C&c Share Discussion Threads

[r0cksteady] 24/1/2008 10:20

Pernod Ricard recorded H1 organic growth of 10.1%, which included growth of 17% in premium spirits. Within this, Jameson Irish
whiskey saw organic sales growth of 23%, of which 16% was volume increases. The product appears to have done particularly well in
North America. C&C's Tullamore Dew Irish whiskey brand is its leading growth product with its International spirits Division.

[eoc74] 22/1/2008 16:06

They would be mad to sell out for such a small amount. The talk last year was €17. They need to get back to growing the brand and sales and forget about takeovers at these levels. If they sell now, its because they see no future for the company on its own.

[finbarr] 22/1/2008 15:58

Roc,

I am afraid the buyout price would be between 6 and 8 euros in the current climate .Wld love to be wrong!!

[r0cksteady] 22/1/2008 15:57

fin: im really not sure. I could not (and hope not) see management reccommending any offers under 10 euro a share, considering they all topped up at over that price. Whether or not the market would accept less (and then concievably could) is still a possibility, although i sincerly hope they would not.

My worry is a solid company that has encountered some serious problems (which they tell us they will address) could be sold for a song at €8 a share.

This is all IMO tho....

[finbarr] 22/1/2008 15:46

Roc,

price?

[r0cksteady] 22/1/2008 15:37

If I had to pick a candidate I would say the most likely would be SABMiller. They have already recently showed their interest in purchasing premium drinks brands, with a recent acquisition of a premium beer producing Australian brewer, if my memory serves be right. Also with improved distribution links it could add to SM's existing portfolio. I have no doubt at these prices, some of the bigger players would take a closer look.

[finbarr] 22/1/2008 15:08

rocsteady,

By whom?

[r0cksteady] 22/1/2008 13:59

What are peoples opinions regarding a takeover? I think it is a sitting duck right now...

[eoc74] 22/1/2008 08:00

Thanks Rocksteady, alas they have not even bothered to send me an acknowledgement. It says a lot about what they think about their shareholders. I recently contacted two other listed companies and received an email directly from the CEO of one company and from the Chairman of another.

[r0cksteady] 22/1/2008 00:19

eoc: a well thought out e-mail. i really hope it is read. cheers.

[eoc74] 21/1/2008 13:17

Copy of email I sent to C&C last week. I didnt get the courtesy of an acknowledgement:



Hi,

I am writing to you as a shareholder in C&C. I would please like to pass my ideas on to somebody in C&C who would be involved in the European sales of Tullamore Dew and Magners. I hold x shares which I bought between May 2005 & May 2007 and was a major outlay for me. I am writing to express my opinion about marketing strategy for both cider and whiskey in the continental Europe market, particularly in Spain.

As we know, a Magners trial was completed last year in Barcelona. While the detailed results were not released to shareholders, I think it was clear to all that the strategy employed needed to be altered. I would like to pass on my personal knowledge of the Spanish market, as an ordinary long term shareholder who has spent a lot of time in the last 10 years in Northern Spain and Seville in the south.

I was in Barcelona last year when the marketing drive for Magners began. I was immediately surprised because it appeared to be targetting local people with pint bottles of Magners. The Spanish drinking culture is very different from that in the UK and Ireland. Beer(or "Long Drinks") are not the drink of choice on a night out in Spain(except perhaps in the tourist parts which I am not qualified to comment on as I never visit there). Cider is usually drank in shots and it is not customary for young people to drink it. When people do drink "Long Drinks", they tend to do so in small quantities at the start of the night or to cool down from the heat in Summer. Spanish people will almost never order a pint(or a half litre) of beer. I have never seen it in 10 years of going there. Most bars will not even have 500ml glasses. If drinking a beer, they will drink either a 200ml glass or a 330ml bottle. They usually pay anything from €1 to €3.50 for such a drink with the higher pric es obviously in trendy bars in places like Barcelona, the bigger cities and the tourist resorts. The product appeared to me to have a future but only if sold in the right way.

I was very surprised when I saw Magners for sale in a typical local bar in Barcelona in a pint bottle. Firstly because not a single person in the place would dream of drinking a pint and secondly because the price was €5. My experience is that most Spanish drinkers simply do not have the means to pay €5 for a drink, at least on regular occasions. I thought that perhaps the C&C strategy was to target tourists in Barcelona but that idea was incorrect as I saw advertising on national TV in Barcelona and tourists neither speak Spanish nor watch national TV there. Clearly the strategy was out of kilter with local habits and this would have been immediately obvious to anybody who spent any amount of time in Spain.

