This leap is a result of crop failures in the former east Germany and Poland, and a surge in demand for concentrate in America.Bulmer, however, grows 65 per cent of its apple requirements and has been cultivating more orchards to meet future demand. This autumn’s apple harvest has been fermented and, unless farmers dilute the strength, prices will have to be raised sharply – a move that could meet resistance from the farmers’ prime customers, who are typically drawn from low-income groups.Cider producers have also been hit hard by a 50 per cent jump in prices for apple juice concentrate to pounds 1,200 a ton. Investors were encouraged by the result, and the accompanying 7 per cent increase to 4.55p in the interim dividend for the six months to 27 October.The profits growth lagged behind the sales advance for several reasons, chiefly sharp increases in raw material costs, which the company will partly offset by raising off-licence prices by 3.5 per cent in January, and a “sharply higher” but unspecified hike in on-licence prices.West Country farmers, typically producing 50,000 gallons a year of mainly high strength cider, will suffer more than most from the tax increase. However, this growth in the market, which has been boosted by the hot summer, may further attract the attention of the Chancellor, Kenneth Clarke.

In the Budget he raised the excise duty on strong ciders over 7.5 per cent alcoholic volume by 50 per cent.
The extra tax has added 8p to the price of a pint of cider, and 28p to the popular 2-litre bottles sold by the big supermarket and off-licence chains.”This is nothing but a tax on success,” said Mr Rudgard, who added that he was disappointed by the lobbying by the big brewers to raise taxes on cider – a move he described as “David versus Goliath”.Bulmer, maker of the best- selling Strongbow and Woodpecker brands, sold almost 20 per cent more cider in the six months to 27 October, which boosted profits before tax and exceptional reorganisation costs by 12 per cent to pounds 16m. Earnings per share have risen every year since 1984, notching up a compound growth rate of 34 per cent, compared with the average of UK quoted companies of just 7.5 per cent. Dividends have risen 29 per cent a year on average over the past 12 years.. Cider is being drunk in far greater quantities than even the most optimistic industry analysts had forecast. John Rudgard, chief executive of the market-leading HP Bulmer group, said yesterday that more than 110 million gallons were being downed each year, and predicted a market size of 150 million gallons by the turn of the millennium. Despite turning in an 18 per cent rise in profits for the year to April with a similar rise in the dividend payout to shareholders, the shares have remained under the cosh, rated less highly even than its peers in the out-of-favour diversified industrials sector.Over the long run Tomkins’ performance has been even more impressive.

Based on the assumption that Tomkins will pay close to the speculated price of $1bn and assume $240m of Gates’s debt, it will have to squeeze a 9.5 per cent margin out of sales of $1.6bn to remain earnings-neutral. It looks a very positive deal for Tomkins on the information so far available,” he said. Zafar Khan at Societe Generale Strauss Turnbull agreed: “It’s a sensible deal and one that the market will warm to.”Full details will not be available until contracts are finalised later this month, but analysts thought the deal would not dilute earnings in its first year in Tomkins. Tomkins beat off offers from two other bidders to secure the deal which is expected to be completed in the first quarter of next year.Although details are still sketchy, the market welcomed the fact that the deal will be funded by the issue of convertible shares to Gates rather than another rights issue.

The pounds 900m RHM acquisition was paid for with a one-for-two rights issue, hard on the heels of a pounds 325m cash call the previous year to fund the purchase of Philips Industries of the US.Geoff Allum of Henderson Crosthwaite said the deal was just the sort of acquisition Tomkins should be making “It’s darned good news. That move was damned for taking the group into the volatile world of bread price wars and for flooding the market with shares.
Gates Rubber, which makes power transmission belts and hoses for the automotive industry, is a family-owned Denver business with turnover of about $1.5bn expected this year. The City yesterday welcomed news from the buns-to-guns conglomerate Tomkins that it has found a sensible use for its fast-growing cash pile. The proposed $1bn (pounds 685m) acquisition of Gates Rubber made analysts doubly happy because it appeared to be taking the group back to its engineering roots The shares rose 7p to 269p. The change in sentiment towards Tomkins follows three years during which the shares have stagnated as investors failed to appreciate the commercial logic of the group’s last big acquisition of Ranks Hovis McDougall.