Welcome to C&C Group's Capital Markets Day. We are delighted to welcome you to Wellpark Brewery here in Glasgow. As you can see, the home of Tennent's and the base for our session today. For those of you who are present in the room, hopefully, a good number of you have had a look around the site already and seen the brewery. Thank you for joining us today for our Capital Markets Day. We specifically wanted to have this session in one of our operating sites, not in our corporate offices in London. This is not to build on the current approach of the number 10 in the North, which seems to be vogue at the minute. It is rather a determined desire to show you the business as it shows up and in one of its important markets.
It is also to give you the opportunity to see firsthand the scale of the Wellpark site. Thank you everyone here today for attending. We will try and make your journey as worthwhile as possible. For those who are attending or viewing virtually, we will try and make your online experience as of added value as possible. If I can maybe just kick off the day with a few introductions, I will just ask my executive committee colleagues maybe to stand up when I call them out. I am pleased to introduce the C&C executive team to you in person today. Most of you will already know Adam at the back of the room there. Let me introduce you to the wider team, starting with Andrea Pozzi. Where is Andrea? Andrea is at the back. Andrea is our Chief Operations Officer.
He has a wealth of experience across numerous brewing sector businesses and also has the dubious luxury of holding much of the C&C corporate memory as the longest serving member of the team. Next up, Cara. Cara Chambers, who is our Chief Marketing Officer. Cara has been with us for just over two years and has had a very long, distinguished career in beverages, including many years working on a number of competing cider brands.
Next up is Carole Kingsbury, our Chief Technology Officer, who also joined just over two years ago, and brings valuable experience to the group within the technology sphere with a very strong retail background. Karen Bates, Karen is at the front, our Chief People Officer who joined in the middle of last year, has extensive people and culture experience across a wide range of consumer retail businesses. Last but not least, Paul Graham. Paul is there.
Paul joined us a few weeks before Adam in March this year and brings an exceptional track record in consumer goods and specifically in drinks, having laterally been U.K. MD of Britvic for more than a decade. I think we have now swiftly moved to assemble a very strong executive team, and I am personally really delighted to have such a capable group of people in place to work with me now at C&C. You will hear from each one of the team today across the sessions we are running. Also for those of you who are here in person, you will get the opportunity to chat to the team throughout the afternoon, and particularly over a drink later in the day. What are we planning to cover today?
Our agenda today is designed to both expose you to the wider leadership team at C&C Group and to provide you with a better understanding of the journey we are on. We will kick off the day with an update on the progress we are making against our refreshed strategy from myself. I will also take the opportunity to show you a couple of videos to show you a little bit more visual experience of the two operating businesses, C&C Brands and Matthew Clark Bibendum.
Cara will then give you an update on the consumer market environment we are operating in. We will then break into smaller groups where you will hear from Paul, Andrea, Cara, Karen, Carole, and Adam, who will update on how we will grow volume in C&C Brands and how we will drive margin improvement in MCB. And also how these actions will be enabled with people, culture, data, and technology support.
This will be followed by a short comfort break, and then we will hear from Adam who will describe the financial framework we are planning to work to as we look forward. We will wrap up, and then we will happily take questions and answers before we head to the bar to see how some of this translates into actual product. Okay, good. Now, I previously described C&C Group as having been built through a series of business acquisitions that were never really properly integrated. This led to an overly complicated business and operating structure, and in recent years, the business has tried at some levels at least, but with only limited success to set itself up as an integrated group. However, the scale benefits of that integration have never been achieved and certainly not shown through in our financial performance.
We reviewed last year, and that suggested that the journey to properly create a single operating model in C&C Group does not have a big enough prize to warrant the effort, expense, or risks involved in delivering this objective. As I outlined earlier in the year, we are moving away from the one C&C Group model. Just before I turn to the revised operating model, one of the key questions that I have asked, and we have discussed as a team and throughout our colleagues in the business, is do we really understand what we are about and why we exist as a business?
And to be honest, kind of got mixed responses. However, today I am pleased to say that we have reached a much more complete agreement across the senior team and the wider business about who we are, what we are about, and how we should show up.
It is captured simply on the slide you can see in front of you. I will refrain from reading every word, but just to highlight the key sentiment. We are here to bring people together through remarkable brands. We are building value-added partnerships, and operationally, we simply aim to keep our promises and do the basics well. As far as who we are is concerned, there is a number of areas we are trying to improve or develop. We are trying hard to become a much simpler business. We are increasingly thinking beyond beer and cider and more into a multi-beverage outlook in our branded business. And we can see the benefits of further developing our capability in channels outside that of our core hospitality expertise, which lies at the heart of our business.