In spite of this, there are other trends that are deeply ingrained in the Spanish drinking culture. A normal night out in Spain for almost every Spanish person I know involves drinking either whisky or vodka. I am always surprised at the amount of whisky that they drink(usually they drink a whisky with a soft drink and ice, a "cubata"). I once went to a wedding there and was literally the only person out of 240 who was drinking a long drink. The sad thing for me as a C&C shareholder is that they drink "whisky" as opposed to "whiskey". Irish whiskey appears to have made little or no inroads into the huge market there. I dont even see other brands such as Jameson and certainly not Tullamore Dew. I think that C&C should consider this and the fact that there is a major opportunity in the Spanish market for an Irish whiskey. I do however see Frangelico in places so the distribution network must be there for C&C. I cannot stress enough how much of an opportunity this ap pears to be!

To summarise, I hope that Magners is relaunched in Spain, but under a more appropriate banner and that a lot more focus is given to the Tullamore Dew whiskey opportunities there.

Rgds,

[cat100] 21/1/2008 10:15

Maurice Pratt to go ?

[itansey] 20/1/2008 10:51

Future uncertain for Magners after dry British spell

20 January 2008 By Samantha McCaughren - Sunday Business Post

British drinkers lost their taste for Magners last summer and have not returned to cider during the autumn and winter months.

Many are now wondering if the initially positive response among London drinkers to Magners was a brief fling, rather than a love affair.

In the company's first ever third quarter update last week, C&C said that the cider business was down 18 per cent in the three months to the end of November. There had been an expectation that the fall might just be in the high single digits.

The key problem for the market is that the company can give little guidance as to how the brand will perform in the year ahead. For management and investors alike, it is a waiting game.

One analyst said that fund managers would not touch shares with poor visibility in the current environment.

''It's not a high visibility business, because you have no contracts coming in. You are talking maybe February, maybe May, until you see if the market share has stabilised," he said. ''It'll be about two years before you can see if the company has the potential to re-group in Britain, get market share back and grow the product again."

But Liam Igoe, of Goodbody Stockbrokers, believes the market is being too harsh on the brand. ''We hold with the view that C&C's current share price is effectively writing of f the value of the Magners brand," he said.

''We think this view is excessive and we consequently retain our positive stance on the stock. We hold with the view that the Magners franchise has significant value, which is largely ignored in the current share price."

He said that even if a value of zero was applied to the Magners brand, a current value of €3.46 could be put on the stock, compared with €6.04, including a valuation for Magners. The company's shares gained nearly 11 per cent last Friday, to close at €4.23.

But for now, the power of the Magners marketing blitz, which replicates the Bulmers strategy in Ireland, is not having the desired impact. The company's original target was to gain 4 per cent of the LAD (long alcohol drinks) market in Britain by 2010/2011 but that looks highly unlikely now.

Some in the market believe that the best case scenario would be a 2.5 per cent share in that timeframe.

At the time of the Rugby World Cup, Magners did manage to get a 4 per cent share of the LAD market in London, but some sceptics believe that may have been a one-off, a fad never to be repeated.

In Ireland, the company has a market share of the LAD drinks market of about 11 per cent, while in the North, it is about 7 per cent. There was an expectation that this pattern of increased share would be replicated in Britain.

''People say it is a totally different market," said one market source. ''Now, there is an appetite for the company to hold its current share and grow from there," he said.

Other valuations in the drinks sector also concern some investors. International brand Grolsch was recently sold to SABMiller for €820 million. At the moment, C&C has a market capitalisation of €1.3 billion, although it still owns other brands, such as whiskey Tullamore Dew.

''Grolsch is a worldwide name, with a presence in emerging markets," said the market source. ''It has a lot more recognition that Magners ever had. So far, it doesn't look like Magners is transferable out of Ireland and Britain. Until they can prove it's transferable to Australia or the US, it has limited potential."

There is strong expectation that Magners trials in Munich and Barcelona will be halted, but issues continue to face the company in Britain.

Ross McEvoy, an analyst with Bloxham's, said the British drinks market has problems. Pub group Punch Taverns last week released its trading update for the 20weeks to January 5, 2008.

''Trading over the last eight weeks has been more subdued, in what has been widely acknowledged as a challenging period for the sector, with declining consumer confidence and the impact of the smoking ban in England and Wales," said McEvoy in a note. ''Going forward, the group remains cautious over the short-term outlook for the sector."

So, while C&C, under chief executive Maurice Pratt, will be trying to hold its share in the face of increased competition in the cider segment, it may also have to tackle wider problems in the British drinks sector. The company is scheduled to update investors on sales at the end of February, and to report results on May 8.

[itansey] 20/1/2008 10:48

C&C has €20m European hangover

20 January 2008 By Samantha McCaughren - Sunday Business Post

There is growing speculation that C&C will suspend trials of Magners cider in Munich and Barcelona to focus on reestablishing the brand in Britain.

