Freezing prices while making hot profits

ON WEDNESDAY, C&C-owned Bulmers Ltd announced that it was leaving its prices unchanged, in spite of recent increases in fuel and raw material costs.

Hard-pressed consumers might have cheered from the rooftops were it not for the fact that Bulmers profit margin is so tasty.

C&C’s announcement follows Diageo’s decision recently to increase the price of the pint by 5 cents.

The price freeze covers Bulmers cider, Becks Vier, Hoegaarden, Tennent’s, Caledonia Smooth and a range of speciality beers.

Bulmers is by far the key brand here in C&C’s stable, as it dominates the cider market.

“We know how difficult it is for our customers, so we want to do our bit by holding prices steady,” Stephen Kent, director of marketing said, by way of explanation for the price freeze.

“We’ll absorb input cost increases for the rest of the year and hope that the impending budget will not affect the duty on alcohol,” he added.

There was no mention of the fruity 46.1 per cent net margin C&C gets from Bulmers in Ireland. In hard numbers, Bulmers delivered a €42.2 million operating profit in Ireland last year on net revenues of €91.5 million.

That’s according to research published last week by Goodbody Stockbrokers.

This profit margin is almost twice what it earns from Magners cider in Britain, and from its Tennent’s beer brand.

Given the hefty margin it already drains from thirsty Irish cider drinkers, a price freeze seems the least C&C could do.