We approach this as a challenger business, seeking the positives in the geographic focus and deep consumer understanding that we have, but at the same time as we leverage our scale and reach right across our core markets of G.B. and Ireland. As a challenger business, we seek to act with agility and pace, but without losing our focus on driving operational execution. All of this is done while we continue to put the delivery of our sustainability commitments at the heart of our operating plans. Our business approach is underpinned by a culture based on pragmatism and simplicity. We will focus on building our capabilities as we make, move, and sell across our business, following a simple path to business growth and improvement, selling more drinks to more people through more customers in more places more often.
Organizationally, the first big steps have been taken, the top team is in place, and with the new business focus on the different business models now set up, we are well-placed to go into the new financial year with a clear focus on revenue and cost from a divisional perspective. We do expect to make more tweaks to our organization to align with our growth profile over time. Also, as part of our efficiency programs, we will seek to further refine how we show up in each of these areas, and we also seek to drive out waste and inefficiency in every part of our business.
Now, I hope today we can lay out some of the building blocks to our success at the same time as we showcase our asset base to you, both physical assets and branded assets, such that the potential we see, whether that is in scale, capacity, flexibility, agility, or indeed in development potential, you can also see too. Now, as I mentioned a moment or two, we have begun to view everything we do through our updated business approach.
Moving forward, two discrete business models coexisting within one group structure. Adam will update on our financial expectations later today, but I should stress we are on a recovery journey, and it will take time to fulfill our potential. We need to work on business resilience and momentum in equal measure. The benefits associated with our actions will come as we position C&C Group for the medium term with a different shape.
Based on MCB delivering improvements in operating margin over the next three years and C&C Brands resetting its growth ambitions through its core brands, driving a new agenda of innovation and brand development. We also need to develop our branded portfolio into wider markets, as I have already discussed, and increase our focus on a broader range of channels. We expect to see continued opportunities to selectively add to the business with value-adding acquisition, long-term partnership, and also the odd tactical opportunity, which as a challenger business we should be open to take, particularly when it has accretive to value. As hopefully the slide shows, C&C Group now operate in a group with two focused businesses. Both have clear priorities and approaches to the creation of value for the group.
C&C Brands is a vertically integrated asset-backed model, including the legacy businesses of Tennent Caledonian Breweries, Tennent's NI, Bulmers Ireland, C&C International, our export business, and Bibendum Off-Trade, our wine agency business. The business operates across the U.K. and Ireland, as well as in 50 countries around the globe. It is a true multi-channel business with leading positions in hospitality and a growing retail footprint. The business is a brand-led model, as I said, which utilizes its considerable asset base to create value, whether that is through its own brands or also in partnerships, in brewing, packaging, route to market services alongside brand development and also other key route to market support for partners. Our powerful stable of brands is managed from here, and our focus is on volume growth, and you will hear more from the team a little shortly about how we are looking at that.
MCB is the wholesale business model that supports the hospitality channel, principally and primarily in England and Wales. MCB is a scale operator, which offers unrivaled service, choice, and value to its customers. At the same time as providing route to market access to the broadest hospitality channels in the market. We significantly reduce complexity and bring scale and expertise to brand owners big and small. This complementary model supports both customers and brands and is a necessary service, we believe, which in recent years has been undervalued by all. Our objective is to reinvigorate the MCB business with a clear focus on margin improvement, particularly in the short term. However, we will do that without prejudicing our core customer objectives of service, choice, and value. Again, in the breakouts, the team will expand on our actions in this area.
In support of these two fundamental business objectives, we have our enabling actions across operational excellence, people and culture, and tech and data, which you will also hear about in the breakout sessions. Today's focus is hopefully clear. Before I move on, I would like to run a couple of short videos just to showcase the two businesses in real life. Firstly, the C&C Brands.
C&C Brands is our volume growth engine, including the business operations of Tennent Caledonian Breweries, Tennent's NI, Bulmers Ireland, Bibendum Off-Trade, and C&C International. This is a brand-driven business where we make, move, and sell an outstanding portfolio of drinks, headlined by our iconic market-leading brands in Scotland and Ireland. Our core brands are born from communities in which they thrive. With locally grown and sourced ingredients and decades-old supplier relationships, consumers know that their favorite drink has not traveled far from our brewery to their glass, and we invest in the sustainability of our operations to do what is right for people and our planet. With hundreds of years of brewing experience, our Wellpark and Clonmel manufacturing sites create brilliant drinks, some that have stood the test of time and others that are new, different, and exciting, all produced with skill, care, and craft.
Our partners trust us too, which is why we have a growing and impressive list of partners in contract brewing, packing, and distribution, including some of the country's biggest brands, as well as exciting new entrants to the market who are building their businesses in partnership with us. Both sites have efficiency, flexibility, and capability baked in, alongside space to develop with operational capacity available from existing infrastructure. Since 1885, Tennent's Lager has been Scotland's favorite beer. Today, Tennent's remains Scotland's undisputed number one. Recent innovations, including Bavarian Pilsner and Tennent's Tops, have brought new consumers into the brand, and it remains at the heart of Scotland's cultural moments, from the highs of the FIFA World Cup to the chorus of concerts across the country. In Ireland, Bulmers have recently celebrated its 90th birthday with a 60% share of cider.
