|- Price /mix impact
|- Volume impact
|Operating margin (Net revenue)
Magners: Export growth of Magners
accelerated in the second half with
volumes growing by 28.3% for the year
as emerging cider categories in North
America, Australia and Europe continued
to demonstrate good growth.
As anticipated, US cider volume growth
increased in the second half of the year as
an improved autumn trading period helped
drive sales. The US business enjoyed the
benefit of increased investment in sales
infrastructure and extended capability
across both channels and brands.
Canadian volumes continue to grow
strongly and were up 85% for the year,
supported in the second half by a new
distribution agreement with Moosehead.
North American volumes grew by 25%
for the year which is line with estimated
category growth rates.
The Australian market, which is a more
developed cider market than North
America, continues to display excellent
growth as imported ciders and flavour
variants recruit consumers into the
category. Penetration rates are now
estimated at 3% of LAD and volumes are
up 30% per annum(ii). Magners introduced
above-the-line TV advertising over the
Australian summer for the first time with
the ‘Catch’ cricket themed campaign.
Volume was up 78% for the year. Under
the recently signed five year distribution
agreement with Suntory, marketing
investment in the brand is set to increase
further and the range-extending Magners
Selections are being rolled out across the
Revenue growth in Magners of 17.6% falls
short of volume growth due to the change
in the structure of the distribution contract
with Suntory, the Group’s distributor in
Australia. Under the terms of the new
arrangement, responsibility for direct
market investment transferred to Suntory
with a consequential reduction in headline
revenue. Total Magners Export revenue
growth under the former arrangement
with Suntory would have been circa
29%. Operating margin improvement is
attributed to the lower reported revenue
number, greater absorption of fixed
overheads and operating efficiencies.
Gaymers: Despite volume decline of 11.0%
during the year, improved unit pricing
delivered net revenue growth of 3.3%.
Opportunities for international markets
are being reviewed.
Hornsby’s: The acquisition of the
Hornsby’s cider brand from E&J Gallo
Winery in November 2011 has positioned
C&C as the number 2 cider company in
the US with an estimated 20% share of the
US cider category. The Hornsby’s brand
brings US domestic cider heritage to
C&C. Trading is in line with expectations
and integration is well underway. We
expect to exit the transitional services
arrangements within the timescale agreed
with E&J Gallo Winery.