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Friday, May 22, 1998 Published at 16:00 GMT 17:00 UK


Merrydown not so merry
image: [ Merrydown hopes its new strategy will help raise a glass to new profits ]
Merrydown hopes its new strategy will help raise a glass to new profits

Merrydown the cider maker is to make substantial job cuts following a slump in the popularity of alcopops.

The Sussex-based company, formed in 1947 as a family-run cider and wine producer and floated in the mid-80s, plans to focus on its cider brand Merrydown and on soft drink Shloer.

The reorganisation will see it withdraw from all but one of its bottling activities and it will cut about 50 jobs mainly in production from its 125-strong workforce.

Strategic mistake

Chief executive designate Nigel Freer said: "Two-dogs (alcopop) was an initiative taken on about three years ago to save the business.

"In in fact it brought it to its knees because attention was taken away from Merrydown and Shloer which are the cornerstones of the business."

Merrydown was the first company to import Alcopops, fruit-flavoured alcoholic drinks, into the British drinking scene in 1995.

The products soon captured the interest of the profitable, young drinking market, but Merrydown was forced to hand over distribution to brewer Scottish and Newcastle, because it could not cope with growing demand and increasing competition.

Merrydown still manufactures the product, but early last year sold marketing and sales rights to Scottish Courage for the product in Britain, and to Pernod-Ricard in Europe.

Fall in demand

Demand for alcopops has now dropped off sharply amid complaints that they encourage under-age drinking.

The trend helped send Merrydown crashing to a pre-tax loss before exceptional charges of 516,000 ($840,000) for the nine months to December 31, 1997.

Merrydown's nine month results included an exceptional cost of 3.27m related to the review of the group.

As part of the makeover, the group also announced a board reshuffle and said it planned to raise about 7m through the issue of 15.6m new ordinary shares at 45p per share.

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