Bringing innovation to the category with light, zero, and flavored serves, Bulmers continues to capture the imagination of consumers. Completing our core brand portfolio is Magners, a mainstay of the cider category. It remains the best-selling packaged apple cider in U.K. pubs and is exported to more than 50 countries around the world. We have recently invested in the development of refreshed innovation capabilities and a new agile brand development approach to support our mission to accelerate the development of our brands throughout Great Britain and Ireland. Our premium range offers the opportunity to grow above market levels, giving consumers high-quality, differentiated brands. The portfolio is underpinned by our heritage brands, local heroes that offer less obvious untapped growth potential by focusing on certain channels, customer groups, and geographies. The vertically integrated brand-led wholesale model differentiates C&C Brands, giving customers the products, expertise, and insight needed to grow.
With a reliable full-service distribution network supplying a carefully curated, extensive range of drinks. We are a business with a long history across the total hospitality universe, and as we look forward, we intend to stretch our capability more widely, including driving further into retail channels. C&C Brands shines is bringing people together.
Here's what our consumers and customers have to say.
When I think of Bulmers, I think of the unofficial soundtrack of summer, cracking open that can in your friend's house or in a field. Yeah, it is incomparable.
When I think of Bulmers, I think of being truly Irish. It was always one that was in my house throughout growing up. It was always around Christmas time, around summertime, it would always be in the house. So I really think of that kind of heritage.
My ideal situation in drinking a pint of Tennent's is everything, to be honest. It does not matter what is happening, where I am. If there is a bar and there is Tennent's there, that is what I am getting.
Tennent's adds value for me within the relationship part. They are not just a distributor for us. They help us plan out strategy. They continuously bring new, forward parts of the market to us before we even have eyes on them. So they are consistently bringing us innovation, which for us in our trade, is key. With more and more bars coming to light, innovation is probably the most important part of our remit as bars and restaurants and hotels.
From the strength of our brands to the breadth of our capabilities, C&C Brands brings everything together to create value for our customers, connect with consumers, and drive sustainable growth for the future.
Hopefully, a picture and a consumer can tell a much more engaging and appropriate story about particularly our branded business than I can. But I hope you enjoyed that little VT. We are now going to run an equivalent one for the Matthew Clark Bibendum business.
As the leading wholesale business in England and Wales, Matthew Clark Bibendum plays a crucial role in the hospitality ecosystem as the true end-to-end total drinks partner with national scale, full drinks portfolio, premium wine expertise, category specialists, commercial support, and a single delivery platform. Delivering millions of drinks annually to thousands of venues, MCB's strength extends across national accounts, independent customers, and wholesale. The integration of Matthew Clark and Bibendum in May 2026 presents an opportunity to take both businesses beyond their established areas of strength, creating one partner for every pour. With a national network of depots, MCB manages the largest in-house supply chain in the on-trade. With everything customers need in a single order delivered on a single truck, we make things easy. MCB is the U.K.'s leading wine business, integrated within the country's most comprehensive drinks platform.
That means market-leading premium wine expertise, an impressive portfolio of world-renowned producers, and the commercial experience to help customers unlock premiumization opportunities while providing outstanding value across the portfolio. No two hospitality businesses are the same. That's why we don't believe in a one-size-fits-all approach. We combine category-leading expertise across wine, beer, cider, spirits, soft drinks, and sake to create drink solutions tailored to every customer, every venue, and every occasion. With national scale and hundreds of thousands of orders each year, MCB has unmatched visibility across hospitality, enabling insight at scale. Our specialists combine commercial expertise with operational excellence to help customers turn data into insight and insight into action. From drinks list development and pricing strategy to training, marketing activation, and nationwide delivery, we support customers to implement actions that improve performance.
Invested in success and strong partnerships, the MCB team is renowned for building relationships with customers and with suppliers. We do it best. By bringing together every drinks category through a single partner, we reduce complexity, improve efficiency, and allow our customers to focus on creating exceptional hospitality experiences. MCB is simple to work with, reliable, and trusted to deliver.
Beyond supplying products, MCB adds value through their insight and their advice. One great example for Admiral Taverns is the wine project that we've been running with MCB. Over the last six months since we launched the project, our wine sales have grown by 30%. I think what sets MCB apart from other partners is their scale, the reliability of their service, and the insight they bring in terms of their advice on categories. I think the primary reason why we continue to work with MCB is because they have a desire to continually improve the service that we can offer together to our licensees.
Our customers value our partnership approach and look to us to support their growth. For brand owners, we provide unique access and expertise in the U.K. hospitality channel, covering every part of the market, from pubs and bars to hotels, restaurants, and more. Partners choose to work with MCB to grow their businesses because they know customers look to us for insight, expertise, and execution that drives value in-venue.
