In a strategic move to adapt to changing consumer preferences away from alcoholic beverages, AG Barr, the maker of Irn-Bru, has acquired the soft drink brands Fentimans and Frobishers. This expansion reflects the company’s commitment to enhancing its portfolio and driving growth within the non-alcoholic beverage sector.
Acquisition of Fentimans
AG Barr has acquired Fentimans, renowned for its ginger beer since 1905, for approximately £38 million through a blend of cash and debt.
Fentimans origin traces back to West Yorkshire when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for botanically brewed ginger beer. The brand now offers a variety of soft drinks, including Rose Lemonade and Curiosity Cola.
Acquisition of Frobishers
In addition, AG Barr has purchased Frobishers, a premium fruit juice producer based in Devon, for £13 million as part of its strategy to broaden its brand portfolio and promote growth.
Financial Impact
Euan Sutherland, CEO of AG Barr, stated: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following the announcements, AG Barr’s share price increased by 33p, or 5 percent, reaching 683p.
Alongside the recent acquisitions, AG Barr anticipates reporting a 4 percent increase in revenue, totaling £437 million for the year ending in January, when results are released in March. Analysts noted this forecast suggests a 4.8 percent sales growth in the latter half of the year, compared to a 3.1 percent increase in the earlier months.
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Performance of Irn-Bru
The company reported that Irn-Bru achieved “modest growth” in the second half of the year, attributed to effective marketing and distribution strategies. Additionally, positive performances from its Rubicon and Boost brands helped to balance a decrease in sales for Funkin Cocktails. Adjusted profit margins are projected to improve to approximately 14.7 percent, up from 13.6 percent the previous year, buoyed by efficiency improvements and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Strategic Outlook
Analysts at Panmure Liberum indicate that AG Barr’s foray into the attractive adult soft drinks market will yield significant cost and revenue synergies through in-sourcing production and expanding distribution channels.
Based in Cumbernauld, North Lanarkshire, AG Barr derives most of its revenue from the UK market. Other notable brands in its portfolio include Moma oat milk, Tizer, and Rio. Last year, the company chose to discontinue the Strathmore bottled water brand, which had been underperforming.
Founded in 1875 by Robert Barr in Falkirk, the business initially sold “aerated waters,” as soft drinks were then called. Over the years, it was passed down through the Barr family, launching the now iconic Iron Brew in 1901, later rebranded to Irn-Bru in 1946 to comply with food labeling regulations that required brand names to be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to diversify its non-alcoholic beverage portfolio.
- The purchase of Fentimans cost around £38 million, while Frobishers was acquired for £13 million.
- The company anticipates a 4% increase in revenue for the upcoming reporting period.
- Irn-Bru has experienced modest growth driven by effective marketing campaigns.
- AG Barr’s adjusted profit margins are projected to improve due to supply chain efficiency.
FAQ
What prompted AG Barr to acquire Fentimans and Frobishers?
AG Barr aimed to capitalize on the growing demand for non-alcoholic beverages and expand its brand portfolio.
How much did AG Barr spend on the acquisitions?
AG Barr purchased Fentimans for approximately £38 million and acquired Frobishers for £13 million.
What impact are the acquisitions expected to have on AG Barr’s revenue?
The company anticipates reporting a 4% increase in revenue in the coming financial period.
