C&C Group recorded most growth in UK in financial year. Credit: Pierre Selim via Wikimedia Commons.

Irish drinks conglomerate C&C Group has recorded 2.2% growth in net revenue and a 3.9% increase in operating profit in the UK in the 2018 financial year, however the group’s total net revenue declined by 4.9% to €548.2m and operating profit fell by 7% to €86.1m.

The company’s net revenue in the UK totalled €459.8m in the 2018 financial year, compared with €440.7m in 2017, and operating profit increased from €38m in 2017 to €39.5m.

Success in the UK was partially attributed to its Magners and other English cider brands transitioning to new distribution agreements with AB InBev; volumes of English cider increased by 9% in the first half (H1) of 2018 with overall flat volumes on 2017 figures.

C&C Group CEO Stephen Glancey said: “The expansion of our distribution agreement with AB InBev for our cider portfolio in the UK gained momentum, through its first year. Incremental on-trade and wholesale distribution points for Magners yielded positive results in H2’18.

The group’s Scottish beer brand Tennent’s also had a strong year as a result of continued investment in promotional activities on social media, product innovation and a new roll-out programme. The beer company’s volumes were flat on 2017 figures, but this is higher than the -2% total for the beer market, and its net sales increased 5.3% in the UK.

Glancey continued: “Our Scottish businesses excelled this year, with Tennent’s driving share growth and revenues of 5%, benefiting from continued investment in social media, sponsorship and new fount roll-out programme.

“Our Tennent’s wholesale distribution business in Scotland also performed strongly. Customer numbers, volumes and revenues were all up, driven by the Group’s procurement scale helping deliver value to customers and excellent service levels.”

Volumes of C&C Group’s craft and premium brands grew significantly in 2018. Menabrea saw an increase of 55%, Heverlec of 33% and Drygate of 74%.

The company purchased UK cider brand Orchard Pig in 2017, which contributed 33kHL in volumes, representing 41% of the total, as well as investing €42m in Admiral Taverns, which owns 850 pubs in England and Wales and contributed €1.1m to its after tax income.

C&C Group struggled in Ireland due to the revised terms of its distribution agreement with AB InBev regarding its beer portfolio. The company has estimated that the loss of some wholesaler accounts as a result of the altered agreement lead to volume losses of 195kHL, revenue declines of €14.9m and profit reductions of €5m.

Lower volume and margin performance for Bulmers, as well as the negative impacts of currency, were other contributing factors to the 5.5% decline in net revenue from €227.6m in 2017 to €215m in 2018 and 6.7% reduction in operating profit to €40.1m.

The company performed well internationally but cider struggled in the US. In all markets outside of the UK and Ireland its net revenue declined 14.9% to €40.5m and operating profit fell by 1.5% to €6.5m.

Its branded portfolio’s volumes fell by 25% in the US in 2018 as a result of a declining overall cider market in the country and a particularly bad performance by Woodchuck and Gumption.

C&C Group’s acquisition of Matthew Clarke from Conviviality occurred after the end of the financial year. However, the company has said that following this purchase it aims to focus on a medium-term target to reduce its net debt to €2m, it is currently at €237.6m in a year with significant strategic investment.