, there is an expectation that US cider consumption could well take off. "It is a tiny market as far as cider is concerned but there is a long tradition of cider drinking in the USA," he says.

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Tipperary also had its tradition of cider-making and the Magners brand takes its name from the founder of Clonmel's cider factory in the 1930s, Mr William Magner. Bulmers, a British company, subsequently bought Magner out. When ownership changed again, the Bulmer's trademark for the Republic of Ireland was retained but Showerings is precluded from using the name elsewhere.

From Belfast, Mr McGuinness has honorary Tipperary status, having spent the past 24 years in Clonmel, "as long as I lived in Belfast". But his background is one steeped in marketing. Graduating with a BSc in economics from Queen's University, Belfast, he started his career with the Gallaher cigarette group, became brand manager for Sovereign & Gold Bond, and was later headhunted by the C&C Group as marketing manager for its soft drinks range.

In 1976, at the age of 30, he was sent to Clonmel as managing director of Showerings. "It was probably fairly unique in those days but it was a very small organisation. Essentially it was a business that was perceived as having a fairly strong management team but a portfolio of products that were not going anywhere."

The development of Carolan's Irish Cream Liqueur followed, the Grants wine and spirits distribution business expanded and the Irish Mist and Tullamore Dew brands were acquired. He says the old cider image was one which was "of a drink of excess", associated with teenage drinking. "The term `cider party' was coined to describe any form of alcohol abuse," he says. He puts this down to the lack of quality control in the early days of the company, when cider could be 6 per cent proof one day, and 9 per cent the next. As a cottage industry product, it was sold relatively cheaply.

"I suppose, like many myths, it grew with time. Those were all the sorts of issues we had to grapple with over the past 10 to 12 years."

Describing the process as a textbook case of going from a low-priced, high strength, poor image product to one that commands a premium price and premium image, he says underage drinking is now more likely to centre on "the near soft drink options that are around".

Huge resources were put into advertising and marketing, putting Showerings among the top advertising spenders in the State. As an example, between April and July of last year, the company spent €370,000 (£291,400) on outdoor advertising, only surpassed by its parent company, C&C, Guinness and Eircom. Overall, €6 million was spent by Showerings last year on advertising and marketing.

"We now have an extremely strong brand in Bulmers. All of its image negatives have been addressed. It has gone full circle to be a positive and modern image, with the added advantage of having tradition and heritage attached to it."

The original product portfolio also included Cidona, the appleflavoured soft drink, and Babysham, "the biggest brand we had at the time". Now Babysham, a relic of genteel female drinking, is being allowed to quietly die, partly replaced by another Showerings product, Ritz perry.

Stag, also a cider, is "ticking over", he says, while its third cider brand, Coopers, has been a failure. It was an attempt to segment the market as a defensive strategy against outside competition. "What it did succeed in doing was expand the total market," he says.

Showerings employs 450 people in total, with 325 based in Clonmel. Cider making, Mr McGuinness says, is labour intensive and numbers do not go down with technology improvements.

"The rate at which Guinness is rationalising; we are nearly as large," he notes.

C&C, which underwent a management buyout from Guinness and Allied Domecq in 1998, is now investing €20 million in new plant equipment in Clonmel and a further €11.5 million in Ballygowan, in Newcastle West, in advance of next year's planned flotation.

"The willingness to invest in positive projects has been much greater since the advent of the ownership change, says Mr McGuinness. "We were part of much bigger organisations. If there was a higher priority elsewhere, then the money was applied elsewhere."

He has responsibility for Ballygowan, another brand leader, at a good time for water. The sector is growing by about 30 per cent annually and Ballygowan is "constantly enjoying double digit growth", although, apart from a British market, it does not have export aspirations.

"The reality is, it is difficult if not impossible to make money by shipping water out of Ireland."

In April, a five-week strike at the Newcastle West plant was settled when workers accepted a 14 per cent pay increase in return for changes in work practices. An estimated six million litres of water production was lost.

"We are very pleased that it has been resolved. It has freed up the whole capital investment programme, which is now proceeding."

He was a member of the task force set up when Seagate, the disk drive manufacturer, closed at Clonmel in December, 1997, with the loss of 1,100 jobs. The task force had huge political goodwill behind it and Mr McGuinness says Clonmel "has not looked back".

"The town enjoys full employment. It is vibrant. The quality of employment that replaced Seagate is of a higher grade and, in my view, more secure in the long term."