Suntory will exit the Magners deal from January 1 2014 – Bacardi Lion Australia will take over – and said it and C&C had decided “amicably to end the relationship due to the change in Suntory’s business direction and C&C’s focus on draught expansion”.
The Japan multinational’s move is intriguing given the clear Australian and international opportunity in hard cider, where in Q1 2014 ending July 3, C&C Group saw 77.7% volume growth in international markets.
However, in its 2013 annual results released on May 15, C&C says that Magners sales volume globally rose 3.9% in fiscal year 2013 ending February 28, "some way below the trend line of the previous few years", due to issues in the US and Australia.
Magners Aussie sales slump
"In Australia, the brand suffered owing to issues with its route to market in FY2013," and volume fell 24% during the year.
"Work continues on resolving the route to market issues and the performance of the brand has improved in recent weeks with a return to more stable volume year-on-year."
One financial analyst, who didn't wish to be named, told BeverageDaily.com: "It's clear for the last year 18 months that C&C has had problems in Australia.
"Their volume sales have fallen by around a third in the past year, and it's because of restructuring.
"I'm not really sure what the situation is with Suntory but there's been a lot of disruption in terms of sales and distribution of Magners there."
The analyst agreed with the suggestion that, given Suntory's new strategic direction, Magners "could have been demoted, in their scheme of things".
Cider sales sizzle down under…
In a July 2013 report, Rabobank analyst Francois Sonneville cited Australia – packed cider sales rose 28% to March 31 – and the US as emerging cider markets where the biggest opportunities lay worldwide.
Mature markets still offered good opportunities, Sonneville added, since even in the world’s leading cider market, the UK, per capita consumption is below 20% of beer consumption.
However, Suntory has chosen to focus on its spirits and liqueur portfolio in Australia, which includes brands such as Cointreau, Russian Standard, Tia Maria and Mount Gay Rum, as well as its own Japanese whiskies, Yamazaki, Auchentoshan and Bowmore.
Suntory hits the spirits, and liqueurs
Ian Atherton, MD of Suntory Australia, said: “Our renewed business focus will be on maintaining and growing our portfolio of premium spirits and liqueur brands.
Suntory launched Magners in Australia in 2004 and subsequently introduced Magners Pear Cider and Magners Apple & Pear Draught into 150+ national accounts.
Magners brand principal, Anthony Brady, said the brand had a renewed focus and believed “Bacardi Lion is the perfect partner to help drive our expansion”.
Announcing C&C’s Q1 results on July 3, CEO Stephen Glancey said: “We remain confident in the attractive prospects of international cider.
“While we have not meaningfully participated in the category growth in the US this quarter, our fundamental assumptions about the attractiveness of the cider category in the US and the broader opportunity for our portfolio in international markets remain unchanged,” he added.
Asked about C&C's volume and value share, and growth trajectory in Australia, a spokeswoman told BeverageDaily.com: "As we are in close period, we cannot say much. I can confirm the Suntory switch and that Magners has been sold in Australia for a number of years."