Until only a few years ago cider was seen as one of the growth areas of the drinks industry, but more recently the prospects have become much bleaker.

Alcopops have bitten into the cider market

The alcopops craze has eaten into the market and it has also suffered from the cross channel importation of cheap beer.

Matthew Clark, which produces Blackthorn and Diamond White, is the third well-known company in the sector to brew up poorer results within a week.

The Bristol-based group said that while the cider market had declined by 5% in volume, it had introduced several initiatives to support and promote its main brands.

Blackthorn was re-launched with a new image together with a £5m advertising campaign while Diamond White had benefited from a complete review and new packaging.

Despite these efforts pre-tax profits in the year to April 30 still slipped from £40.6m to £35.8m while turnover dropped from £570.7m to £553.1m.

Market is shrinking

Cider production in Taunton will cease at the end of the year but Clark's said it had been able to offer other jobs to around half the workers.

"The cider market has declined for the second year running after a period of sustained growth. It still continues to be fiercely competitive," explained chief executive Peter Aikens.

Duty free sales of beer have also had an impact on cider sales

"Nonetheless our strategy to increase investment in brands and the infrastructure of the business is beginning to show positive results."

He stressed: "The other areas in the company are performing to expectations, particularly our wholesaling business which continues to achieve substantial growth."

Its wine operation, Stowells of Chelsea grew its business by 13%, while the Strathmore bottled water division maintained its position as a leading brand and increased sales and operating profit.

The total dividend falls by nearly a half from 24p to 13p.

Cider profits pulped

Matthew Clark is not alone in suffering a slump in the demand for cider.

Last Thursday Bulmer, the country's largest cider maker posted a 26% decline in annual profits to £22.1m in the year ending April 1998.

The group, which makes the country's best selling brand Strongbow, suffered from the import of cheap lagers from mainland Europe over Christmas and ill-judged pricing of its White Lightning cider.

However, Bulmer increased its share of the cider market to over 58% from 54.4% in the period and its three main brands Scrumpy Jack, Strongbow and Woodpecker saw sales grow by 8% in the year on the back of increased advertising expenditure.

Even small cider maker Merrydown last week reported a loss before tax of £4.1m in the year ended March 31 compared with a profit of £0.8m in the previous year.