Hi, I'm Jordan, the Sales Director here at Balfour Winery. I head up all trade sales, both in the U.K. and internationally. We work with Matthew Clark Bibendum for a number of reasons, but the most prominent to me is their cross-channel access, whether that's their dedicated off-trade team who give you technical support and all sorts, their national on-trade sales team, and then right through to their regional sales team and depots throughout the U.K. What this does is it gives us one key partner who we can have a relationship with that will give us access to all these channels in the U.K. We have quite a broad range of wine, so that's particularly important to us. And one aspect that's really fun for me is building relationships across the entire Matthew Clark Bibendum business, whether that's buying, marketing, sales.
One thing that's really benefited us and helped us grow significantly is being put in front of every single key tender opportunity in the country.
For MCB, sustainability is about reducing the carbon impact of distribution while using our scale and influence to drive more sustainable choices across suppliers, products, and customers. From exceptional products and specialist expertise, to insight, service, and nationwide delivery, Matthew Clark Bibendum brings everything together to help customers succeed and suppliers grow. One partner every pour.
I hope those two little videos just give you just a little bit more practical sense about how the businesses operate and allow you to hear from consumers and customers. Having done that, if we can now just focus a little bit on what we need to do. The two words there, resilience and momentum, are critical focus points for us, and they're the two key traits that we believe we need to drive into the C&C Group to meet its potential. We've already said, or I've already said, we're on a recovery journey here at C&C. Our immediate job is to increase the levels of business resilience. However, we also need to begin to build momentum into the business. Increasing our resilience will afford us the stability necessary to focus on building that momentum, and it's crucial to all consumer goods businesses.
If you look back at some of the missteps from the past, and I reflect on that from time to time, there are many factors, and frankly, there's probably very little benefit of trying to unpack the past. What is clear to me, though, is that it was our lack of resilience that was at the heart of many of those issues. While we can't guarantee that external factors will not play against us in the future, we can increase our ability to avoid significant risk. Given sometimes bad stuff does happen, we need to be better set up to withstand whatever these external issues might be. Much of what you're going to hear about today is fundamentally aimed at improving and increasing our resilience across the group. Momentum, however, is far more difficult to drive into an organization.
Momentum is absolutely crucial for a consumer goods business. It provides confidence to employees and customers alike. It fuels the virtuous funnel of growth that is required to be successful. That funnel is when you increase sales, it tends to lead to increased levels of product distribution and increased space, which in turn leads to increased consumer awareness, which then drives participation, which interestingly gets you more space and more feature. The virtuous circle goes on. I very much hope that today you will see where we are in our recovery journey and make your judgment about that. You will also see that the momentum that is required is being built, and it is being built on an improved level of resilience. Since the last update in May, we have not been idle. In fact, we have been pretty busy across the group.
The long overdue integration of Matthew Clark and Bibendum is now up and running. The teams and the organization is redefined, and importantly, the transition phase of bedding this significant change in is now complete. Many of the steps in this integration have been done, which include the updated product range, which is a very important step, especially the creation of a single wine list capable of providing the choice and value our customers need and expect, at the same time as we provide our brand partners the appropriate platform to grow and develop within our core markets. In recent months, we have continued to work on what I would describe as the carve in of Matthew Clark and Bibendum, giving us the visibility of performance at a granular level on a properly costed basis for the MCB business.
We can start our margin recovery journey from a much more clearer understanding of the financials in the business than we have ever had. This will allow us to make better decisions, whether they may be big or small, difficult or easy, they will be much, much better informed going forward. We expect for the full year that we will report on the basis of the new operational businesses as our segmental reporting. You will hear later from Cara about Innis & Gunn, but I was delighted to get the opportunity to bring the Innis & Gunn brand fully into our portfolio, which gives us a significant opportunity for growth across a number of markets and geographies and product groups with a premium authentic brand, which we already understood well and we consider we acquired at very reasonable value.
In the last couple of weeks, we announced our agreement with Asahi to acquire their wholesale business in the U.K., which is predominantly the Nectar wholesale business. This plays to our strategy of building our business with high-quality customers who will benefit from our service, choice, and value. I did speak before about our expectations surrounding industry consolidation. Indeed, these two examples are evidence of this thesis playing out. Our strategy has been designed to take account of all possibilities and to look for benefits for us where possible. In the example of Innis & Gunn, we have been able to strengthen our growth aspirations in our branded portfolio, and with Asahi, it brings a sizable number of new high-quality customers whilst increasing utilization and efficiency across the MCB operating model. Both present immediate improvement opportunities, but also importantly demonstrate a clear path to meeting our strategic objectives.
Paul will cover a little more around how the Asahi deal fits within our business in his breakout session. It is very difficult not to steal the thunder from some of your presenters, particularly around the branded area of the business where we have seen some real progress in our innovation delivery, in particular in the last few months. Some real exciting brand development and new product introduction going on in this business now, and you will hear about it, and importantly, taste it, if you wish, later in the day. Early on my time at C&C, I committed to simplify how we operate and support the delivery of a significant improvement in operating performance. I am pleased to confirm that we are well on our way as far as that journey is concerned. Our service levels are at industry-leading levels, and they are highly stable.
