In a strategic move to adapt to changing consumer preferences, the maker of Irn-Bru has acquired the soft drink companies Fentimans and Frobishers. This acquisition reflects AG Barr’s intent to expand its portfolio amid a growing trend away from alcoholic beverages.
Acquisition of Fentimans
AG Barr purchased Fentimans, renowned for its ginger beer since 1905, for approximately £38 million, funding the deal through a blend of cash and debt.
Fentimans originated in West Yorkshire when Thomas Fentiman, an iron puddler from Cleckheaton, obtained a recipe for its signature botanically brewed ginger beer. The brand has expanded to include various soft drinks like Rose Lemonade and Curiosity Cola.
Expansion with Frobishers
In addition to Fentimans, AG Barr has acquired Frobishers, a premium fruit juice company based in Devon, for £13 million. This acquisition is part of their strategy to enhance growth by diversifying their brand portfolio.
Euan Sutherland, chief executive of AG Barr, mentioned: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr’s shares increased by 33p, or 5 percent, rising to 683p.
Concurrent with these developments, AG Barr expects a 4 percent rise in revenue, targeting £437 million for the year ending in January, with results to be reported in March. Analysts have indicated this suggests sales growth of 4.8 percent in the second half, compared to 3.1 percent in the first half of the fiscal year.
• Irn-Bru with a twist for Burns Night — plus more trends to know now
The company reported “modest growth” for Irn-Bru in the second half, credited to effective marketing and distribution strategies. Additionally, the strong performance of its Rubicon and Boost brands helped to compensate for a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to approximately 14.7 percent, up from 13.6 percent last year, aided by efficiency measures and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts at Panmure Liberum indicated that AG Barr’s foray into the appealing adult soft drink sector will yield significant cost synergies through in-sourcing production, reducing overhead costs, and expanding revenue via distribution enhancement.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its revenue within the UK. The company also owns other brands such as Moma oat milk, Tizer, and Rio. Recently, AG Barr decided to discontinue the Strathmore bottled water brand, which had struggled in the competitive market.
Founded by Robert Barr in Falkirk in 1875, the business originally sold “aerated waters,” a term used for soft drinks at the time. Over generations, the company introduced its well-known product, Iron Brew, in 1901, which was later 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 for £38 million and Frobishers for £13 million to diversify its beverage portfolio.
- The deals are expected to drive growth through synergies in production and distribution.
- Irn-Bru continues to show modest growth, with increased marketing efforts boosting performance.
- Company shares rose by 5% following the acquisition announcements.
- Analysts project revenue growth of 4% for the current financial year.
FAQ
What companies did AG Barr acquire?
AG Barr acquired Fentimans and Frobishers as part of its strategy to expand its soft drinks portfolio.
How much did AG Barr pay for these acquisitions?
AG Barr paid approximately £38 million for Fentimans and £13 million for Frobishers.
What impact did these acquisitions have on AG Barr’s shares?
Following the announcements, AG Barr’s shares increased by 5 percent.
What are the expected benefits of these acquisitions?
The acquisitions are expected to lead to significant cost synergies and revenue expansion through enhanced distribution efforts.
When will AG Barr report its financial results?
AG Barr is expected to report its financial results in March, detailing a projected 4 percent rise in revenue.
With these strategic acquisitions, AG Barr positions itself to capitalize on the growing non-alcoholic beverage market. The company is set to evolve further, leveraging the strengths of its newly acquired brands.
