C&C price cut yields 'moderate' sales increase

A price cut in cider in Ireland has led to a “moderate” increase in sales for C&C, a survey by Merrion Stockbrokers said today.

In a note published today, the stockbroker said almost half of Irish publicans questioned reported sales were "slightly" or "a bit" better since the 10 per cent wholesale price cut implemented in June for the brand, which is marketed as Bulmers in Ireland and Magners in the UK. A further 27 per cent said sales were "better".

However, 12.5 per cent said the price cut may not be the only factor to take into consideration, with seasonal factors and better weather also contributing to sales increases.

The survey covered 350 randomly selected Irish pubs in four regions of the country last week.

Merrion analyst Aisling Vaughan said the level of price cut varied.

"Our survey of Irish pubs last week shows that the wholesale price cut is being passed through. However, there is a wide dispersion in terms of the absolute amount of the price cut ranging from 30 cent per pint bottle to as much as 55 cent per bottle," she said in the note.

The survey also suggested pear cider is reaching a "steady state", and is expected to offset weakness in the overall market.

"The success of Bulmers Pear cider has rejuvenated Bulmers which had become a tired consumer brand," the research note said.

Dublin-based C&C last year appointed chief executive John Dunsmore as part of a bid to revive revenues.

The company, which relies on cider for about three quarters of sales, cut prices and introduced pear and draft cider varieties as part of the efforts.

"Our survey of Irish pubs last week shows that the wholesale price cut is being passed through," said in the research note. "The sales response is moderate."

Merrion has a "buy" rating on the stock.

Additional reporting: Bloomberg