Irish C&C Group and AB-InBev save drinks firm Conviviality
The maker of Magners cider looks to have saved around 2,000 jobs at the collapsed drinks firm Conviviality after a GBP 100 million (USD 140 million) deal to buy the firm’s distribution businesses Matthew Clark and Bibendum. Matthew Clark is one of the UK’s biggest suppliers to the on-trade serving more than 20,000 pubs.
Stephen Glancey, CEO of C&C Group, said on 4 April 2018 his company paid a symbolic GBP 1.00 for Conviviality’s distribution businesses, but paid the failed firm’s banks GBP 102 million – more than half the GBP 180 million debt Conviviality owes to its lenders.
The companies will trade under the combined name of Matthew Clark Bibendum and account for roughly 2,000 of the 2,500 jobs at Conviviality prior to its collapse.
AB-InBev has lent C&C some of the money for the deal but Mr Glancey said the brewer has no equity stake in the acquisition or management involvement. He declined to disclose the size of the loan or the terms of its repayment.
As the largest customer to Matthew Clark, AB InBev’s sales to the pub sector could have taken a hit had the distribution company ceased trading.
C&C already has distribution capabilities in Ireland and Scotland, where it makes Tennent’s beer, but the addition of Matthew Clark Bibendum will give it a drinks delivery business with a vast presence in England via its 27,000 pub, bar and restaurant customers including JD Wetherspoon and Slug & Lettuce owner Stonegate.
Conviviality, which also operates more than 700 franchise stores across the UK under the Bargain Booze and Wine Rack brands, ran into trouble in March after it revealed a string of profit warnings and an unexpected GBP 30 million tax bill. It promptly sacked its CEO Diana Hunter, who had overseen its breakneck expansion since listing on the AIM stock market in 2013.
The role of Conviviality in the UK market over the past five years cannot be underestimated. Its customers included some of the leading names in the UK on-trade. In its 2016/17 fiscal year, Conviviality’s sales nearly doubled to GBP 1.56 billion (USD 2.1 billion).
The group acquired Matthew Clark for GBP 200 million in 2015, followed by its GBP 60 million takeover of Bibendum in 2016, media say. A swathe of other purchases elevated its position from cheap retailer to drinks goliath, spanning a number of categories, services and channels. However, with rapid acquisition comes complexity. It is quite possible that management did not do enough to streamline operations. What is more, Conviviality’s investment in traditional off-trade channels – its franchise stores – may have been unwise, considering the rapid growth of consumer spending online and in supermarkets.
On 7 April 2018, the cash and carry wholesaler Bestway stepped in to buy Conviviality’s franchise retail business for an estimated GBP seven million (USD 9.8 million). This should provide some relief to the 370 franchise-holders and their 2,000 employees.
