Pabst takes over distribution of C&C ciders
This proves to show how tough the U.S. alcohol market can be. The Irish-based drinks group C&C, the maker of Magners cider, announced on 11 December 2015 that it has signed a long-term relationship with Pabst Brewing Company to distribute C&C’s cider products throughout the United States.
C&C entered the U.S. market three years ago with the EUR 235 million purchase of the Vermont Hard Cider Company, which owns a cidery and a number of brands in the New England region
The Irish group has since had to write EUR 150 million off the value of its U.S. assets due to distribution challenges and cut-throat competition from other ciders and alcoholic root beer.
During its fiscal first half, ended 31 August 2015, C&C saw North American net revenue drop 12.5 percent to USD 25 million. Operating profit fell 61.5 percent to about USD 548,000. C&C’s North American portfolio declined 14.6 percent to about 1.6 million (2.25-gallon) cases during the period.
The U.S.-based activist shareholder, Orange Capital, which has taken a near 5 percent stake in C&C, has urged management to dispose of its American assets to concentrate on Ireland and UK.
Pabst currently distributes over 30 beers in North America, including its Pabst Blue Ribbon brand. It is the fourth-largest U.S. brewer (2.6 percent market share) by volume (6.2 million hl beer in 2014), according to Beer Marketer’s insights.
The brewer was bought in 2014 by Eugene Kashper, a U.S. citizen who was born in Russia and has a long history in the eastern European brewing business (as Chairman of the Oasis Group) together with the private equity firm TSG Consumer Partners.
The agreement between C&C and Pabst will take effect as of 1 March 2016. Under the terms of the partnership, Pabst will have the exclusive license to distribute, market and sell all of C&C’s cider brands in the U.S., including premium craft cider brands Woodchuck, Gumption, Wyder’s and Hornsby’s and all of C&C’s imported cider brands, including Magners and Blackthorn.
Moreover, Pabst will also have the option to acquire C&C’s U.S. brands and related assets.
According to the U.S. beverage publication Impact, the top five cider brands in 2014 based on depletions (cases sold by distributors to the trade) account for 81 percent market volume, with the majority of these brands only established since 2011. The top five are as follows:
1. Angry Orchard – 56 percent market share (MS) (owned by Boston Beer)
2. Woodchuck – 9 percent MS (Vermont Hard Cider Co. part of C&C Group)
3. Johnny Appleseed – 6 percent MS (AB-InBev)
4. Smith & Forge – 5 percent MS (MillerCoors)
5. Crispin – 5 percent MS (MillerCoors)
Impact ranks Magners as the 8th major brand.
The U.S. cider market registered sales of 3.1 million hl in 2014. It is projected to rise 39 percent this year, according to Impact.
