C&C Group PLC’s (LON:CCR) expanded manufacturing and distribution partnership with AB InBev is a big vote of confidence in the Magners cider maker, Investec asserts.
C&C has concluded a new distribution agreement with drinks leviathan AB InBev where the latter will now be responsible for the sale and trade marketing of C&C's cider portfolio in England and Wales, including on and off-trade national accounts.
“We believe that this agreement will greatly increase the penetration potential of C&C's portfolio of ciders (Magners, Blackthorn and Chaplin & Corks) as they will be bundled with AB InBev's range of lagers (Becks, Stella Artois, Budweiser and Corona), increasing brand negotiating power with pub chains and supermarket outlets,” Investec said.
The broker is not making any changes to its forecasts for the first year of the new deal, it believes it will enhance earnings in the medium term and beyond.
“We see this set of deals as affirmation from a global player that not only has C&C the distribution capabilities to best serve its needs in Ireland and Scotland, but also that it has a cider brand with potential in England & Wales, which we believe augurs well for mid to longer-term growth,” said Investec’s Ian Hunter.
Shares in C&C were up 1.5% in late morning trading.