Scotland's biggest lager brand gets set for pubs reopening

With around 80 per cent of its revenue derived from the on-trade, C&C Group said yesterday that the ongoing closure of the hospitality sector because of coronavirus has “material implications for our business and earnings potential”.

The group recognised the impact of pub closures in the UK and Ireland yesterday as it booked an exceptional charge of €47.6 million directly related to coronavirus in accounts for the year ended February 29. A welcome surge in grocery store volumes failed to offset the loss of the pub business. The volume of Tennent’s sold in Scotland rose by 41 per cent in the off-trade in April and May but fell 42% in the on-trade.

Stewart Gilliland, interim executive chairman, said C&C has been supporting publicans through the lockdown by extending loan periods and helping them prepare to reopen by ensuring it has enough kegs to supply a “summer’s worth” of trading. It is also supplying hygiene products.

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Asked if pubs were getting enough support from the government in Scotland, Mr Gilliland said: “I think it is [the same] across the whole of the territories we operate in. It is difficult to know about the individual circumstances, and also we are getting very confusing messages on when pubs might be able to open up.

“Everything is very loose across all the markets. All we can do is ensure that when they do reopen, we are there to support them. We have kept in contact with a large number of customers, really to be in tune with what they are thinking and how they want to reopen and how we can help.”

Mr Gilliland said it would helpful for pubs to be given two weeks’ notice in terms of the official reopening date to prepare to welcome customers, noting that premises will have to be deep cleaned. Staff will have to be trained on social distancing measures.

Mr Gilliland said: “We would hope we could get some guidance, but we are there ready to open up and serve our customers as and when they can. And I think everybody really just wants to get back in the pub and have a pint, don’t they?"

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C&C responded to the risk posed by the pandemic by putting in place a range of measures to save cash, with around 70% of its staff placed on furlough. The company, which said underlying cash burn is $7m a month while pubs are closed, imposed a salary reduction of around 20% across its workforce. And the remuneration of the executive leadership team and board has been cut by 30% and 40% respectively, for three months initially.

The company, which has secured covenant waivers from its lenders until August 2021, said its liquidity was “more than sufficient” for “current and expected needs”.

Asked if the rise in off-trade business compensated for the drop in pub sales, Mr Gilliland said: “It does. We are delighted to have seen 41% growth over the last few weeks, but the brand is still 42% down in total because we have not got that whole trade.

“Yes, it does help, and I have to say the team at Wellpark have done an absolutely fantastic job in making sure the site is safe and secure for employees, and the employees have done a great job in really maximising capacity and keeping up with demand for customers, which has been absolutely unprecedented.”

Mr Gilliland said the firm was examining the details of how the government furlough scheme will taper off before deciding when to bring workers back. He said: “The trick is really to make sure that it matches the scale of activity as the on-trade opens up.”

Mr Gilliland was speaking after C&C reported an underlying operating profit of €116.4 million, up 10.4%. Net revenue climbed by 7.8% to €1.72bn .

C&C booked exceptional charges totalling €92.5m before tax, €47.6m because of coronavirus and €34.1m reflecting the write down of its North American assets, namely its Woodchuck cider brands. It will not declare a final dividend.