C&C Group manufactures Magners, Ireland's leading cider brand, with approximately 80% market share, as well as Tullamore Dew Irish whiskey. With strong brands and marketing capabilities, the company re-created cider as a fashionable drink for people in their 20s and 30s. On the back of its success in Ireland and upon entering the UK market, C&C geared up for massive volume expansion with the UK launch of Magners. Unfortunately this coincided with an unexpectedly wet British summer and an underestimated competitive response from Scottish & Newcastle to C&C's entry into the UK market. The stock price fell by over 40%, leaving it with an expected 5% dividend yield and 10% free cash flow yield. Volumes have now stabilised and cost cuts are expected to improve earnings. As a potential bonus, the company may be an attractive acquisition to one of the major brewers with strong distribution channels, such as SAB Miller or InBev.
| Sedol |
Type |
Price |
Date |
| B011Y09 |
Buy |
EUR 3.98 |
15/01/2008 | |
