In a strategic move to adapt to changing consumer preferences, the maker of Irn-Bru, AG Barr, has acquired two soft drinks companies, Fentimans and Frobishers. This acquisition highlights the company’s aim to expand its offerings beyond alcoholic beverages and tap into the growing market for soft drinks.
Fentimans Acquisition
AG Barr purchased Fentimans, renowned for its ginger beer crafted since 1905, for approximately £38 million, using a mix of cash and debt.
Fentimans can trace its origins to West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, first developed a recipe for botanically brewed ginger beer. The brand now offers a variety of soft drinks, including Rose Lemonade and Curiosity Cola.
Frobishers Acquisition
Additionally, AG Barr has acquired Frobishers, a premium fruit juice maker based in Devon, for £13 million. This acquisition aligns with AG Barr’s strategy to bolster growth by diversifying its brand portfolio.
CEO Remarks
Euan Sutherland, the chief executive of AG Barr, expressed optimism, stating: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Market Response
Following the news, AG Barr’s shares climbed by 33p, or 5 percent, reaching 683p.
Financial Outlook
Alongside these acquisitions, AG Barr forecasted a 4 percent revenue increase to £437 million for the year ending in January, with results expected in March. Analysts project this signals an upturn in sales growth of 4.8 percent in the latter half, in contrast to 3.1 percent during the first half of the financial year.
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Product Performance
Notably, the company reported “modest growth” in Irn-Bru during the second half, largely due to successful marketing and distribution efforts. Strong performances from brands like Rubicon and Boost helped to counterbalance a decline in Funkin Cocktails. Adjusted profit margins are anticipated to rise to approximately 14.7 percent, up from 13.6 percent the previous year, driven by efficiency initiatives and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Future Prospects
Analysts from Panmure Liberum highlighted that AG Barr’s venture into the lucrative adult soft drinks market will generate substantial cost efficiencies from in-sourcing production, minimizing overheads, and expanding distribution networks.
Currently headquartered in Cumbernauld, North Lanarkshire, AG Barr derives most of its revenue from the UK market. In addition to Irn-Bru, the company also offers a diverse range of products such as Moma oat milk, Tizer, and Rio. The previous year marked the closure of the Strathmore bottled water brand, which the company acknowledged had faced competitive challenges.
Established by Robert Barr in Falkirk in 1875, the company originally sold “aerated waters,” a term used for soft drinks at that time. It has since passed through generations of Barrs, launching the iconic Iron Brew in 1901. The brand was rebranded as Irn-Bru in 1946 to comply with food labeling regulations requiring brand names to be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand its non-alcoholic beverage portfolio.
- The acquisition of Fentimans cost approximately £38 million.
- Frobishers was acquired for £13 million as part of growth strategy.
- AG Barr’s shares rose 5 percent following the announcement.
- Expected revenue growth of 4 percent for the year ending January.
- AG Barr’s profit margins are anticipated to improve due to efficiency initiatives.
FAQ
What brands does AG Barr own?
AG Barr owns several brands including Irn-Bru, Moma oat milk, Tizer, and Rio.
Where is AG Barr headquartered?
AG Barr is headquartered in Cumbernauld, North Lanarkshire, UK.
What is Fentimans known for?
Fentimans is renowned for its botanically brewed ginger beer and a range of other soft drinks.
Why did AG Barr acquire Frobishers?
The acquisition of Frobishers aims to enhance AG Barr’s brand portfolio and increase growth opportunities.
When was Irn-Bru first launched?
Irn-Bru was first launched in 1901 and was originally known as Iron Brew.
As AG Barr continues to broaden its brand offerings, these strategic acquisitions position the company to thrive in the evolving beverage market. The focus on non-alcoholic products aligns with consumer trends, paving the way for potential growth and market expansion.
