Maurice Pratt believes that C&C is faced with the challenge of anticipating and responding to changes in consumer demands, writes Brendan McGrath, Markets Editor

Mr Maurice Pratt already knew quite a lot about Cantrell & Cochrane and its products long before he joined the drinks and snacks group as chief executive at the start of the year.

As chief executive of supermarkets group Tesco, Mr Pratt was one of the biggest domestic buyers of C&C products and he would presumably have been striking hard bargains with C&C, as retail multiples do with all suppliers.

Now his role has changed - he has turned from a buyer to a seller and the way he manages the C&C business will be different from the way he managed Tesco.

"My role with C&C is more strategic. There are fewer decisions to be made but they are more important and I have to get them right," he says.

Now he has the task of bringing C&C to the stock market in what may be the biggest public share offering since hundreds of thousands of investors ploughed their money into Eircom three years ago.

Mr Pratt will not talk directly about the IPO, bound by the rigours of Stock Exchange regulations and the diktats from C&C's army of legal and financial advisers, but it is clear that he believes C&C has something special to offer investors when the company comes to the market in either July or October.

Despite a perception in some quarters that C&C and many of its flagship products are in the "mature" category (the marketeer's way of saying that there is limited growth potential), Mr Pratt has no doubts about the potential for significant growth - both organic and through acquisition at home and overseas.

"Cider is growing, Tayto and snack foods are growing, wine is growing, water is growing. The Irish economy might be set to grow at a slower pace than it has done but, when you look at the sectors we are in, many with double-digit growth, there are tremendous prospects to grow this business. These categories have a long way to travel before they come down to the levels of growth that are being experienced internationally," he states.

But with 20 years' experience in retailing, Mr Pratt also believes that C&C - like other consumer goods companies - is also faced with the challenge of anticipating and responding to changes in consumer demands.

"In retailing, you have a relentless focus on the consumer. This is one step removed from where we operate at C&C, and it's very important we get closer to the customer.

"The consumer is moving almost faster than the market and that can be a bit scary, so you have to get close to them and understand them in a way you never did. I think we have to become more and more customer-focused.

"There is scope for growth not least because of the pace at which the market is changing. Some of the sectors we're in will change quite dynamically in the next five years - and it behoves us too look at where the consumer's going and how can we arrive there ahead of them with new products and new opportunities.

"The core strength of the business is its brands, FMCG [fast moving consumer goods\] brands we have embryroed and developed and matured, and also those we have franchised. There are enormous areas for growth in both those areas, both domestically and in the international market. Look at what we have achieved with Tullamore Dew [bought some years ago from Irish Distillers in a brand swap\] - it shows what we can do and what we want to do more of."

There is a perception that C&C is almost totally exposed to the domestic market but about one-fifth of its turnover comes from international sales.

"I was quite surprised when I came to C&C at the strength of the international business," he said, and emphasised the success of the group's Magners cider brand in Northern Ireland.

"It proves that with a different brand outside the country, we can repeat the success we have enjoyed here with Bulmers."

Talk of cider inevitably brings the conversation around to the decision in last year's Budget to add 26 cents duty to the pint of cider. "It felt like a tax on success. We were annoyed because it imposed extra duty on a product which in other EU countries is taxed at a lower level. Last week's British budget actually reduced the duty on cider."

To minimise the impact on market share, C&C absorbed half the increase in duty but it will be some months before the full impact of the forced price increase becomes clear.

"The market is still growing but it's difficult to assess the impact because there are other factors in play, the introduction of the euro, a VAT increase plus increases for the trade," says Mr Pratt. He adds that the first quarter is the least important for cider sales and the impact of the increase will become apparent after the key summer period.

Mr Pratt rejects suggestion that C&C is over-dependent on the supermarket multiples and their aggressive buying policies.

"We have a much better risk spread between the on-trade, off-trader and the grocery trade, and we have don't have an over-dependence on any one of them. To the Irish eye, the market might seem quite concentrated but, in reality, it's much less concentrated that some of the nearby overseas markets, like the UK. The spread is quite good and is one of the key strengths of the business," he states.

Mr Pratt is optimistic about the prospects for the domestic economy and is an advocate of a new partnership agreement.

"A new agreement may be more of a possible than a probable. But business needs as much certainty as one can get and for me partnership has been good and if you look over the past 12 years it has delivered. I'd be one of those saying don't look at partnership in terms of what's happened in the past two years - that hasn't been a great experience - but look at in context of the the last 12 years. We should look forward not two years but in the context of the next five to 10 years."