Our simplification program is now part of our core operating principles in everything we do. Across the group, partnerships are critical to success, and in C&C Brands business, we are really beginning to build momentum in these value-added relationships. Our capacity, capability, flexibility, and scale in manufacturing, whether that is in brewing or packaging, alongside the scale of our logistics operation, are providing value-added opportunities for industry-leading businesses to build with us for the long term. These partnerships are utilizing our capabilities, our assets, our know-how, and are benefiting from our capacity, scale, and our positions in our core markets, creating value for shareholders where value was previously allowed to go uncaptured or at least not fully exploited.
We can see from the current economic climate that we all can understand and the ever-present sustainability factors that further opportunities will come our way as we try to unlock value from our operating platform and asset base, some of which you will hear more about later. With our recovery journey well underway, our drive to build resilience into our business is very much in the building phase, and we can now see what I believe is the start of the momentum phase within both C&C Brands and MCB. With an increased level of resilience and building momentum, we expect to see more stable financial performance with significant improvements in the quality of earnings and cash flow being the first green shoots of performance recovery in this business.
You are probably sitting wondering what the shape of that recovery is going to look like, and I will save the proper detail for Adam in his session later in the day. Let me just finish with one slide. Despite the well-documented challenges we all face as consumer goods businesses with cost inflation and economic uncertainty, and assuming we drive the resilience and momentum required into the group, we will deliver an accelerated financial performance over our three-year plan with profit and cash on a rising curve. As I said, Adam will take you into the detail of this a little later, including a revised free cash flow definition, which I will not try and involve my amateur financial capabilities in, but it supports these numbers.
With an operating profit target in the mid-80s and a cumulative cash flow of over EUR 100 million on our three-year horizon, delivered by significantly higher quality of earnings. Based on this, I believe we are making real progress. I hope you enjoy the rest of the day we have set up for you. I am going to hand over to Cara now for the next session, and after which, Cara will ask you to go into your breakout groups, which are all detailed on your badges. If I can ask Cara to come up to stage. Thank you very much.
Thank you. Thanks, Roger. I am going to spend the next 10- 15 minutes just giving you some category context and our perspective on really what that means for us and the shape of our businesses and the ambition that we have outlined today. I know all of you in the room here read the headlines and the data about our industry, and you could conclude that this is a category in structural decline. Young people are drinking less, the pub is dying, the consumer is stretched, nobody is going out. However, I want to tackle those head-on, because the data can also tell us a different story, and it is a story that explains why we are investing behind our brands and our distribution business, rather than managing them for cash. Let us start at the macro level.
The key story here is that despite cost of living pressures, people still value and find ways to prioritize social occasions and experiences, which is good news for our business. We know that the consumer is under a lot of pressure, and if you read the headlines every day, we know that comes from inflation, it comes especially from the cost of living in households, especially around energy, and that is forcing families to make choices about where their precious leisure spend goes. Yet, what we know is that spend in U.K. pubs and bars, and clubs grew. Restaurants, cafes, and bakeries too. People are prioritizing going out ahead of other discretionary spend. Consumer confidence is starting to recover, and in Ireland, summer occasions really led the FMCG growth across soft drinks, ice cream, fruit-flavored alcohol, and lager. What am I taking from all this?
When money is tight, people do not stop going out, but they do go out more deliberately. They choose the occasions that matter, and they want to feel the money was well spent. This is a value question, not necessarily a volume collapse, and value is about far more than price. It is about the experience that our brands create. It is about whether that is a pint in a Glasgow pub or a Bulmers over ice in the garden at home. It plays directly to our brand portfolio. When the consumer is choosing more carefully, the brands that suffer are the ones with a single brand at a single price point, but we have something for every demographic, every preference, and every pocket of spend across our branded and our distribution business. People are continuing to come together through drinks, both in hospitality and at home.
The summer, yes, has been good to us, and we will touch on that. I am not going to pretend that has not been good to us in the last few months. However, there are some things to really draw out underneath this. Retail and hospitality are playing different but complementary roles in the industry. Hospitality value is growing, but it is more considered its higher price serves. Retail is adding both volume and value as more drinking happens at home. This is not a market that is in retreat, it is demand redistributing across different occasions, and we are really well positioned to capture it in both of those places. Let us be really straight about the drivers, because I know you would ask me that question. Yes, this period was flattered. The heat wave was prolonged in England.
I can tell you it was not quite so in Scotland, but it drove stronger cider, lager, and RTD sales as well in Ireland. The World Cup drove longer and later occasions, particularly in England, and staycations got a boost from the weather and from international travel concerns. I am not going to ask you to extrapolate a summer that was hot and had a World Cup in it, but I would ask you to look at what is underneath the weather. Pricing and mix are up in the G.B. on-trade and the off-trade, and there are similar dynamics in Ireland. There is actually a pretty stable on-trade universe. Net new outlets were actually up slightly in G.B. since December, and online is continuing to outform in grocery through frequent smaller shops. The point here is that the outlet base is not collapsing. The pub is not dying.
