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Europe & Middle East Outlook

Bulmers
Tennent’s
Magners
C&C Group
alcohol production
Europe food & drink
beverage production

C&C GROUP

C&C Group has spent much of 2015 prioritising its portfolio and streamlining its processes as part of a strategy that looks to encourage a strengthening global presence into 2016 and beyond

Sustainable Growth on an International Scale

Writer:

Matthew Staff

Project Manager:

Ben Wigger

C&C Group is responsible for producing some of the most renowned alcoholic beverages in Europe, and indeed the world, and is already laying out its plans for 2016 in order to continue quenching the thirsts of one of the industry’s most loyal customer bases.

The manufacturer, marketer and distributor of branded cider, beer, wine and also soft drinks has diversified its range and business proposition extensively over the past few years, from its headquarters in Dublin, to comprise not only its core manufacturing arm - producing Bulmers and Magners cider brands - but to also comprise ownership and distribution segments to further spread its influence.

This influence, and ongoing strive to amplify its product range, has subsequently led to a comprehensive international expansion; now exporting to the likes of North America as well as its core European markets.

Add the unlimited array of export markets to the fold and the C&C offering takes on an even more global dimension; contributing largely to the positive past 12 months enjoyed by the Company, especially in regards to its cash generation success.

“Our core businesses are strongly cash generative. We therefore focus on cash,” the Company confirms on its website. “We critically review the value for money of all brand and capital investment. Our current emphasis is on investment at the customer interface, to drive revenue.

“Group management relentlessly drives to reduce costs; in production, distribution and commercial overheads.”

This stable and sustainable foundation facilitated key progress in its core Irish and Scottish markets in 2015, which saw the launch of Drygate as well as two new products, volume growth across its Anheuser-Busch Inbev brands, and concerted investment into its staple Bulmers and Tennent’s products.

Driving value

The Company’s full-year dividend of 11.5 percent per share signified a 15 percent year-on-year increase to further emphasise this enhanced confidence in both the business model and C&C’s cash generation capability.

This isn’t to say that the past 12 months hasn’t been proactive in ironing out necessary improvements also though. A more concerted focus on simplicity formed the crux of the business’s philosophy towards the back end of 2014 and continued into early 2015 through a prioritisation of its portfolio.

Complementing its Woodchuck Hard Cider brand in North America, C&C Group’s core offering in its native Ireland, and Scottish domains have been on the receiving end of a refinement in not just production techniques, but significantly through its logistical and distribution strategies; ensuring that the end product is as cost efficient as possible.

Driving value is the ultimate ethos garnered from such an approach, and has already seen positive results in the form of an expanded footprint into Europe, as well as an accelerated presence across Asia and Africa in regards to its export credentials.

For the former continent especially, both Magners and Tennent’s saw as much as 30 percent rises in saturation, while previous downturns in Australian custom were also rectified during 2015.

As a consequence, the Company achieved a very strong balance sheet for the year, achieving the combination of short-term gains aligned with long-term sustainability.

Sustainable and international

Looking forward to 2016 and the business is in a prime position to capitalise on the slight streamlining and expansion that has occurred in 2015; its primary goal of simply continuing the progression of core business transformation reflecting the lack of need for any drastic developments.

Additionally, however, the Company has also earmarked further cost reduction initiatives for the next 12 months, compounded by a further drive into export markets for its Bulmers and Tennent’s brands, as well as an increased sales and marketing influence in the US.

Continuing to grow outside of the UK and Ireland, the vision subsequently remains a solidification of its balance sheet by leveraging its cash generation philosophy, as core markets are expected to facilitate stronger sales performances in the months and years to come.

“The medium-term strategic goals for the Group are to maintain strong brand market combinations in core geographies through brand and customer investment and by developing our brand-led wholesale platforms,” C&C Group explains. “They are also to transform our international business through investment in brands and infrastructure and through the development of strategic alliances and acquisitions; thus enhancing future earnings growth and maximising shareholder value.

“We seek to generate high free cash conversion and maintain a sound and efficient balance sheet.”

The Company adds: “Our long-term strategy is to build a sustainable international cider-led, multi-beverage business through a combination of organic growth and selective acquisitions.”