Drinks group C&C yesterday announced it is to lay off 70 staff temporarily from its Bulmers production plant in Clonmel in Co Tipperary due to a downturn in cider sales in the UK as a result of the bad weather. Barry Roche, Southern Correspondent, reports.
The company spokesman said it is envisaged that the company will again start ramping up production at the plant to meet the anticipated pick-up in cider sales of its Magners brand in the UK next summer.
Over the past two years, Bulmers has carried out a two- phased extension of the Clonmel plant with an initial €80 million expansion being completed in May 2006 and a second €160 million expansion started earlier this year. "The increased capacity started to come on stream last May and provides C&C with cider manufacturing and bottling capacity for approximately 500 million litres, which is more than double the sales volume of 2006," said the spokesman.
Last month C&C saw more than half a billion euro wiped off its value as shares in the company fell by more than 15 per cent after the company issued a profit warning as wet weather dampened demand for its products. And earlier this week the company issued a second profit warning that sales had fallen at an unexpected rate in the second half of July. It blamed the continuing bad weather and increased competition in the cider market.
Over the past two years or so, C&C has seen its sales of Magners grow dramatically to win 2 per cent of the mainly cider and beer long-alcohol-drinks market in the UK, while its equivalent brand in Ireland, Bulmers, commands 10 per cent of the market here.
C&C said very poor weather in June and July, together with heavy competition on prices, was likely to lead to weak second-quarter cider sales, with operating profits for 2007-2008 set to closely match last year's performance.
Total revenues increased by 15 per cent in its first quarter, and sales volumes of Magners in Britain are still expected to grow by 35 per cent this year, though operating profits for the March-August period are likely to be down on the same period in 2006.
A heatwave last summer helped C&C to an 89 per cent rise in sales volumes of Magners in its last financial year after its marketing campaign convinced British drinkers that cider could be a premium product for pouring into a glass with ice.