AG Barr, the maker of the iconic Irn-Bru, recently expanded its portfolio by acquiring the soft drink companies Fentimans and Frobishers. This strategic move aims to leverage the growing trend of consumers shifting away from alcoholic beverages.
Acquisition Details
AG Barr purchased Fentimans, known for its ginger beer crafted since 1905, for approximately £38 million using a mix of cash and debt.
Fentimans originated in West Yorkshire, when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for botanically brewed ginger beer. The company has since expanded its offerings to include various products such as Rose Lemonade and Curiosity Cola.
Additionally, AG Barr has acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million, enhancing its goal to broaden its brand portfolio and drive growth.
Market Implications
Euan Sutherland, the chief executive of AG Barr, mentioned that: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following the announcements, AG Barr’s shares increased by 33p, or 5 percent, reaching 683p.
In conjunction with these acquisitions, AG Barr anticipates a 4 percent increase in revenue to £437 million for the fiscal year ending in January, with results to be reported in March. Analysts noted this suggests a sales growth of 4.8 percent in the second half, compared to 3.1 percent in the initial six months of the financial year.
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The report indicated that Irn-Bru has experienced “modest growth” in the second half of the year thanks to effective marketing and distribution strategies. Additionally, strong performances from its Rubicon and Boost brands have compensated for a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to around 14.7 percent, up from 13.6 percent a year prior, driven by efficiency initiatives and investments in the supply chain.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts at Panmure Liberum noted that AG Barr’s foray into the growing adult soft drinks market could yield significant cost synergies through in-sourcing production, reducing overheads, and expanding distribution channels.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its sales within the UK. Other notable brands in its portfolio include Moma oat milk, Tizer, and Rio. In a previous move last year, the company decided to discontinue the Strathmore bottled water brand, acknowledging its struggle to maintain competitiveness.
Founded in Falkirk in 1875 by Robert Barr, the company initially sold “aerated waters,” the term used for soft drinks at the time. It has since been handed down through generations, launching its renowned product, Iron Brew, in 1901, which was rebranded as Irn-Bru in 1946 to align with food labeling regulations.
Key Takeaways
- AG Barr acquired Fentimans for £38 million and Frobishers for £13 million.
- The acquisitions aim to capitalize on the growing demand for non-alcoholic beverages.
- Irn-Bru and other brands showed modest growth due to effective marketing strategies.
- AG Barr projects a revenue increase of 4 percent for the current fiscal year.
- Analysts foresee significant synergies and benefits from entering the adult soft drinks market.
FAQ
What is AG Barr known for?
AG Barr is best known for its flagship product, Irn-Bru, alongside other brands like Tizer and Rio.
When was Fentimans founded?
Fentimans was established in 1905 and has become famous for its botanically brewed beverages.
Where is AG Barr located?
AG Barr is headquartered in Cumbernauld, North Lanarkshire, UK.
What other products does Frobishers offer?
Frobishers specializes in premium fruit juices and is known for its high-quality fruit blends.
Why did AG Barr close its Strathmore brand?
The Strathmore bottled water brand was discontinued due to competitive struggles in the market.
In summary, AG Barr’s recent acquisitions are a strategic effort to adapt to shifting consumer preferences, underscoring its commitment to diversifying its brand offerings. As the adult soft drinks market continues to grow, AG Barr appears poised for significant growth and enhanced market presence.
