Magners Original Irish Cider was single-handedly responsible for the revival of the cider market in 2006. While its strategy of suggesting the drink could be enjoyed over ice was simple, it created a new generation of cider drinkers.
The brand, which is distributed by C&C Group in the UK, saw its sales more than triple after its UK launch in March of that year, helped by a £20m launch campaign, including heavy point of sale work, and good weather in the early part of the summer.
Two years on and Magners has lost all its sparkle. Last week, C&C appointed former Scottish & Newcastle chief executive John Dunsmore to the same role. However, it is understood that he and two other investors plan to pour £1.2m into the struggling business.
The company reported a 13% decline in revenue over the six months to August 31, although it claims that the decline in cider sales was offset by cost cutting and an 11% rise in volume sales of Irish whiskey Tullamore Dew.
The group’s cider revenue fell 12.6% to €229.8m (£193.5m) over the same period, while Magners’ share of the off-trade market fell to 7.5% from over 8%.
While few industry observers would disagree that Magners’ “cider over ice” launch campaign was effective, some dismiss it as little more than a “gimmick”, and one without a robust marketing strategy to support it.
Meanwhile, its success in creating a new category allowed rival brands to muscle in on its territory. Scottish & Newcastle, which has since been taken over by Heineken, relaunched its dormant cider brand, Bulmers Original, at a lower price. Critics say that Magners – at more than £4 a bottle – is too expensive.
The cider market was worth £1.5bn in 2006, according to Mintel, and it was predicted to grow to £1.6bn by 2008. The success of the “over ice” category is thought to have been key to the category’s growth.
The absence of a long-term marketing strategy to build the Magners brand beyond its launch is now having an effect. Last month, C&C Group chief executive Maurice Pratt resigned, admitting that his repositioning strategy over the past two years had “not met expectations”.
He had hoped that Magners would overtake Bulmers as the market leader, as well as open up new markets in Spain, Germany and eventually the US. C&C says it is now having to “rethink” its marketing and commercial strategies.
Bulmers, on the other hand, has managed to build a following among “young and cool” consumers. Interbrand chief marketing officer Graham Hales says/ “Bulmers’ image is slightly younger and more accessible, while Magners is more of a heritage story. Magners needs to change so it’s more in tune with drinkers.”
The idea of cider over ice was bound to be copied by a competitor, admits Magners marketing manager Scott Fairbairn. He says the brand is still “driving the category” and dismisses suggestions that it has failed to innovate, pointing to its draught variant, which is not served over ice and aims to encourage cider drinking during the colder seasons.
He adds that it is “looking” at the potential for flavoured ciders, but adds that such limited editions tend not to make a significant difference to long-term sales. He adds: “We are talking to consumers, rather than throwing things at them.”
Magners needs to develop a new positioning and evolve its product line or it will face being pushed out of the very category that it created.