Volume of C&C ciders began to stabilise in the second half of the year with a decline of 6.8% comparing to 14.0% in the first half and 22.2% in Q1 2014. Performance was some way below a category that returned to volume growth of 2%(ii) this year, boosted by a good summer. The proliferation of new entrants and range extensions into cider continues to commoditise the cider space in England and Wales and pricing remains under pressure for brands reliant on national distribution and scale. For C&C, price/mix declined by 4.0% in the year, leading to net revenue being down 15.0%.
The Group recognises the scale and importance of the UK cider category and continued to invest in its assets during FY2014. Rather than retrench in the face of market headwinds, a new advertising campaign for Magners was launched and investment in the Shepton Mallet cider business up-weighted. This partially accounts for an operating profit decline of 29.1% to €20.7 million and a 3.6ppt drop in Cider UK’s operating margin to 18.4%.
The investment decisions reflect our view that both the authenticity of the Magners brand and the differentiation offered by the brands within the Shepton portfolio give them long term value worth protecting and supporting.
In Scotland and Northern Ireland, the superior strength of our business model and portfolio helped to deliver category outperformance in FY2014.