In a strategic move to capitalize on the growing demand for non-alcoholic beverages, AG Barr, the renowned maker of Irn-Bru, has expanded its portfolio by acquiring two established soft drink brands, Fentimans and Frobishers.
AG Barr Acquires Fentimans and Frobishers
AG Barr purchased Fentimans, a company with a rich history of crafting ginger beer since 1905, for approximately £38 million, utilizing a combination of cash and debt.
Fentimans originates from West Yorkshire, where Thomas Fentiman, a skilled iron puddler from Cleckheaton, came upon a recipe for botanically brewed ginger beer. The brand now boasts a diverse range of soft drinks, including Rose Lemonade and Curiosity Cola.
Additionally, AG Barr has acquired Frobishers, a premium fruit juice maker based in Devon, for £13 million, as part of its strategy to enhance growth through a broader brand portfolio.
CEO’s Insight on Acquisitions
Euan Sutherland, chief executive of AG Barr, stated: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following the news of the acquisitions, AG Barr’s shares rose by 33p, or 5 percent, to 683p.
The company is also anticipating a 4 percent increase in revenue, projecting it to reach £437 million for the year ending in January. These results will be disclosed in March. Analysts have indicated that this suggests sales growth of 4.8 percent during the second half, in contrast to 3.1 percent during the first six months of its financial year.
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AG Barr noted that Irn-Bru has experienced “modest growth” in the latter half of the year, bolstered by marketing and distribution initiatives, while strong performances from its Rubicon and Boost brands have compensated for a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to approximately 14.7 percent, compared to 13.6 percent a year prior, attributed to efficiency strategies and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts from Panmure Liberum highlighted that AG Barr’s penetration into the adult soft drinks market could lead to notable cost synergies through in-sourced production and reduced operational costs. They also foresee significant revenue synergy potential due to expanded distribution.
Based in Cumbernauld, North Lanarkshire, AG Barr primarily generates its sales within the UK. Its portfolio includes brands such as Moma oat milk, Tizer, and Rio. Recently, the company opted to discontinue the Strathmore bottled water brand, acknowledging its challenges in the competitive market.
Founded by Robert Barr in Falkirk in 1875, the company began by marketing “aerated waters,” a term used for soft drinks at the time. It has been passed down through generations, and its flagship product, Iron Brew, was introduced in 1901, later rebranding to Irn-Bru in 1946 to comply with labeling regulations mandating accuracy in branding.
Key Takeaways
- AG Barr expands its portfolio by acquiring Fentimans and Frobishers.
- The acquisition aims to support the shift toward non-alcoholic beverages.
- Fentimans is known for its botanical ginger beer and a range of other drinks.
- AG Barr anticipates a 4% revenue increase for the year.
- Market entry into the adult soft drinks sector is expected to yield significant synergies.
- Founded in 1875, AG Barr has a long-standing history in the beverage industry.
FAQ
What brands has AG Barr acquired recently?
AG Barr has acquired Fentimans, known for its ginger beer, and Frobishers, a premium fruit juice manufacturer.
What is AG Barr’s flagship product?
AG Barr is best known for its Irn-Bru soft drink, launched in 1901.
Where is AG Barr located?
The company is headquartered in Cumbernauld, North Lanarkshire, UK.
What is the expected revenue growth for AG Barr?
The company projects a 4% increase in revenue for the year ending in January.
Why did AG Barr discontinue its Strathmore brand?
AG Barr acknowledged that the Strathmore bottled water brand struggled to compete in the market.
In conclusion, AG Barr’s recent acquisitions signal a significant shift in focus towards a more diverse range of beverages. With a commitment to expanding its brand portfolio, the company is poised to respond effectively to the evolving market demands.
