C&C shares rise as rival enters cider market
SHARES in C&C have climbed more than 7pc since Monday amid reports that another competitor plans to move into the cider market.
Anheuser-Busch InBev (ABI) said it planned 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 planned to make the UK cider Strongbow a worldwide brand. Heineken's announcement was interpreted as a potential threat to C&C's Magners, which is the number two cider brand in Britain, but ABI's plans are now seen by analysts as a sign of growing confidence in the business.
The prospect of more competition from major brewers entering the cider market could be 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 launched Bulmers in the UK, but Jason DeRise of UBS said the British 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 among 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," he said.
"Historically, new cider brands have grown the category and C&C is likely to still grow volumes despite ABI entering the cider market.
"ABI's decision also signals how positive they are about cider potential -- a backhanded compliment to C&C."
NCB's Paul Meade agreed, and suggested the move confirmed 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 mergers and acquisitions target list of the major brewers, especially given the significant operational transformation at the group and its strong growth in international sales and the availability of surplus manufacturing capacity in Clonmel," he said.
Yesterday, C&C gained 0.85pc to reach €3.56 by mid-afternoon. The stock opened on Monday at €3.32.