Yes, of course, as the headlines tell us, hospitality is under pressure and pubs are closing, but the industry is reshaping itself and changing itself to provide value and experience, and consumers are absorbing price because they value what is on offer. Beer, cider, and RTDs remain right at the center of those kind of occasions, which are at the heart of our portfolio, again, both branded and in our wholesale and distribution business.
Focusing a little bit more on hospitality, people really still value socializing even when their cost of living is under pressure, and drinks are remaining at the center of those moments. The key trends here that I would ask you to remember from this section is this is about long-term behavior, not just one summer. There are three big structural shifts which we have measured over years, not just the past few weeks of a good summer.
And we see these happening, as Roger said earlier, in our data. One of our great assets is our data, because of our whole market coverage, and therefore we see these trends coming through really quickly, both in the external, but more quickly in our internal data. That gives us a really unique read on the whole market, which we can act on quickly. What it tells us is people are drinking earlier. It is the 2:00 to 7:00 window, Saturday afternoons and early evenings. You have probably seen this in your own social life. It is all about the boozy brunch. It is the day disco, socialize hard, home and in bed by 8:00. What is not to love? People on these occasions have mixed repertoires. One in three on-trade soft drinks occasions actually involves an alcoholic drink.
If you think about that, this is the same consumer in the same occasion mixing between the two. More and more occasions are food led, so that's up about 5% over seven years ago. You put all these together and you're actually getting an answer to the moderation question. Consumers are just socialising differently. They're not socialising less. The occasion's moving earlier, it's becoming more food-led, and the repertoire is broadening. That is a challenge if you happen to be a single-serve, late-night, one-liquid brand. However, it's an opportunity if you have, like we have, breadth. This is where we're genuinely well-placed. We have leading beer and cider brands that suit earlier, lighter occasions, wine, spirits, RTD, and soft drink breadth across the wholesale portfolio, and propositions deliberately designed around food.
The Gen Z narrative that troubles the sector is, in our data, a narrative about how people drink rather than whether or not they do. They want choice, they want lower alcohol options alongside full-strength ones, and they want the occasion to be worth it. We can serve all of that from one portfolio and one route to market. Onto retail. Again, long alcoholic drinks are outperforming the wider basket as the growth broadens across categories and occasions. While total FMCG is in some growth, alcoholic beverage way outpaces that, more than double the rate, and there are real pockets of growth within beer, cider, and RTD, particularly driven by flavors, fruit, and format. Yes, again, there was an exceptional summer that drives that backdrop, but the longer view makes a broader point. Beverage is outperforming total FMCG, and it's concentrating in taste, convenience, and choice.
Beer and lager are actually the biggest contributors to category volume, and premiumisation is driving a lot of the growth in that volume. Within the beer volume, there are these pockets of growth, again in fruit. In particular, fruit-flavored beer is really growing. Stout is also a big category in growth in the U.K. off-trade. There's continued consumer interest and momentum in that category, and cider is in really solid volume growth and holding share on refreshment occasions. RTDs, super interesting, fast-growing segment with volumes up and value even growing faster still. Low and no, as we all know, is continuing to build, and it's adding incremental occasions rather than replacing them. It's strongest in beer and cider, where those existing brand equities convert really readily into those extensions.
The share donors for all this, if we're being honest, are in wine, which is broadly flat, and spirits, which is also down. The key point for us here is share is moving towards the categories that we are strongest in and away from the ones we are least exposed to. We've got scale through Tennent's, and we've got permission to extend cider in Bulmers and Magners, and we've got an innovation agenda built for exactly these pockets of growth. Just a quick recap why we remain confident in our categories. People continue to prioritise social occasions even when household income is under pressure. Beer and cider remain large, relevant, and resilient categories. People still come together, but it's earlier, it's with food, it's in groups, and the real changing experience and value is what they're looking for in the on-trade.
In hospitality and retail, they are playing complementary roles. Hospitality value is growing on these considered higher-priced serves. Retail is adding volume and value as more drinking happens at home. Again, we are in both. In terms of growth, it is coming from premiumisation, fruit, flavors, stout, and low and no. Beer and cider are gaining share, with RTDs the leading growth segment. To come back where I started, the sector narrative says the consumer has stopped drinking. The data says the consumer has changed. If this was a market in terminal decline, the right strategy would be to defend, to cut, and to harvest. We do not believe that is the market that we are in. We believe we are in a market that is redistributing towards experience, toward quality over quantity, towards choice within the occasion, and redistributing in the direction of the categories where we lead.
That is why we are in a growth plan, and that is what we are going to talk to you in more detail as we go into our breakout groups on both C&C Brands and our MCB business.
