C&C Group plc headquartered in Dublin, Ireland and with manufacturing plants in Clonmel, is a leading manufacturer, marketer and distributor of cider, such as the leading Irish cider brand Bulmers and the premium international cider brand Magners. The company also distributes niche spirits and liqueurs brands across a number of international markets, such as Tullamore Dew, globally the #2 Irish whiskey brand, and Frangelico. The brands are distributed by two companies: Hollywood &Donnelly and Quinns Reihill McKeown.
Operating Profit by Division 2007/8 Operating Profit by Region 2007/8 [pic] [pic] Geographic Operating Profit by Region 2008/9 [pic]
Over the last year the rapid economic deterioration and the resulting impact on consumer confidence have been very challenging for the group. In addition, the poor summer weather of 2008 militated against recruiting cider drinkers, and a substantial strengthening of the Euro against Sterling reduced the group’s cost competitiveness in its UK market. Business in the key markets of the UK and Ireland has therefore been difficult with each experiencing downward pressure on pricing and volumes, as well as the impact of the accelerated trend from the On-trade market to the Off-trade market. For C&C these trends were exacerbated by a loss of share in both Ireland and the UK. The company has announced the resignation of the CEO Philip Pratt per October 9th 2008 and has installed a sub committee of the Board, lead by Philip Lynch, to conduct an in depth review of its marketing and commercial strategies.
I Macro Environment- PEST Analysis
I. A Political and governmental policies and regulations
The Republic of Ireland, where C & C is based, has experienced instability and weakness following the financial crisis. Ireland was the first to act unilaterally by guaranteeing deposits and debts of its six largest financial institutions on September 30th 2008 when problems started occurring. This was an act which was largely criticized by neighbouring countries.
In 2000 the Lisbon Agenda was introduced with focus on the following priorities to increase work opportunities and boost growth throughout the EU: ▪ economic
The plan would be to restructure and renew the European economy over a period of ten years until 2010. The plan was renewed in 2005. The EU GDP accounts 15% to trade services and goods, meaning it is very outward-oriented and interdependent. There is now more trade and investment which has led to: ▪ Productivity gains through greater competitiveness
▪ Innovations through more competition
▪ Better specialisation through comparative advantage
Ireland, through the New Reform Programme (NRP) and the Lisbon Agenda has seen greater economic growth and employment performance.
Through different external factors, the government has influenced the alcoholic beverages market in Ireland. In Ireland taxes on alcohol are high which comes from a plan created by the government to prevent alcohol related incidents and mortalities. The government has furthermore introduced the following fiscal measures:
▪ The current VAT rate is at 21%, which makes it one of the higher rates in the EU. ▪ The excise duty on cider was increased in 2002 to 0.185 per litre, bringing it in line with beer ( Higher revenues followed ( Governmental restrictions on alcohol promotion (Less underage drinking and overall problems with alcohol ▪ The increase of taxation on alcohol and the rising price of raw material costs resulted in a slowdown in sales from 2007 through 2009, loss of share and sharply decreased operating profits.
These facts have led to the shift towards premiumisation, or sales of premium products which leads to a competitive market. Furthermore the smoking ban which was introduced in July...