Tennent’s to ‘excite customers with new things’ as market share grows further

Tennent’s parent company C&C Group said the iconic Glasgow-brewed lager had outperformed total beer market performance in the on-trade sector, increasing market value share by 0.9 per cent in the 12 months to the end of February. However, Tennent’s total brand net revenues were down 2 per cent in the period, with higher pricing partly offsetting a volume decline of 6 per cent.

Releasing its full-year results, C&C said the outcome reflected the impact of poorer weather over the summer and the “temporary impact” of the Euro football tournament, when an estimated 200,000 Scotland fans travelled to Germany over the period, knocking Tennent’s sales closer to home.

Brand investment in the year centred on Tennent’s sponsorship of Scottish football as well as the continuation of the lager’s successful “Oooft” campaign.

The annual results were the first for Irish C&C Group under the leadership of Roger White, who took the helm as chief executive towards the end of January, having led AG Barr, the Cumbernauld-headquartered maker of Irn-Bru, for 22 years until May last year.

White, who was one of Scotland’s longest-serving chief executives before he stepped down at the famous soft drinks maker, pointed to progress on a number of fronts over the past year, despite the ongoing challenging macro and market backdrop.

“It’s good to be here and I think it was a pretty resilient performance from the group last year, recovering from some of the prior year’s challenges,” he told The Scotsman. “We are moving in the right direction but there’s plenty to do.

“Tennent’s is an amazing brand. One in every two pints of lager sold in Scotland is Tennent’s,” White noted. “It appeals to a very broad-based consumer group but there’s a lot I think we can do with it.

“It has been reasonably well invested over the last few years from a broad marketing point of view but it hasn’t had a lot of development work done to it. There isn’t a lot of innovation or breadth to the Tennent’s portfolio.

“From my point of view, although it’s early days, there is plenty we can do to excite our customers with new things from Tennent’s.”

Those future plans could target further gains in the popular low and no alcohol beer markets and undertaking “one-off special brews”.

C&C Group posted adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of €112 million (£94m) for the year to February 28, up by almost a fifth on the previous 12 months. The key operating profit measure saw growth of 28.5 per cent to €77.1m (£65m), with improved operating margins in the branded and distribution segments.

Net revenues came in at just under €1.67 billion, up from about €1.65bn previously.

White said the group, whose other brands include Bulmers, Magners, Menabrea and Orchard Pig, had seen limited tariff impact on trading and costs in recent weeks.

“There is a macro impact on the economy and confidence but we have relatively little exposure to outbound or inbound movement of goods,” he added. “However, we are keeping a close eye on what’s going on.”

The group warned that overall employment costs in the UK would grow in the coming year due to the increase in the national minimum wage and employer national insurance (NI) contributions announced in last autumn’s Budget, and implemented from last month. The introduction of further legislative activity, such as the extended producer responsibility levy and the already introduced deposit return scheme in Ireland, will cause further price inflation, C&C added.

White said the NI and wage hikes were having a significant impact on bars and restaurants, but pledged to “support our hospitality customers at what is a pretty difficult time for them”.

Greg Johnson, an analyst at brokerage Shore Capital, said C&C’s full-year results were “very much in line” with his expectations including solid underlying cash generation.

He added: “With an encouraging start to the new financial year, we would not envisage any change to forecasts and look forward to the group executing on its medium-term targets for operating profit building back to €100m.

“The preliminary results are the first under new CEO Roger White, and we are encouraged by the reconfirmation of this commitment, with the statement highlighting opportunities through business simplification, reinvigorating Magners, developing its premium drinks portfolio and market share gains in distribution. Comments around the potential across the core brands of Bulmers and Tennent’s also piqued our interest.”

Tariff impact

Analysts at Davy Research noted: “Management anticipates limited tariff impact on trading and costs. Current focus for management remains supporting customers, investing behind core brands, people and systems, whilst continuing to simplify the business and control costs.”

In his statement to investors, White said: “Looking ahead, year to date trading is encouraging. With the key summer trading period ahead, we are executing our plans for the year, supporting our customers, investing in innovation and brand-building, people and systems, whilst continuing to simplify the business and control costs.

“We remain focused on building a solid platform from which we can maximise the potential of the group. We are developing plans to grow sustainably whilst delivering on our financial targets, creating increased long-term shareholder value.”

Tennent’s owner C&C teases ‘exciting plans’ as new boss looks to drive growth