TENNET'S
heading
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TENNENT’S THIRD PARTY BRANDS
Constant Currency(i) FY2012
€m
FY2011
€m
Change
%
FY2012
€m
FY2011
€m
Change
%
Revenue 216.8 223.9 (3.2)% 77.9 83.5 (6.7)%
Net revenue 100.1 102.0 (1.9)% 74.0 76.1 (2.8)%
- Price /mix impact 6.9% 0.2%
- Volume impact (8.8)% (3.0)%
Operating profit 22.3 18.2 22.5% 7.1 5.8 22.4%
Operating margin (Net revenue) 22.3% 17.8% 4.5ppts 9.6% 7.6% 2.0ppts
Volume (khl) 1,421.7 1,559.7 (8.8)% 391.8 403.8 (3.0)%


Scottish beer market(ii): The Scottish Beer on-trade market remains in decline with total beer volumes falling 8% for the year according to Nielsen/CGA. Scottish off-trade beer volumes declined by 4% in volume but grew by 5% in value.

Tennent’s: The Tennent’s brand delivered a strong set of numbers for the year with operating margins increasing to 22.3%, a level comparable to the Magners brand in GB. Net revenues fell by 1.9% as a consequence of the volume lost in pursuit of improved unit pricing in the off-trade. Total volumes fell by 8.8% with the positive impact of price/mix contributing 6.9% to the net revenue line. During the financial year, the Group commenced exporting Tennent’s brands to overseas markets including Australia, Italy, North America and Russia and launched Tennent’s Original Export, a premium lager, in April 2012.

Tennent’s Scotland: Tennent’s outperformed the on-trade market with a decline of 2% as the brand continues to build momentum across the Scottish market. In the independent free trade (IF T) in Scotland, Tennent’s is now back in net revenue growth as distribution gains and a growing loan book lifted volumes 1% in the year. The Group continues to invest in the on-trade to secure distribution with €11 million advanced to customers over the course of the year. Our cider business is also performing well in the on-trade, benefitting from the Tennent’s reach. The C&C cider portfolio now accounts for 31% of the Scottish on-trade draught cider market. In the off-trade Tennent’s volumes declined 16% as a result of the Group’s pursuit of value growth.

Ongoing commitment to brand investment is evidenced by good brand health scores. Sponsorship of The Old Firm football clubs and ‘T in the Park’ music festival continue to energise the Tennent’s brand and improve engagement with the trade and consumers. The launch of Caledonia Best in the fourth quarter was well received in the on-trade and the product has been rolled out to over 1,000 points of sale across Scotland.

Tennent’s NI: In Northern Ireland Tennent’s continued to perform robustly in the on-trade. There was substantial loss of volume in off-trade multiples but positive growth amongst local groups.

Operating Efficiencies: The focus on cost control, delivery of synergies and improved unit pricing on Tennent’s contributed to a significant uplift in operating margins to 22.3%. The supply side of the business delivered a robust cost performance and incremental third party volumes helped to offset low level input cost increases. During the year, a bottling line was relocated from the Group’s cider manufacturing facility in Clonmel to Wellpark Brewery in Glasgow, enhancing the brewery’s capability to service both planned innovation for the Tennent’s brand and growing demand for third party activity.

Third party brands: Continued to perform well with operating profit growth of 22.4% reflecting improved product mix and the strength of the portfolio in Scotland and Northern Ireland.

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