Tennent's Lager gained market share in the Scottish on-trade despite a backdrop of “unfavourable summer weather” and the impact that 200,000 Scotland fans travelling to Germany for Euro 2024 had on domestic sales.

C&C Group reported that Tennent’s, Scottish biggest lager brand, increased its share of the on-trade by five percentage points over the 12 weeks to August 10.

The firm said the brand’s net revenues were broadly flat over the period, with pricing offsetting a volume decline of 7%.

Tennent’s, which invested heavily in Euro 2024 promotional activity, grew market share as C&C made an underlying profit before exceptional items of €40.3 million in the six months ended August 31, up €9.1m on last year, helped by a rise in operating margin. The result kept the firm on track to deliver a full-year operating profit of €80m.

However, shares in the firm fell sharply as C&C warned that trading conditions "remain tough", with sentiment regarding today's Budget causing "some consumer caution".

C&C said its performance in the first half underlined its recovery from a botched systems upgrade at its Matthew Clark and Bibendum wine wholesaling business last year, and accounting errors this summer, with the issues resulting in the firm parting company with two chief executives.

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Chairman Ralph Findlay, a former chief executive of brewing and pub firm Marston’s, stepped into the breach on an interim basis following the departure of Patrick McMahon in June.

Speaking to The Herald, Mr Findlay said C&C had put in “resilient” performance during challenging trading conditions this summer – citing the impact of poor weather and the ongoing cost of living crisis - and expressed satisfaction with efforts to put the operational issues behind it.

The Scot said: “Tennent’s had a pretty outstanding six-month period. Although we have very significant market share in Scotland – in the on-trade, we are 55% of the lager market – we increased share by five percentage points in the on-trade. Share went up [and it was] a really strong performance by the brand.”

Commenting on the effect that 200,000 Scotland fans travelling to Germany in July had on the lager market here, Mr Findlay added: “I looked at those numbers and thought, ‘where has that gone?’. The answer was to Germany. Fortunately, most of them came back, so did the business.”

C&C was rocked by a failed systems upgrade at its wine wholesaling division in 2023. The problematic project had a “material” effect on profits and led to the departure of chief executive David Forde last year.

It was then announced in June this year that Mr Forde’s successor, Mr McMahon, had left after the company was forced to make retrospective charges totalling €17m to its accounts for the previous financial year. Mr McMahon has been chief financial officer during the periods to which the adjustments related and acknowledged the “relevant shortcomings occurred at a time when he had overall responsibility for the group’s finance function”.

Mr Findlay said yesterday that after a “difficult period” last year, the distribution business had increased volumes by nearly 6% and customer numbers by nearly 10%. He also cited an improvement in margin, which boosted profitability “significantly”.

Asked if he was satisfied the firm had put the worst of issues behind it, Mr Findlay replied: “Yes I am. The key point of all of that is not just the numbers but what we have achieved in terms of customer service, and all the indications are that our current customer service levels are either at or above where we were prior to the implementation of that system. Good customer service is the cornerstone of winning that business back and I think the growth in customer numbers indicates we are well on track with that.”

Mr Findlay said C&C did lose customers “in the aftermath” of the system challenges in 2023 and declared the “improved service and focus on winning those back has been one of the key objectives for this year, which is behind the 10% growth in customer numbers that we had in this first six months”.

He added: “You can see that coming back.”

Mulling the outlook for the second half of the year, C&C said conditions "remain tough".

But Mr Findlay said: “The next key thing from a trading perspective is Christmas and New Year, and I think we are in a much better pace than we were a year ago. Last year [we were] still trying to resolve the various systems issues that had been incurred in 2023. This year [we are] much more focused on the trading period, so [we are] optimistic about that.”

Shares in C&C closed down 4.21%, or 6.8 cents, at €154.8.