Between managing the impact of rampant inflation, labour shortages and repairing the damage from two years of pandemic upheaval, running a major consumer business in the current climate sounds like it must be a horrendously complicated undertaking.
Or perhaps it is actually deceptively simple. David Forde, chief executive of Bulmers/Magners cider maker C&C, was at pains to preach the virtue of keeping it simple on Tuesday at the company’s first capital markets day in years. C&C’s recovery strategy, he said plainly, is just to “win more customers” – supply more drinks to more pubs and off-licences, and quit worrying about what happens in the market.
Magners spearheaded the reinvention of the cider category in Britain in the mid-Noughties, when the company let the locals there into a secret the Irish had known for years – the best way to drink the stuff is from a pint bottle poured over ice. Simple. But at the time it was also revolutionary.
Forde is banking on the renewal of a simplified approach at C&C to bring success in the post-Covid recovery period. If he is to pull it off, he will need Magners to fizz again the British market, just as it did 16 years ago during the scorching World Cup summer of 2006 that solidified the brand’s status. Recapturing that kind of verve, alas, will not be a simple undertaking at all.
Few Irish corporates have had as mercurial a ride over the years as C&C, the Dublin-headquartered, Clonmel-centred drinks company. It has performed, at times, as a near- microcosm of the fortunes of the Irish economy – up, down, up, down, inside out and back again. Both could now do with a period of boring, stable growth. The next year or two will be crucial for C&C.
After Magners swiftly conquered the British market under its then chief executive, Maurice Pratt, at the height of the Celtic Tiger period, the company looked imperious for a short time. But, like the tiger economy’s infamous “fundamentals”, this was illusory and by 2008 it was battered into submission by bigger British competitors such as Scottish & Newcastle, later bought by Heineken, Forde’s alma mater.
Just as the Irish economy entered the post-boom horrors, so too did C&C. Three former S&N executives arrived from Britain in late 2008 on a heavily incentivised deal to whip it into shape. They had some success, broadening its portfolio and diversifying the business in the UK, if never quite reliving its former magic. But a disastrous €235 million foray into the US cider market a decade ago always seemed to hold the business back.
C&C trundled along doing reasonably okay for a few years after its US mistake, deviating into the pub-owning business through Admiral Taverns and also buying up broader drinks distribution units to give it more reach in the British market.
But it also seemed to lose some focus. It became hard to figure out what C&C was all about. Then the pandemic came and threw the entire industry into turmoil.
Forde took the reins in November 2020 at the height of anti-virus fever. Since then, he has moved to straighten up the business and start afresh.
Tuesday was, in a way, his proper debut as C&C’s public face. His first 18 months in the job, as C&C struggled for stability as the economy digested the impact of Covid, were “the toughest of his career”, he acknowledged this week. Having come out the other end, Forde quipped that negotiating the currents and eddies of rampant inflation should be “kindergarten stuff”.
He has ditched its incongruous-looking Admiral Taverns stake, merged C&C’s assorted distribution platforms into a single unit, turned its focus away from the distractions of global markets and tied its main operating divisions together into a simpler, single British structure.
Three planks underpin its new strategy. Firstly the company aims to use its sprawling distribution network to service even more more pubs and retailers. Forde says one in five drinks in the British pub trade are distributed by C&C. With 30,000 outlets on its books out of 120,000 in Britain and Ireland, he wants more.
Secondly, the company has identified two main product categories where it is targeting major growth. The first of these is the premium beer segment. C&C owns good, long-standing beer brands such Tennent’s. But nobody could ever accuse the cult Scottish brew of being premium. Forde will need to expand the reach of its other promising beer brands, such as Menabrea from Italy.
The other drink category where C&C targets a revival is cider, specifically in the British market. Bulmers in Ireland has a share of more than 50 per cent: there isn’t much more it can do here. But in Britain, Bulmers’ alter ego Magners has only about 5 per cent.
There is room for growth. Lucy Henderson, C&C’s marketing director, who recently followed Forde to the Irish company from Heineken, told investors this week that Magners is a “sleeping giant” that has suffered from a lack of marketing investment that the company now plans to rectify.
But the last time the brand made a big splash in Britain, it was on the back of its over-ice revolution. It is difficult to see what the brand’s beachhead for a major push could be this time round. It seems to lack a major “story” to build its marketing around. Launching Magners Light next year won’t cut it. Even the World Cup this year is in winter, which isn’t good for a cider-over-ice proposition.
The third plank of Forde’s strategy is to tie the business fully to the sustainability agenda that soon will come to dominate corporate decision-making across the entire economy. The C&C chief executive has promised to put sustainability at the centre of everything the business does. We shall see.
C&C has emerged from the pandemic in quite decent financial health, given all that has happened over the past two years. It raised £151 million last year in a rights issue, much of which went to cut C&C’s debt. The £55 million from the Admiral sale will take care of another chunk, giving Forde more financial leeway should a suitable acquisition opportunity come along.
Its sales have also rebounded quickly as soon as Covid-19 restrictions were eased – annual revenues were up 88 per cent in its results this week.
But old challenges remain. Once state subsidies wear off, it will become apparent once again that the pub trade in Britain and Ireland has resumed the downwards trajectory that has been the norm for close to 15 years. Regulation of the marketing of alcoholic drinks on public health grounds will bring more challenges. And C&C has some major competitors it must beat.
The task of keeping it simple has never looked more complicated.