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Wednesday, 24 May, 2000, 15:47 GMT 16:47 UK
Cider maker woos China
The UK cider industry has a 10% share in the UK drinks industry
The UK cider industry is worth �1.4bn
By BBC Working Lunch's Ian Jolly

One of the most traditional of English industries is making bold expansion plans worldwide. Cider maker H P Bulmer has just launched a joint venture to make and sell the drink in China.

And the Hereford-based company is turning to the internet in an attempt to consolidate cider's share of the long drinks market - at 10%, it is the biggest cider sector in the world.


Chief Executive Mike Hughes aims for expansion
Chief Executive Mike Hughes aims for expansion
On Wednesday, Bulmers launched Pubserve.com, aimed at increasing its penetration of the independent pub sector.

While two-thirds of managed or tenanted pubs stock draught cider, only one in three independent houses offers the drink.

"It's about making it easier for our customers to get information and order electronically. It takes time out and it takes costs out," explained Bulmers chief executive Mike Hughes.

"There are about 70,000 independent outlets, and it costs a lot to send salesmen and deliveries to all of them."

Targeting the independents

Third party suppliers will also be able to offer their products and promotions, and advertising will provide extra revenue for Bulmers.


Strongbow is the leading cider brand
Strongbow is the leading cider brand
The company already has the splendidly-named Incider Trading, an online site enabling customers to download product information, check pricing, place orders and track their progress.

But the �500,000 investment in Pubserve.com shows that the cider industry is determined to shake off its traditional yokel image.

"Strategically it's entirely right for us because we have always gone through intermediaries and now we can zoom straight in to the outlet," Mike Hughes told BBC News Online.

Cider sales slump

Following a period of sharp growth in the early 1990s, cider sales suffered a slump, partly because of the advent of alcopops.


Cider making is still traditional
Cider making is still traditional
But the industry is buoyant again, and for the big players - Bulmers and rival Matthew Clark of Taunton - the rewards can be sizeable.

The industry is worth �1.4bn a year, and Bulmer's flagship brand, Strongbow, makes up about a quarter of all sales.

It is now on the verge of joining the top 10 of long alcoholic drinks in the UK - no mean achievement. But although the market is still growing, analysts believe it might be near its full potential in the UK. To achieve a 9% increase in Strongbow sales last year, Bulmers spent heavily on TV advertising and a sponsorship deal with Premiership football team Leeds United.

Last month the company paid �32m for the Beer Seller, a drinks distributor which it hopes will help it get its brands into independent pubs.

International expansion

But, recognising the limitations of the domestic market, Mike Hughes is turning his attention to international expansion.

The first bottles of sweet Woodpecker cider have just gone on sale in Beijing and Shanghai following the building of China's first cider-making plant. It is in the eastern Shandong province, which produces 40% of the world's apple crop.

Bulmers accepts that persuading the Chinese to try the new drink will be a challenge. Rival Matthew Clark already exports its Diamond Black brand, but other UK drinks companies have failed in attempts to break into the market there.

Perhaps more reliable are Bulmer's plans for other countries. It now has 40% of the US cider market following the acquisition of Green Mountain Cidery and has opened a new factory in South Africa, the world's second largest cider market. There are also operations in Australia, New Zealand and Belgium.

"Our growth rate has been staggering abroad," said Mr Hughes. "The American market is growing by about 40% a year."

But while Bulmer is enjoying success - half-yearly profits were up 14% - it knows the cider market is notoriously fragile.

It has hedged its bets with UK rights for San Miguel, Red Stripe and Amstel beers, and even distributes the Orangina soft drink.

But Mike Hughes - in charge since 1998 - knows the only way for this long-established family business to thrive is to make cider an international drink.

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See also:

06 Jul 98 | The Company File
Sour taste for cider firms
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