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C&C Group Acquires Number Two US Cider Brand

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C&C Group Acquires Number Two US Cider Brand

C&C Group Acquires Number Two US Cider Brand
November 09
16:32 2011

UK and Irish beverages producer C&C Group has acquired Hornsby’s, the number two domestic US cider brand, from E & J Gallo Winery, for a cash consideration of up to €20 million ($27.5 million). The deal makes C&C the second ranked cider company in the US with an estimated 20% share of a rapidly growing category. The US long alcohol drinks (LAD) market is one of the largest in the world with significant growth potential for cider – cider’s current share of LAD is estimated to be 0.2%.

 

Hornsby’s complements C&C’s Magners Irish cider brand in the US market. Magners is primarily an on-trade and East Coast brand, whereas Hornsby’s is primarily an off-trade and West Coast brand. C&C will also benefit from a broader portfolio through the combination of a US domestic cider brand with strong brand equity and a premium imported craft Irish cider brand. The deal also presents a significant opportunity for C&C to invest in and grow Hornsby’s volumes in the US and the potential to develop export led growth of the brand.

 

In the year ended 31st December 2010, Hornsby’s volumes were 61,000 hectolitres and net revenue was $11.7 million. The business is currently delivering low single-digit revenue and volume growth. Based on year to date performance, the business is expected to generate a contribution after marketing of Eur3.6 million in the 12 months to December 2011 before estimated overheads of approximately Eur1.4 million.

 

Hornsby’s is produced and packaged at Gallo’s winery in Modesto, California. The business does not have its own dedicated sales and marketing resource and as a result, Hornsby’s is managed within the context of the entire Gallo portfolio of brands. Gallo is the largest winery in the world.

 

According to Stephen Glancey, C&C’s chief executive designate, the acquisition of Hornsby’s “represents a significant step towards the development of the group’s international, cider-led strategy.” He adds: “The Transaction more than doubles our volume in a growing market; broadens the scope of our cider portfolio; and, presents significant opportunity to develop the Hornsby’s brand throughout North America.”

 

C&C estimates that annual US sales of cider are currently 400,000 to 500,000 hectolitres. US cider category volumes are growing at approximately 20% per annum.

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