Irish drinks group C&C and its embattled Magners brand has been dealt a fresh blow on its own doorstep by Tesco, which has been offering the cider - sold under the brand name Bulmers in the Republic of Ireland - at a knockdown price. In a special promotion across its 95 stores, the chain has been selling Magners on a 'buy one, get one free' basis, two pint bottles for just €3 (£2). Ironically, while Magners was flying high in Britain, C&C had refused to supply Tesco at discounted rates. Now the company - and the brand - are struggling in the aftermath of a UK sales collapse of 30% in July, blamed on a combination of bad weather and stepped up competition from Scottish & Newcastle. The collapse led to two profit warnings within a month, wiped €740m off C&C's value on the Dublin stock exchange and prompted talks of redundancies at its production plant in Clonmel, County Tipperary. Supplies of Magners for Tesco's two-day promotion, which coincided with a big sporting weekend in the Republic, were acquired not from C&C but on the 'spot market', where surplus goods are offered to buyers at attractive prices. A Tesco spokesman declined to say if further promotions were planned, but it is understood that, as a result of the UK market slump, significant volumes of cheap supplies are available to the retail sector. The Tesco cut-price move is an embarrassing blow for C&C as it struggles to rebuild the brand, but the company was restrained in its response. The promotion was a matter for Tesco's retail strategy, said a spokesman, adding: "Dealings with Tesco involve the normal cut and thrust of negotiating with the retail sector." Meanwhile, reports in Dublin suggest that the company's test marketing of Magners in Munich and Barcelona, on which it has spent €12m, has failed to match expectations. C&C will officially inform the market in October of the progress of the campaign.

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