Magners owner beefs up offering

16 April, 2010

The Irish owner of Magners will become a serious portfolio competitor to Heineken UK in the cider market after agreeing a deal to buy Gaymers from Constellation.

The £45 million deal will see Constellation concentrate its European business on wine and give Magners owner C&C Group a package of brands that includes Gaymer?, Blackthorn and Olde English.

It’s the second major acquisition of the year for C&C having bought the Tennent’s beer business in Scotland, and it further strengthens its hand in the growing, but increasingly-competitive, cider category.

The deal is expected to be completed by the middle of January and will give Magners a cider production facility at Shepton Mallet in Somerset and a distribution base in Bristol.

C&C said it had identified £3 million in cost savings but expected the integration to be “relatively straightforward”.

The move will increase Magners’ volume sales in the cider market threefold, at a stroke, and give C&C a strong portfolio of mainstream and premium brands to take into the negotiating chamber with on? and off-trade retailers.

C&C had struggled to compete with Magners as a solus brand against Heineken’s cider portfolio of Strongbow, Bulmers Original and Jacques, backed by Foster’s and Kronenbourg.

Some 80% of the Gaymer business is in the off-trade and it produces a range? of value brands and own-label for supermarkets, giving C&C a better balance between on? and off-trade business in the UK.

C&C has undergone a period of rapid re-invention since the arrival of former S&N boss John Dunsmore as chief executive in 2008.

Dunsmore said: “The transaction strengthens our position within the world’s largest cider market and broadens the scope of the group’s existing cider offering.”?Gaymers had been an uneasy fit in the Constellation empire since the US wine giant acquired it as part of the Matthew Clark package in 2005.

Troy Christensen, president of Constellation Wines Australia and Europe, said: “For the UK and in Europe the drive is to focus primarily on wine.

“For Gaymer, the opportunity now exists to develop as part of a business that is focused on the cider and beer sector.”?Gaymer managing director Peter Spencer added: “Once the deal is completed we can look to manage the issues of integration and future planning.

“In the meantime, my colleagues and I have a clear focus on our existing plans and business.”?The Gaymer?s acquisition will increase speculation that C&C could sell off under-performing spirits brands to ease its debt burden.

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