C&C hurt by Heineken gains

By Geoff Percival

Shares in Irish drinks group C&C fell by nearly 2% on the back of Heineken reporting further cider sales growth.

In its full-year results for 2017, Heineken reported revenue growth of 5.4% to €21.9bn and net profit growth of 25.6% to €1.93bn.

In cider, Heineken saw low single digit volume growth and double digit growth excluding the UK, saying “good progress” had been made.

Heineken Ireland's Cork headquarters

While the Dutch brewing giant doesn’t break out figures for individual countries it did say, in August, that particularly strong growth levels in Ireland, South Africa and Vietnam had boosted its international cider sales.

The company owns the Orchard Thieves brand here, which has become the fastest growing label in the Irish cider market.

Analysts have expressed caution on the C&C stock — down 26% in the past 12 months and down around 1.9%, yesterday, before marginally recovering — in the recent past, in relation to growing competition from Heineken and that remains.

“While Heineken’s partial delisting in the UK potentially creates some opportunities for C&C in that region, the global brewer’s strong growth in international cider markets outside of the UK indicates a challenging backdrop for C&C,” said Goodbody’s Patrick Higgins.

Admiral Taverns — the UK pub chain 47% owned by C&C — recently upped its portfolio by buying 17 bars from Heineken’s pub chain.

However, Heineken has its own pressures.

Its share price fell by over 2%, yesterday, as it warned that its profit growth in 2018 is likely to slow on the back of volatile markets and its acquisition of the loss-making Brazilian operations of Japanese brewer Kirin.

Heineken had a target of increasing its operating margin by 40 basis points per year between 2014 and 2017 but said it expected this margin to increase by 25 basis points in 2018.

In 2017, Heineken’s margins had in fact expanded by only 14 basis points, weighed on by the Brazilian acquisition.

“We expect the environment will continue to be marked by volatility and uncertainty,” chief executive Jean-Francois van Boxmeer said.

The brewer of Heineken, Amstel, Tiger and Sol lagers and Strongbow cider said that beer volumes increased in all of its business regions in 2017, though growth in Europe was almost flat.

additional reporting Reuters



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