Okay, I think we are all back. Welcome back, everyone. I hope you enjoyed the breakout sessions and that they helped to bring to life how we are focused on growing volume in C&C Brands and growing margin in MCB, and how those are enabled by both people and culture and technology and data. I will now take you through what this means for profit and cash over the next few years, as well as a refresh of our capital allocation framework. To start with, I will take a short look back at the last few years, and clearly earnings have been volatile as a result of some internal and external factors. Volumes over that period have declined, and whilst this has been partially offset by price increases, it has been coupled with high cost inflation, which has contributed to that volatility that we have seen over recent years.
The group does have good cash generation characteristics, but free cash flow has been a bit weaker in recent years and leverage has increased, although still well within manageable levels. On the right-hand side of this slide here, you can see return on capital employed over the last few years has averaged just over 10%. That is above the weighted average cost of capital for the group, but only slightly. Improving this rate of return will be a focus over the coming years. As Roger explained at the outset, and as you have seen in the breakout sessions, we have two businesses, C&C Brands and MCB, each with different characteristics. On the right-hand side here is MCB, which is our wholesale business in England and Wales, and in FY 2026 that generated around EUR 900 million of revenue, and close to 1% operating margin.
C&C Brands on the left then contains everything else in the group, and it comprises the manufacturing and sale of our own brands, partnership operations where we manufacture on behalf of others, international sales, the wholesale of third-party products in Scotland and Ireland, and then also the Bibendum Off-Trade business, which is a wine supply agency to retailers. This part of the business, C&C Brands, generated around EUR 600 million of revenue and around 10% operating margin in FY 2026. Looking at operating margin in recent years and then the outlook going forward. We've averaged about 4.3% operating margin in the last three years. On the left-hand side here, I've set out a few of those factors that have been contributing to that. Firstly, cost inflation, and that has been a very significant headwind over recent years.
Labor costs, in particular, have seen multi-year compound growth, and also whilst energy costs have normalized from their highs a few years ago, they remain elevated and volatile. Category mix there has been another headwind for the MCB business in particular, as the higher margin wines and spirits categories have become a smaller share of the drinks market overall. Volume decline has also been a factor in both C&C Brands and MCB. Offsetting those factors, in recent years, has been price increases, and also cost reduction and transformation initiatives. Although the latter have obviously come at some considerable cost in exceptionals, and those exceptional costs are obviously stripped out of the operating margin numbers that I'm talking about here. How do we see things going forward? On the right-hand side here, cost inflation will remain a factor.
Where this comes through to us in raw materials and consumables, we would expect this to be passed on in price as it would be across the market. However, we also expect some cost inflation to remain significant within our overhead base. In particular, we do have above-inflation cost increases coming through in our IT infrastructure as existing agreements and contracts come up for renewal. On category mix, we expect this to remain a drag on margin, but perhaps to a potentially lesser extent than we've seen in the last few years. In C&C Brands, we do expect a potentially dilutive mix effect on margin over the coming years from partnership operations as we look to fulfill the opportunity to better utilize our manufacturing facilities.
These partnership operations typically come with good gross and net margin, but obviously lower margin than our own brands do, and therefore slightly dilutive. Middle of the slide on the right-hand side there, volume. In terms of volume, you've heard today about the focus on growing volume in C&C Brands. In MCB, we anticipate volume decline, and I'll come onto that in a minute, but that will be largely driven by the planned exit of low-margin business. Price will continue to be a feature across the industry, not just for C&C Group. However, as you'll have heard today, there's an opportunity for us to optimize price or to ensure that we achieve the right price for the service we offer. The price opportunity is over and above just market-driven price inflation. Finally, we will continually review opportunities for cost reduction and efficiencies.
You will have heard some of those today, including how we are driving efficiencies through the distribution network, but this continues to be a key focus for both me and the entire executive team going forward. Moving on to balance sheet and cash, I will take a look first of all at the group's financing facilities. In total, we have EUR 600 million of diversified, committed borrowing facilities comprised as set out in the stack here on the chart. The RCF term loan and private placement have some years left on them before they need renewing or refinancing. The receivable securitization facility is an annual renewal. In total, at the end of February 2026, so for the full year just gone, the group had a total of EUR 373 million of available liquidity and EUR 104 million drawn down on that receivables facility.
I will just give a little bit more detail on that receivables facility. We do have some questions occasionally. This is a facility that the group has used for many years. It is flexible, it is low cost, and the amount that we have drawn down on that, as you can see in the chart, has stayed pretty steady actually over the last three years or so. In line with accounting standards, this is treated as a working capital facility, so it is not part of our net debt. Going forwards, there is no current plan to significantly increase or decrease the usage of that facility. But we will continue to be transparent about the amounts that we have got drawn down and to explain that it does not form part of the group's net debt. Free cash flow then, and firstly, an update as to how we define it.
