Irish Company Buys Woodchuck Cider

Vermont Hard Cider, a Middlebury, Vt.-based beverage company, was recently sold to the Irish beverage company C&C Group for $305 million dollars.

Vermont Hard Cider, which was started in a garage in Proctorsville, Vt. in 1990, is the producer of Woodchuck Cider, the most popular hard-cider brand in the United States.

While hard-cider is still an outlier in the alcoholic beverages market in the United States — hard cider sales currently account for less than 1 percent of gross national beer sales — cider is immensely popular in the United Kingdom, where the beverage accounts for 15 percent of beer sales.

Vermont Hard Cider joins a host of other high-profile alcoholic beverage companies to be purchased in the last year. The Anheuser-Busch InBev conglomerate recently bought out Mexican beer-company Grupo Modelo for $20.1 billion, and Heineken recently announced its plan to purchase Singapore-based Asia Pacific Breweries for $4.6 billion.

C&C is not the only company that has noticed the growing demand for hard cider products. Last August, Heineken purchased Strongbow Cider, the second-largest American hard-cider brand behind Woodchuck and the largest international, from Vermont Hard Cider for an unknown sum.

Within the last year, Anheuser-Busch InBev introduced its Michelob Ultra Light Cider, MillerCoors recently bought Crispin Cider Company and Boston Beer Company (the makers of Samuel Adams) recently launched a line of hard ciders called Angry Orchards.

Despite the arrival of these many newcomers, sales of Woodchuck Cider have steadily increased in the last few years.

According to Vermont Hard Cider, sales of Woodchuck are up 25 percent this year, and the company anticipates $15 million dollars in profits this year — up 50 percent from a hefty profit of $10 million in 2011. In 2011, Woodchuck Cider accounted for 2.2 of the five million cases of hard cider sold in the United States.

Nate Formalarie, communications manager at Vermont Hard Cider Company, said that the rapid growth of the Woodchuck Cider brand required greater investment.

“In C&C group we find a like-minded partner,” he said. “They are committed to using the finest ingredients, supporting local agriculture and working to reduce their environmental footprint. They will invest in the expansion and future of the Vermont Hard Cider Company, providing a solid base for the overall U.S. portfolio.”

C&C’s decision to purchase U.S. based Vermont Hard Cider reflects the company’s intention to develop the international cider market. Analysts at C&C hope to capitalize on a rapidly growing — albeit underdeveloped — hard cider industry in the United States.

“The U.S. cider category has recorded strong growth in the period from 2005 to 2011,” C&C explained in a press release on Oct. 23. “In the first six months of 2012, the category grew by 57 percent.”

Shifting consumer preferences are the primary driver of the increased demand for hard cider in the United States. Hard-cider — which has not enjoyed widespread consumption in the U.S. since before prohibition when cider was the most popular alcoholic beverage for colonial Americans — is growing more popular due in large part to consumers’ desire for ciders and craft beers that present more natural alternatives to highly processed mainstream American beers.

“Instead of drinking a commodity beer off the shelf that’s yellow and fizzy, there are craft beers that [consumers] are willing to try now,” said Steve Parkes, owner of Middlebury’s Drop-In Brewery, in an interview with the Campus in September. “People are fed up with being fed commodity products.”
Representatives of C&C assure consumers that few structural changes will be made to the operation of the company.

Although the company will be owned by C&C, it will continue to operate as an independent subsidiary, and Bret Williams — the visionary president and chief executive officer of Vermont Hard Cider who bought the company for just $2.3 million in 2003 — will continue to run the business.

All of the 125 employees of the company will stay remain employed, and the primary facility will remain in Middlebury. Furthermore, C&C has stated that it plans on continuing with plans to build a new 100,000 square ft. cidery adjacent to the existing 62,000 square ft. facility in Middlebury.

This new cidery — which will enable Vermont Hard Cider to remain competitive in the increasingly competitive global market for hard cider — is expected to bring at least 30 to 35 new jobs to the Middlebury community.

The new cidery will dramatically increase production levels and it is projected to cost between $20 and $30 million, and work on the facility is expected to begin next year.