PracticeConsultingBulmers confident of market position

Bulmers confident of market position

The release on Monday of end of year results by drink maker Bulmers will indicate whether the company's strategy to massively increase turnover for its leading brand Strongbow Cider, has paid off.

Backed by an advertising campaign starring TV lad hero Johnny Vaughan and supermodel Jerry Hall, Bulmers aims to increase sales of Strongbow by 13% over three years.

These results should show whether the ‘loafers’ drink is making its way or whether group finance director Allan Flockhard and UK FD Lesley Jackson will have to rethink their strategy.

But if such growth sounds ambitious it comes during a year in which Bulmers has shown every sign of being superconfident. In September of last year the company was saying that UEFA Champions League related promotions would increase sale of Amstel lager by 10%.

Indeed brand manager Nathan King was saying sales could be even higher as the company unveiled a special edition football can for the tournament.

Other launches, such as the single shot Sidekick gave Bulmers cause for confidence.

But just before Christmas the bubbly atmosphere went flat as half-year results revealed that despite a 51.7% rise in sales to Pounds 257m, profits had been reduced by 2.1% to Pounds 16.5m.

However, the company continued with its bullish approach and announced in January that it had joined forces with Brake Bros, the food service group, to develop an online B2B outfit called Pubserve.com.

Around 2,000 pubs have signed for the service, which enables pubs to order everything from booze, to food, to cleaning products and also offers marketing and legal advice.

With so much innovation going on, and money being ploughed into a high profile advertising campaign investors will be fascinated to know just how things are.

Certainly the share price has remained stable at 425p, but a reasonable set of results could see that rise a little or quite significantly if the Strongbow sales figures look like they will be met.

Bulmers remains in a competitive sector which is only likely to intensify as suppliers seek new products and try to gain more market share.

Lesley Jackson told Accountancy Age Bulmer’s advantage was its relatively small size which allowed it to manoeuvre with some agility. Efforts by competitors to find growth through acquisition, namely Interbrew’s efforts to absorb Bass, ruled anti-competitive by the Competition Commission, signals that the race is on.

Links

Bulmers and Cobra: brewing up a profit

SNAPSHOT

Half year results to October 2000
Pre-tax profits: fell 2.1% to Pounds 16.5m
Earnings per share: down to 20.34p from 20.77p
Current market capitalisation: Pounds 227m
Executive directors: Michael Hughes, group chief executive, appointed 1998
Alan Flockhart, group finance director, appointed 1994
James Bulmer, appointed 1962
Tim Furse, managing director Bulmer UK, appointed 1995
John Harvey, international director, appointed 1996.
Auditor: Andersen
Company profile: Supplier and manufacturer of alcoholic drinks operating in the UK, US, China, Australia, New Zealand, South Africa and Belgium.
Product lines including Strongbow Cider, Woodpecker and Scrumpy Jack.
Has diversified into schnapps and vodka-based drinks.

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