AG Barr, the maker of Irn-Bru, has expanded its portfolio by acquiring the soft drink brands Fentimans and Frobishers. This strategic move aims to tap into the growing market trend favoring non-alcoholic beverages.
The company purchased Fentimans, known for its ginger beer since 1905, for approximately £38 million, financed through both cash and debt.
Fentimans’ history dates back to West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, came across a recipe for its botanically brewed ginger beer. The brand now includes various soft drinks, such as Rose Lemonade and Curiosity Cola.
In addition, AG Barr has acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million. This acquisition aligns with the company’s strategy to stimulate growth by diversifying its brand offerings.
Euan Sutherland, CEO of AG Barr, expressed optimism about the synergies resulting from these acquisitions, noting a positive impact on long-term growth prospects.
Following the announcements, AG Barr’s shares rose by 33p, a 5% increase, reaching 683p.
In conjunction with these acquisitions, AG Barr is anticipating a 4% rise in revenue, projecting figures to reach £437 million for the year ending in January. When results are released in March, analysts expect to see a sales growth of 4.8% in the latter half of the financial year, an improvement from 3.1% in the first six months.
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The company reported “modest growth” for Irn-Bru during the second half, credited to effective marketing and distribution efforts. Positive performance from its Rubicon and Boost brands helped mitigate declines in Funkin Cocktails. Adjusted profit margins are expected to rise to around 14.7%, up from 13.6% the previous year, driven by efficiency initiatives and supply chain investments.
The Irn-Bru factory in Cumbernauld
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Analysts at Panmure Liberum noted that AG Barr’s foray into the growing adult soft drinks sector will yield significant cost advantages from in-sourcing production and a decrease in overhead costs, along with increased revenue from expanded distribution.
Founded by Robert Barr in Falkirk in 1875, AG Barr began by selling “aerated waters”—a term for soft drinks at the time. The company has continued through generations, launching the iconic Iron Brew in 1901 and rebranding it as 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 enhance its non-alcoholic beverage offerings.
- The purchase of Fentimans was valued at around £38 million.
- Frobishers, a premium fruit juice brand, was acquired for £13 million.
- AG Barr foresees a 4% revenue increase for the year, expected to reach £437 million.
- Adjusted profit margins are projected to rise thanks to efficiency initiatives.
- The company’s shares increased by 5% following the acquisition news.
FAQ
What are the brands acquired by AG Barr?
AG Barr has acquired Fentimans, known for ginger beer, and Frobishers, a premium fruit juice maker.
How much did AG Barr pay for these acquisitions?
The acquisition cost was approximately £38 million for Fentimans and £13 million for Frobishers.
What growth is AG Barr expecting?
AG Barr anticipates a 4% rise in revenue, reaching £437 million by the year-end.
What is Irn-Bru?
Irn-Bru is a soft drink known for its unique flavor, originally launched as Iron Brew in 1901.
Why was the name changed from Iron Brew to Irn-Bru?
The name was changed in 1946 to comply with food labeling rules that required names to be “totally true.”
In conclusion, AG Barr’s recent acquisitions position the company well within the evolving beverage landscape, focusing on non-alcoholic options. These strategic moves are likely to enhance their market presence and revenue potential in the coming years.
