THE owner of Scotland’s best-selling lager brand has flagged unpredictable trading conditions amid currency fluctuations and the move to new distribution arrangements for its Magners cider brand as it reported a tumble in first-half profits and turnover.

But C&C Group declared its flagship Tennent’s Lager brand had outperformed the market over the period, building volume and revenue in the domestic market against a sector in general decline, and making progress in the international arena.

Dublin-based C&C, led by Scot Stephen Glancey, reported an operating profit of €50.5 million for the six months ended August 31, down 4.9 per cent on the first half of last year. Revenue fell 6.8 per cent to €273.1m, the company reported.

However, C&C flagged a strong performance by its Tennent’s business in Scotland, with sales rising five per cent to €148.2m.

C&C noted that its share of the independent free trade in Scotland “remains healthy”, while in the off-trade the brewer grew market share as volumes increased by five per cent.

Tennent’s is believed to be the only “standard lager” in growth in the UK.

The company said its success in Scotland reflects continued investment and marketing behind the Tennent’s brand, which includes the roll-out of a new font in the on-trade. Some 500 fonts have been installed so far in Scotland, and the programme will now be rolled out south of the Border.

Asked to sum up the mood among customers in the Scottish on-trade, who have come under pressure from sharp hikes in business rates and higher costs arising from the National Living Wage and apprenticeship levy, Mr Glancey said: “It’s been challenging for them [and] the interventions from government have not always been helpful.

“To be fair, Scotland was the first area of the UK to give some support – the government decided to provide a little bit of support on business rates. And tourism this year has been good in Scotland, but it is challenging for small operators.

“All we can do is help, that’s what we do by investing. Our loan book [to licensed trade operators] is up at £25m.”

The company underlined the continuing progress being made by Tennent’s in international markets, which is seeing some benefit from the weaker pound.

Andrea Pozzi, who runs C&C’s UK business, highlighted strong growth in Italy, its biggest export market, and Spain. Growth is also being seen in South Korea.

“The brand is really appealing to the international consumer - it’s the provenance and quality [of the product],” he said.

Elsewhere in Scotland, C&C pointed to a strong performance by its wholesale distribution arm north of the Border, which has appears to overcome the difficult integration of the Wallaces Express business it took full control of in 2014.

Customer numbers grew over the period, with the division boosted by some larger account wins. While volumes sold through the wholesale business, which sells a broad range of beers, wines and spirits, grew by one per cent, C&C said revenue grew by more, “reflecting an improved mix”.

“This includes a good performance from our owned brands wine business which was up strongly in the period,” the firm said.

More broadly, the company is continuing to feel the effects of sterling’s collapse since last year’s Brexit vote, which C&C cited as a factor in its first-half profits dip. It also highlighted the negative impact on revenue and profits from the change to its distribution arrangements for Magners and other brands in England, now being handled by brewing giant AB InBev.

C&C has since the first half closed invested £37 million to acquire a minority stake in Admiral Pub Company. The deal, which gave C&C a 47 stake in Admiral, has provided a route to market for the company’s brands to around 845 pubs south of the Border.

Mr Glancey said he does not envisage pursuing similar deals in Scotland, given the commanding positions its brands already enjoy in the market.

“I would be surprised if we did [pursue similar deals] – competing against your customers is never the best idea,” he said.

“We’ve got fantastic relationships in Scotland with a number of big customers. The model is not as relevant [in Scotland].

“When you have Tennent’s as strong as it is, you kind of don’t need to.

“In England and Wales it gives us market access for our cider and premium beer portfolio.”