C&C must address its English problem

Cidermaker C&C is an Irish company with an English problem: its rivals there are mercilessly squeezing its brand Magners for shelf space and market share. It will be interesting to see what decisions the two Glasgow Celtic-supporting Scots who run the company – chief executive Stephen Glancey and finance director Kenny Neison – take to solve the conundrum.

Falling cider sales in England and Wales have already prompted C&C to warn that its profits for the full year will be lower than expected, although still healthy at about €115 million.

Yesterday the company revealed it plans to unify three separate England/Wales businesses into one division, C&C Brands. This will cut costs in the short to medium-term.

To truly address its issues Glancey and Neison will have to do something more strategic and, well, drastic. C&C must either overhaul its struggling English/Welsh business or else put it in the hands of someone who will. As part of a strategic review it has considered selling its English/Welsh business, essentially Magners. Yet there are other options.

Its highly profitable Irish and Scottish businesses perform so well partly because C&C acquired plain vanilla distribution companies – Gleesons in Ireland, for example – to make sure its brews get shelf space. This may be a less attractive option in England where distribution in the on-trade is skewed by the swathe of brewer-owned pubs, although it might help Magners in the off-trade.

A better option might be to partner somebody else, perhaps Carlsberg, and try to solve its distribution problems that way. Another option is to license its brands to others, who would then sell it with the Irish company taking a fee. Management could then concentrate on sweating its businesses in Ireland and Scotland, and cracking the US. Whatever route it goes down, Glancey and Neison will have to give investors some inkling as to what way they are thinking next month at its results briefing. Over to you, gents.