Two amended metrics that we will be talking about going forward. Firstly, underlying free cash flow. This is essentially the same as what we used to call free cash flow pre-exceptional items. The only difference being that we now also include lease costs in there. So that is underlying free cash flow includes lease costs, but excludes exceptionals. Free cash flow then is the same, but less exceptionals.
So free cash flow will be everything out of it, so leases and exceptional costs coming out of it. That is what we will refer to going forwards in our reporting. You can see in the table here, I have restated both FY 2026 and FY 2025 and highlighted in blue the two metrics, the two cash flow metrics there. The chart on the left here that shows using that free cash flow definition, the cash that we have generated over recent years.
In the last three years, the group has generated EUR 72 million of free cash flow. This is obviously net of leases and exceptionals as explained on the previous slide. The receivables facility did generate EUR 10 million of cash inflow in that period. So effectively, the real cash flow was about EUR 60 million in the last three years, free cash flow.
The reason for the drop off that you can see in FY 2025 and FY 2026, is partly due to the high cash cost of exceptionals, which ran at about, well, it ran at over EUR 20 million for two years in a row. Then also in FY 2026, there was a significant working capital outflow. On the right-hand side here of this slide, you can see that going forward we are targeting over EUR 100 million of free cash flow for the three years from FY 2028 to FY30.
This increased free cash flow generation is from a combination of higher earnings, lower cash exceptional costs, whilst at the same time having relatively modest ongoing CapEx requirements. Working capital over the next few years, we can expect, typically from year to year, you can get some volatility in working capital depending on timing of payments and receipts. But generally speaking, over the next three years, we would expect that to be fairly stable. In terms of CapEx, we will continue to invest in maintenance CapEx and we will supplement that with selected growth CapEx from time to time. But the growth CapEx and overall CapEx requirements to support the plans that you have heard today are relatively modest. As you will have also heard today, there is opportunity or quite significant opportunity to significantly increase utilization of our manufacturing facilities without significant capital investment requirements.
What does all of that mean then for the next few years? We have established the profit and cash target set out here, which Roger also highlighted at the very start of the day. Firstly, targeting operating profit in FY 2030 to be around 20% higher than it is today. This is based on the plans that you have heard today, and does not take account of any potential deployment of surplus capital into acquisitions or other growth initiatives. As we build resilience, we would expect profit to be broadly flat through this year and next, with profit growth coming through as we progress through the momentum phase that Roger outlined earlier. Looking at the outlook for the two businesses separately, there is a bit of kind of modeling commentary in the orange box here.
We are targeting volume growth in C&C Brands, which would translate into revenue growth, and that is driven by all of the initiatives you would have heard in that particular breakout session today. We do anticipate that operating margin in the C&C Brands business could decline modestly over the next few years, and that is due to mix, and particularly as we look for opportunities to increase utilization of our manufacturing facilities. In MCB, we anticipate volume decline over the next few years, excluding any future consolidation activities such as the Asahi deal that we announced two weeks ago. This volume decline is expected to reflect a combination of the market plus planned exit of low margin business. From a margin perspective, as you will have heard in the breakout session with Paul today, we are targeting to increase that to 3%+ over the coming years.
Then on cash, on the right-hand side of this slide, as explained earlier, we are targeting over EUR 100 million of free cash flow in the next three years. That level of free cash generation would see the group ordinarily delever over the years ahead. Without reinvestment in growth CapEx or M&A or returns to shareholders, that leverage could drop to a level that implies potentially significant surplus capital for deployment. Which leads me onto how we think about capital allocation. Our capital allocation priorities are set out here on this slide. Firstly, to maintain a strong balance sheet targeting leverage of 1x-1.5x on a pre-IFRS 16 basis. This leverage range is where we would expect to be on average over the medium term, and we are comfortable with a bit of flex either side of that.
Where the group sits within that range over the next three years will depend on the opportunities available for deployment of surplus capital. As I mentioned on the previous slide, the targeted free cash flow generation over the next few years should generate opportunities for deployment of significant surplus capital. The second priority here then, and actually it is pretty closely linked to the first because they are both about maintaining a strong business, is organic investment in the business to deliver the plans that you have heard today and to maintain the asset base. Thirdly, to pay a sustainable and progressive ordinary dividend. Finally, any surplus capital would then be deployed for growth or for return. You will see we have not put any particular predetermined prioritization of those on this slide here. Those will depend on the relative attractiveness at the time.
Obviously any investments will be subject to our usual disciplined investment appraisal processes and returns requirements.
Hopefully today we have given you a decent overview of the business, in totality. A look at each of the two separate businesses that we are building. We focused on the areas of those businesses that we believe we need to develop and define change in and improvement in. You have seen a little bit of the broader team and the details of some of the delivery. We have tried to outline the steps that we believe we need to take to support our growing resilience, and we have tried to set out the steps we think we need to build the momentum in the business. As Adam has just done, we have had a look at the financial structure and the profit algorithm as we see it now.