In a strategic move to adapt to changing consumer preferences, AG Barr, the maker of Irn-Bru, has acquired the renowned soft drink brands Fentimans and Frobishers. This acquisition highlights the company’s commitment to expanding its portfolio as more consumers shift away from alcoholic beverages.
Acquisition Details
AG Barr purchased Fentimans, a company known for its ginger beer since 1905, for around £38 million, financed through a blend 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. Over the years, it has diversified its offerings to include beverages like Rose Lemonade and Curiosity Cola.
Additionally, AG Barr has acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million. This acquisition aligns with their strategy to promote growth by broadening their brand portfolio.
Market Response
Euan Sutherland, the chief executive of AG Barr, stated: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these announcements, AG Barr saw its shares increase by 33p, or 5 percent, reaching 683p.
The firm anticipates a 4 percent rise in revenue, projected at £437 million for the year ending in January, with results set to be released in March. Analysts predict this indicates a sales growth of 4.8 percent in the latter half of the year, compared to 3.1 percent in the first half.
• Irn-Bru with a twist for Burns Night — plus more trends to know now
According to the company, Irn-Bru has experienced “modest growth” in the second half, thanks to targeted marketing and distribution strategies. Strong performances from the Rubicon and Boost brands helped to mitigate a decline in sales for Funkin Cocktails. Adjusted profit margins are expected to rise to around 14.7 percent, up from 13.6 percent the previous year, driven by enhanced efficiency and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Strategic Insights
Analysts from Panmure Liberum suggest that AG Barr’s foray into the adult soft drinks market could result in significant cost savings from in-house production, lower overheads, and increased revenue through expanded distribution channels.
Based in Cumbernauld, North Lanarkshire, AG Barr largely generates its revenue within the UK. Other brands in its lineup include Moma oat milk, Tizer, and Rio. Last year, 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 initially sold “aerated waters,” which would later evolve into soft drinks. The company gained notoriety with the launch of Iron Brew in 1901, which was rebranded as Irn-Bru in 1946 to comply with food labeling regulations.
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand its non-alcoholic beverage portfolio.
- The acquisition of Fentimans was valued at approximately £38 million.
- Frobishers, known for premium fruit juices, was acquired for £13 million.
- AG Barr anticipates a 4% increase in revenue, projecting £437 million for the year ending in January.
- The company’s shares rose by 5% following the announcement of these acquisitions.
- AG Barr aims to enhance profit margins through efficiency improvements.
FAQ
What brands does AG Barr own?
AG Barr owns several brands, including Irn-Bru, Tizer, Moma oat milk, and Rio.
Why did AG Barr acquire Fentimans?
The acquisition is part of AG Barr’s strategy to diversify its portfolio in response to the growing demand for non-alcoholic beverages.
What is Frobishers known for?
Frobishers specializes in premium fruit juices and has a strong presence in the beverage market.
What historical significance does Irn-Bru have?
Irn-Bru has been a popular soft drink since its inception in 1901, originally known as Iron Brew.
Where is AG Barr headquartered?
AG Barr is headquartered in Cumbernauld, North Lanarkshire, UK.
These acquisitions mark a new chapter for AG Barr as it strategically positions itself within the evolving beverage landscape. By expanding its offerings, the company aims to tap into a growing market and enhance its overall growth trajectory.
