Magners firm hit by damp weather

Can the cider boom continue?

The British thirst for Magners cider has been dampened by the wet weather, forcing the brand's Irish owner to cut its profit forecast for the year.

Poor weather in June and July, a key earnings period, combined with heavy competition has led C&C Group to expect 12-month operating profit to be flat.

It had originally forecast earnings to be up by between 15% and 20%.

C&C shares dropped almost 13% on the news, even though the firm was upbeat about future growth potential.

Investors knocked 1.39 euros off the firm's shares to 8.80 euros in early trade.

"The second quarter of the year is crucial to full-year performance for reasons both of its seasonal importance and the impact of summer recruitment on performance for the rest of the year," the company said.

"Very poor weather in June and into July together with continued heavy price-led competition is likely to lead to a weak second quarter and, as a result, while the group expects strong volume growth for the full year in Great Britain it is reducing its sales volume expectations."

Cider makeover

Variations in sales volumes are particularly sensitive for the Dublin-based firm, they said, given the substantial amount of investment in marketing the Magners brand.

This includes the current high-profile TV and poster advertising campaign, which promotes the drink as being served poured from a pint-bottle, over ice into a glass.

The image has been a key driver in making cider attractive to pub goers in England.

In 2006, sales of Magners grew by 225% after it went on sale in England for the first time, having been sold in Scotland since 2003. In Ireland the brand is sold as Bulmers.

Observers say that they expect the strong growth in UK cider sales to continue, despite C&C's disappointing trading statement.

But with other brewers cashing in on the Magners "over ice" image with their own ranges, many believe C&C is unlikely to repeat the growth rate it has enjoyed so far.