Shares slump, but brand-new image lifts cider

THE sudden slump in C&C shares late last week caught the market by surprise as questions were raised about the outlook for Magners cider in Britain during the winter.

This turnabout followed an acknowledgement the day before that Magners was the second-best performing brand in the British retail grocery sector last year.

The Irish-made cider from C&C has seen its well- known Bulmers brand gain significant appeal with Irish drinkers following astute repositioning of the brand by the group in its domestic market.

To gain a toehold across Britain, C&C rebranded Bulmers as Magners, with significant success.

The shares have reflected that success as the group gave its new brand in the British market a strong underlying appeal for the younger drinker.

One of Goodfellas’ pizzas, another Irish brand, though now British owned, had the distinction of being the top brand in Britain in 2006 and those achievements, given the underlying importance of food and drink to the Irish economy, were flagged by Bord Bia in its annual report of 2006.

No sooner were those words uttered but a leading Irish broker questioned the ability of Magners to deliver solid growth through the winter, given the style of the drink and its traditional association with balmy summer days and evenings.

Bearer of the bad news was Robert Brisbane of Merrion Stockbrokers, well regarded for his analysis of Magners and the cider market in the past.

As a result of his comments last Thursday, investors took fright as he reduced the share to hold on concerns that cider would not do as well this winter.

For Magners the problem seems to be that a significantly greater degree of seasonality has hit it this year than in the past, according to Mr Brisbane. Shares in C&C, which have increased more than five-fold since their 2004 stock market debut, largely attributable to a strong British debut for Magners, fell nearly 11% last Thursday, their weakest point since early December.

What Magners has shown from a brand perspective is that not even high status with consumers will necessarily keep a brand from feeling serious strain in certain circumstances.

But the real positive aspect of the Bulmers/Magners story to date is that ‘brand matters,’ and even a product like cider that was seen as a drink virtually of down and outs can be elevated to a new plane.

Cider’s image just got linked to the wrong kind of people in Ireland for years until C&C decided to change its profile through skilful marketing which involved giving the apple-based alcoholic drink a totally new brand image.

In that context, Bord Bia’s report last week, showing a significant increase in the number of companies prioritising brands to underpin their food and drinks produce, is to be welcomed.

At this time 120 companies have, as members of Bord Bia’s Brand Forum, stepped up to the plate and are working on how to position their brands and create brands that will produce the winning product in an increasingly competitive retail food and drink environment in Britain and Ireland.

Price deflation is a huge issue for companies in retail food in particular, and strong brands can be a buffer to that downward pressure, provided the consumer believes the premium price represents good value.

Bord Bia is committed to helping firms to create what its chief executive, Aidan Cotter, describes as products with “differentiated positions in the market place” where increasingly every food producer or processor is trying to create an aura for their products that give them an edge.

New research by the food promotion body shows that 68% of Irish firms say they will develop new products over the next 12 months while 49% said they would reformulate existing goods to give them added appeal.

Also good news was that 74% of respondents said their new lines would cater to nutrition, health and well-being.