C&C shares rise as ABI announces it will move into the British cider market
SHARES in C&C rose yesterday with the news that another competitor plans to move into the cider market.
Anheuser Busch InBev (ABI) says it plans to enter the UK cider business with the launch of its own cider brand as part of its Stella Artois line. "Stella Artois Cidre" will be a premium "over-ice" cider.
The move follows last week's announcement by Heineken that it plans to make the UK cider Strongbow a worldwide brand.
Heineken's announcement was interpreted as a potential threat to C&C's Magners Cider, which is the number two cider brand in the UK, but ABI's plans were seen by analysts as a sign of growing confidence in the business.
The prospect of more competition from major brewers entering the cider market was seen as a potential challenge to C&C but analysts have poured cold water on expectations the Irish company may be damaged. In 2008, Magners lost hard-won market share after Scottish & Newcastle (S&N) launched Bulmers in the UK.
Jason DeRise of UBS said the UK market was big enough for several cider companies to thrive and that such a threat was no longer relevant.
"Magners' brand positioning is more established and is amongst a more diversified portfolio reducing the risk. The impact of S&N launching Bulmers as a competing brand followed by other new premium cider brands was dramatic but one more premium brand does not greatly change that dynamic [now].
"Historically, new cider brands have grown the category and C&C is likely to still grow volumes despite ABI entering cider.
"ABI's decision also signals how positive they are about cider potential -- a backhanded compliment to C&C," he added.
NCB's Paul Meade agreed, and suggested the move confirmed that major brewers could be circling C&C.
"The read through on this assumption is confirmation that C&C's cider assets and market share are now on the target list of the major brewers, especially given the significant operational transformation at the group and its strong growth in international cider sales and the availability of surplus cider manufacturing capacity in Clonmel," he said. C&C closed up 1.05pc at €3.56.