Sales continuing to sparkle at AG Barr
● Maker of Irn-bru is on track for sales increase of about 5% in the first half
Irn-bru maker AG Barr has said the market impact of the new sugar levy is “still to be fully determined” as the soft drinks group reported robust first-half trading.
The Cumbernauld-based firm, which is also behind the Rubicon, Strathmore and Funkin brands, said revenue for the 26 weeks to 28 July was expected to top £136 million, marking an increase of about 5 per cent on the year before.
It described that performance as “especially positive” given the 8.8 per cent growth reported for the corresponding period in 2017.
The soft drinks market was up 4.5 per cent in value terms and nudged up 1.4 per cent by volume during the period from 28 January to 1 July, according to industry data – recovering from the impact of severe weather in the first quarter and benefiting from the hot early summer weather across much of the UK.
In a trading update, AG Barr said its core brands had performed well during the period.
It told investors: “We completed the implementation of our reformulation pro-
0 Roger White highlighted ‘encouraging’ growth across the core brands
NICOLA MALLARD
gramme and have grown market share.
“The Irn-bru brand in particular has continued its positive growth momentum, with regular Irn-bru increasing its volume and value share of the total soft drinks market alongside strong growth in Irn-bru Xtra.
“We have continued to invest behind both our established brands and our innovation pipeline. In the period this has supported further significant growth in Rubicon Spring and the recent launch of Street
Drinks by Rubicon.
“Our new partnership brands, San Benedetto and Bundaberg, have made encouraging early progress and Funkin continues to perform strongly across all channels,” the firm added.
Looking ahead, the group noted that the “external landscape remains volatile”, adding: “In addition we have seen the implementation of the soft drinks industry levy, the market impact of which is still to be fully determined.”
Despite the challenging backdrop, the firm pledged to continue investing in its “brands, innovation and people” which was likely to have a “moderate impact on margins in the current financial year”.
Chief executive Roger White said: “We have delivered strong top-line growth in a period of considerable marketplace volatility and change.
“Our growth across core brands is especially encouraging and our strong second half brand and sales development plans give us confidence that we can deliver against our profit expectations.”
The group is due to release its interim results on 25 September.
Nicola Mallard, an analyst at Investec Securities, which has a “buy” recommendation on the shares, noted: “Mid-period, we saw the implementation of the soft drinks industry levy although, following Barr’s reformulation efforts, its portfolio now sits almost entirely outside of the levy. As such, it had little direct impact on sales.
“The market continues to see an accelerating consumer move towards the lower/no sugar offer.”
She added: “Barr has delivered (comfortably) better than market volume growth in its [first half ], with revenues expected to be up circa 5 per cent.”
“The market continues to see an accelerating consumer move towards the lower/no sugar offer.”