Bulmers owner says floor pricing boosts big brands

C&C’s deal to leave Admiral Taverns while retaining a contract to supply the British pub chain is a “win-win” for the Irish drinks group, according to CEO David Forde.

The head of the maker of Bulmers Cider, Tennant Lager and Tipperary Water dismissed a suggestion that the exit, five years after it bought a 49 per cent stake in the pub chain, was a mishap for the group.

The sale to US investment firm Proprium Capital Partners has raised €65.8 million which will help deleverage the business and C&C has also negotiated a long-term agreement to supply its own and agency brands to Admiral after the sale, said Mr. Forde.

“It feels like a win-win situation,” he said.

The Admiral stake helped C&C build distribution but was effectively squeezed out when the company later decided to buy drinks retailers Matthew Clark and Bibendum, he said.

“We now have the most powerful distribution platform in the UK and it was worth considering what role Admiral Taverns could play,” he said.

C&C reported an 87.8 percent increase in net revenue to 1.4 billion euros in the 12 months to the end of February as pandemic restrictions were lifted and floor pricing per unit was introduced. Sales were still below pre-pandemic levels, reflecting restrictions for much of the past year.

While retail sales are now recovering, C&C warned of possible further price hikes as costs rise, saying the rising cost of living could affect future consumer demand.

Speaking on the flip-slide, Mr Forde said the minimum unit price for alcohol introduced in Ireland this year puts supermarkets’ own brand products at a disadvantage compared to branded drinks such as C&C’s by narrowing the price gap between premium and generic drinks.

For the full year 2022, C&C reported an operating profit of €47.9 million compared to a loss of €63.6 million in 2021, with a full year operating margin of 3.3 percent.

Revenue in “On Trade” – bars, restaurants and cafes – increased by 207.8 percent, with 150 trading days more than 2021.

Off-trade performance decreased 3.4 percent compared to 2021.

Basic earnings per share rose to 9.9 cents compared to a loss of 31.1 cents last year, while diluted earnings per share rose to 7.5 cents compared to a loss of 21.1 cents last year .

The company announced plans to resume dividends.

C&C shares closed in London up 3.71 percent at 212.6 pence each after the company’s earnings statement.