AG Barr, the renowned maker of Irn-Bru, has recently expanded its portfolio by acquiring the soft drink companies Fentimans and Frobishers. This move reflects a strategic shift towards non-alcoholic beverages, aligning with current consumer preferences.
Acquisition of Fentimans
AG Barr purchased Fentimans, known for its ginger beer since 1905, for approximately £38 million, funded through a combination of cash and debt.
Fentimans has a rich history dating back to West Yorkshire, when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for botanically brewed ginger beer. The company also produces a variety of soft drinks, including Rose Lemonade and Curiosity Cola.
Acquisition of Frobishers
In addition, AG Barr has acquired Frobishers, a premium fruit juice maker based in Devon, for £13 million, with the aim of enhancing growth by “broadening the brand portfolio.”
CEO Comments
Euan Sutherland, the chief executive of AG Barr, remarked: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Financial Outlook
Following these acquisitions, AG Barr’s shares increased by 5 percent, rising 33p to 683p. The company also anticipates a 4 percent increase in revenue, projecting figures to reach £437 million for the year ending in January. This growth suggests a 4.8 percent increase in sales for the second half of the financial year, compared to 3.1 percent for the first.
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Brand Performance
AG Barr noted that Irn-Bru experienced “modest growth” in the latter half of the year, driven by effective marketing and distribution strategies. The company reported that strong performances from its Rubicon and Boost brands compensated for a decline in Funkin Cocktails. Adjusted profit margins are expected to rise to approximately 14.7 percent, an improvement from 13.6 percent the previous year, bolstered by efficiency initiatives and investments in the supply chain.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Future Growth Prospects
Analysts at Panmure Liberum predict that AG Barr’s venture into the adult soft drinks segment will yield significant cost synergies through in-sourcing production and reduced overheads, along with substantial revenue synergies from expanded distribution channels.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its sales within the UK. Its brand lineup includes Moma oat milk, Tizer, and Rio. Recently, the company made the decision to discontinue the Strathmore bottled water brand due to ongoing competitive challenges.
Founded by Robert Barr in Falkirk in 1875, the business initially focused on selling “aerated waters.” The product that gained it prominence, Iron Brew, was introduced in 1901. The drink was rebranded to Irn-Bru in 1946 to navigate food labeling regulations requiring that brand names be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand into non-alcoholic beverages.
- The total investment for both acquisitions amounts to approximately £51 million.
- Fentimans is known for its botanically brewed ginger beer.
- AG Barr expects overall revenue growth of 4 percent in the upcoming financial report.
- Anticipated profit margins are set to increase to around 14.7 percent.
FAQ
What brands does AG Barr own?
In addition to Irn-Bru, AG Barr owns brands like Moma oat milk, Tizer, and Rubicon.
When was Fentimans established?
Fentimans was founded in 1905 in West Yorkshire.
Why did AG Barr acquire Frobishers?
The acquisition was aimed at broadening AG Barr’s brand portfolio to enhance growth.
