Broker snap: Mixed pub trade news for C&C

27th Jan 2010 12:22

Citigroup has been poring over the sales data for the pub trade and has seen mixed news for Magners cider producer C&C Group.The data, covering the months of October and November last year, show a 'material improvement in the performance of Magners Original and in particular an improvement in Scottish distribution,' notes Citi analyst Liz Hartley, but the figures also highlight a weak performance by Gaymer Cider and a 'lower price-mix amongst packaged but stronger price mix in mainstream cider.'Figures from CGA, which has taken over the provision of on-trade data from ACNielsen, show that the core C&C group saw volume growth of 1% in October and 4% in November. Magners Original declined by 13% and 7% in October and November respectively, but for a brand that has previously seen month on month declines of anything from 20% to 50%, that represents good news, Hartley suggests, especially in view of price increases that were in line with, or even ahead of, those applied by Bulmers.'This appears to be distribution-share driven, with group increases of c.360-450bps [basis points] mom [month on month], but c.620-690bps in Scotland, reflecting, we assume, the benefit of distribution alongside Tennents' (acquired 29 September),' Citi says.Gaymer Cider Company volumes were disappointing, with volumes down by 16% in October and 19% in December, which could be attributable to weaker distribution, the broker surmises.'Blackthorn was very weak (c.73% of portfolio, down 16% and 24%) but Gaymers Original continues to perform well (c.15% portfolio. +9% and +17%),' Hartley said.Citi rates the stock as a high risk buy and has a target price of €2.95.