Bulmer beats cider tax

The country's largest cider manufacturer, HP Bulmer, whose brands include Strongbow and Woodpecker, is to cut the strength of its premium brands to avoid a 50 per cent tax surcharge on strong ciders. The new tax, announced at last year's Budget, is due to be imposed in October.

From the beginning of that month Bulmer is planning to sell a version of White Lightning with an alcoholic strength of 7.4 per cent by volume, just under the level at which the excess tax rate kicks in. Thanks to inconclusive market research, suggesting consumers are unsure whether they want their cider to be powerful or cheap, the company will continue selling its original 8.4 per cent brew at a higher price.

News of the dual branding accompanied profits for the year to April 10 per cent higher at pounds 27.5m before a pounds 2.1m exceptional charge. Earnings per share of 32.9p and a dividend of 13.2p rose by a similar margin.

John Rudgard, chief executive, said the cider market continued to grow strongly in the UK, with 15 per cent growth overall driven by a 20 per cent increase in the buoyant take-home sector. Bulmer claimed 28 per cent growth for its own off-licence sales and estimated that its share of the on-trade had risen to 53 per cent compared with the 43 per cent attributed to the newly combined GaymerTaunton operation owned by Matthew Clark.

The two companies now dominate the UK cider market, with Bulmer adding to its share after the year end with the acquisition of Inch's Cider Company in May.

Mr Rudgard said Bulmer would not be following Bass and Merrydown into the alcoholic lemonade market despite the impressive success of the drinks and the danger that they would take market share from cider.

Bulmer's shares closed 3p higher last night at 589p.