The perils of changing tastes among drinkers were laid bare yesterday when C&C, the Irish cider maker, reported a 41.4 per cent fall in profits for its financial year.

Sales of its premium Magners brand rose by 350 per cent in 2005 and a further 225 per cent during 2006 as long, hot summers beckoned drinkers into pub gardens and a marketing campaign pitched it poured over ice as the perfect summer drink.

C&C began a €200 million (£160 million) expansion of its cider production facilities in Clonmel, Co Tipperary, as part of the group's largest capital investment programme, with plans to hire 150 extra workers. The budget for this expansion has since been reduced to €130 million.

Last year profits fell from €176.9 million to €103.9 million and have been hit by low consumer confidence and poor spring weather this year. Cider sales were also affected by the introduction of Scottish & Newcastle's Bulmers Original in the UK last summer. S&N owns the rights to the Bulmers brand in Britain, while Magners markets it in Ireland.

Revenues fell by 8.1 per cent to €679 million as Magners's volumes fell 15 per cent, while volumes for Bulmers, the Irish cider brand, dropped 4 per cent.

Maurice Pratt, the chief executive, told The Times that an advertising campaign similar to the campaign that launched the brand in the UK had not been successful. It is looking for a partner to market cider in both countries.

He said: “The overall cider market is set to grow modestly as beer declines. We are continuing to invest heavily in brand awareness and we are also launching the draft version of Magners and Magners Light.”

C&C intends to cut costs by €10 million a year. The company, which has sold its soft drinks business to Britvic for €246.6 million, plans to expand into Spain and Germany and is still testing the market in Barcelona and Munich, with mixed results.

Analysts greeted the results with cautious optimism. Analysts at JPMorgan said that the margin decline in cider was lower than expected and this was “positive”.

Barry Gallagher, an analyst for the Davy brokerage, said that he expected 3 per cent volume growth for cider this year, but weather and heightened competition remained key variables.

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