Big brewers suffer post-Christmas hangover

By Neil Merrett

- Last updated on GMT

Related tags: Management, Diageo

SABMiller, Diageo and Magners cider maker C&C group have all announced hits to their operations amidst fears of weakening consumer demand for beer and alcohol in the current global economic downturn.

Yesterday, Diageo, which is responsible for manufacturing Guinness and a number of branded beers, said it would be ‘re-evaluating’ a €650m investment plan unveiled in 2008 to test feasibility. The review will be used by the company to decide if the proposed shake up of its Irish operations remains ‘appropriate’ in current financial climate, Diageo said in a statement.

The potential amendments to the brewer’s operations come as a number of rivals like Anheuser-Busch InBev also eye possible closures of breweries in the UK.

Similar concerns also appear to be taking their toll on SABMiller and the C&C group, with both companies recording falling sales in some international markets.

SAB sales

SABMiller said that when excluding acquisitions made over the last year, on an organic basis, lager sales volumes had fallen during the third financial quarter by one per cent. Revenues still matched the volumes of the prior 12 month-period on a year-to-date basis though, the company said.

However, in both the group’s US and European operations, there were some difficulties with MillerCoors domestic sales to retailers deceasing by 2.3 per cent on a pro forma basis for the three-months ending 31 December.

Organic volumes in expected high growth markets like Russia also fell by 22 per cent through de-stocking of wholesaler inventories that began in the country in September, SABMiller said.

“Consumer demand has been affected by the current global economic slowdown, and has continued to weaken in many of the group's markets,”​ stated the company.


C&C, which is perhaps best known as the manufacturer of the Mangers cider brand, also said it had recorded difficulties during the closing months of 2008.

The brewer said that group sales fell by 13 per cent for the three-month period ending 30 November. C&C added that cider sales took the biggest hit over the period, with revenues from the segment declining by 19 per cent on a year-on-year basis, according to an interim management statement released by the group. Sprit and liqueur sales fell by one point, the group added.

Guinness refurbishment

Back in may 2008, Diageo said that it was to plough €650m into its network of Irish breweries, with the Dublin-based St. James's Gate site becoming the second biggest beer plant in the country. The plans were announced as part of an operational shake up that will result in the closure of its Kilkenny and Dundalk plants.

As part of the initial investment plan, the site was to be expanded into what the company called an ‘centre of excellence’ for production of the brand, while two other plants would have been shut to make way for an additional brewery outside Dublin to supply export demand.

About 250 jobs were expected to be lost across the company's operations as a result of the refocus, Diageo said at the time.

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