CIDER - REPUBLIC OF IRELAND (ROI)
heading
bottle collection

CIDER BEER
Constant Currency(i) FY2012
€m
FY2011
€m
Change
%
FY2012
€m
FY2011
€m
Change
%
Revenue 126.8 136.4 (7.0)% 15.8 13.6 16.2%
Net revenue 91.5 100.0 (8.5)% 9.9 8.8 12.5%
- Price /mix impact (5.5)% (10.5)%
- Volume impact (3.0)% 23.0%
Operating profit 42.2 43.2 (2.3)% 2.2* 0.7* 214.3%
Operating margin (Net revenue) 46.1% 43.2% 2.9ppts 22.2% 8.0% 14.2ppts
Volume – (khl) 532.4 548.6 (3.0)% 89.6 72.8 23.0%
* before allocation of Group overheads


LAD category(ii): The last 12 months have seen Long Alcoholic Drinks (LAD) volumes in ROI fall by 1% year on year. As with the prior year, the swing of consumption from on-trade to off-trade continues with Nielsen/CGA reporting positive growth of 7% in LAD off-trade volumes and a decline of 6% in on-trade volumes. Home consumption in ROI now accounts for 44% of total consumption, up from 41% in the prior financial year. The pricing differential and increasing levels of promotional activity in the off-trade remain a key factor in this accelerated channel switch, a deflationary trend that we expect to continue over the next few years. On an aggregate level, pricing in LAD off-trade fell by 7% in the year while on-trade pricing remained relatively flat.

Despite the deflationary headwinds in the off-trade, operating profits in ROI remained relatively stable for the third year in succession at €44.4 million. Cider ROI delivered operating profit of €42.2 million, while operating profit from the Group’s beer portfolio increased to €2.2 million. Innovation continued with the recent launch of Caledonia Smooth, a draught dark beer currently being rolled out in the on-trade.

Cider: Net revenues were down 8.5% in the year with volumes accounting for 3.0% of the decline and price/mix a further 5.5%. The price/mix deflation reflects the negative impact of product mix in the on-trade, lower off-trade pricing and continuing channel shift to home consumption.

Re-allocation of marketing investment to support the brand to ensure off-trade price competitiveness contributed around 60% of the 2.9ppts margin improvement. The balance of the margin improvement is attributed to disciplined cost control. The Bulmers brand health remains strong. Ongoing investment in advertising campaigns and the sponsorship of live music events such as ‘Forbidden Fruit’ help to maintain energy and saliency behind the Bulmers brand.

Beer: The Group’s beer portfolio continued its strong performance in ROI, with volumes growing 23% in a flat market. Tennent’s Lager volumes increased 64% year on year growing impressively in both channels of trade. Tennent’s Lager draught is pouring in over 1,000 on-trade outlets, a value proposition supported by ‘The Honest Pint’ campaign. In the off-trade Tennent’s Lager volumes more than doubled.

The economic environment in ROI remains challenging and the expectation is that current trends in the LAD market will persist. Strong cost focus, continued innovation and building out of the Group’s beer portfolio will remain essential to maintaining operating profit.

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