Market sources said there was an expectation that the company would announce plans to halt the trials Munich and Barcelona.

''The feedback we're getting is that it is not going well, Munich especially," said one broker.

''They are investing up to €20 million in marketing. They should really regroup in the UK and try to stabilise the market there instead of expanding overseas, it's not the time to do that."

Market sources said that the company was expected to bow to pressure to prove that its sole focus is on maintaining market share in Britain.

C&C has already scaled back its investment in Europe in order to allay concerns over falling sales in Britain. Maurice Pratt, chief executive of C&C, told analysts in October that the company would ''be adopting a lower net investment approach to Europe''.

A spokesman for C&C said it would not comment on market speculation.

''At its half-year results last October, the group said that there was a consumer opportunity in both markets and that it planned to remain in both markets and formulate a revised approach for the financial year of 2008/2009," the spokesman said.

[eoc74] 18/1/2008 15:36

Havent seen this ina while!

[eoc74] 18/1/2008 13:30

Theyve issued that kind of stuff before. Not convinced by the argument either. I suspect Heineken will add to S&N's capacity to promote Bulmers.

[r0cksteady] 18/1/2008 11:41

could be partly due to this from goodbodys:

It now looks increasingly likely that Carlsberg and Heineken will succeed in their three month long pursuit to acquire Scottish &
Newcastle, as yesterday, the board of S&N announced that Carlsberg and Heineken will propose a bid of 800 pence a share, valuing
the company in the region of £7.8bn. Carlsberg wants to acquire full ownership of its JV with S&N, BBH, while Heineken has its sights
set on the UK operations. Of importance to C&C are the implications that a Heineken-S&N hybrid would present in the UK and Ireland
cider markets. There could well be a short term gain to C&C, as S&N, due to this corporate activity, may not be as proactive in their
attempt to pack UK pub shelves with Bulmers. Ultimately, Heineken may view the premium cider category as a valuable growth niche,
but one, we expect, where there are likely to be less prone to compete on a low price platform. We would also see this as a positive
development for C&C. However, Heineken may also decide in time, to launch a new premium cider product within the Irish market. We
expect however that despite Heineken's significant share of the Irish on-trade market, an attempt to launch a rival premium product in
Ireland would be unsuccessful, given C&C's pedigree in the sector and its proven record at fending off new competition. An outcome of
the deal is expected soon after 24 January, as this is the date, set by the UK Takeover Panel, when all bids are due. Assuming an 800p
share price for S&N leads to an FY08 EV/EBITDA of 14.8x and a PE of 20.2x, which compares to C&C's forward FY08 EV/EBITDA of
11.4x and a PE of 12.8x.

[r0cksteady] 18/1/2008 11:14

Its a day traders dream, will be a while before it has a solid base to build from.

[eoc74] 18/1/2008 10:48

Very odd share movement here recently. It tends to shoot up or down significantly at various points during the day!

[eoc74] 17/1/2008 08:11

To be fair djderry, the last buyback was a complete disaster, as predicted by some of us on here. Others here were supportive of it and I still fail to see why. EPS is down anyway. They might as well have thrown that €117m down the toilet. To think of what could ahve been done with that to grow the cider and whiskey brands. It was criminal. Obviously a buyback now would be better timed. However, Im still dead against it. I dont see the point of doing it while sales are flagging. Address the basics first. I have lost all faith in the board anyway so I dont expect them to do whats necessary. This is a bet on the summer's weather, not on managements capabilities. We already know about that.

[djderry] 16/1/2008 22:09

Let the buy back commence! As you can see,the Irish market was much stronger because its a longer established brand there.As the brand builds in the UK, the share price will recover.

[finbarr] 16/1/2008 15:34

eoc74,

Much of the bad news is now in the price.Any improvement at all in uk figures will send this up

[eoc74] 16/1/2008 15:31

Not sure about the nuts and bolts of it but I know that Ryanair and Waterford Wedgewood and others engage in major hedging of foreign currency as most of their sales are in foreign currency.

Ill be damned, blue again!

[lobby ludd] 16/1/2008 15:24

EOC74 - 'earnings in sterling' ?
Surely all of C&Cs earnings are in Euros ?
Of course it sells in the UK, but all ITS sales are in Euros. The company itself doesn't sell anything in sterling. It exports from Ireland into the UK market, and its UK importers will pay it in euros. The weak £vEuro will though be a negative, making its exports into the UK more expensive, and tend to reduce sales.
Or am I wrong ?

[eoc74] 16/1/2008 08:57

Thats my thinking Rocksteady. Although Im thinking more about Summer 09. I would like to see the replaced though. Their lack of innovation is criminal.