AG Barr, the producer of Irn-Bru, has made a strategic move by acquiring the soft drink brands Fentimans and Frobishers, aiming to leverage the growing preference for non-alcoholic beverages.
The company purchased Fentimans, renowned for its ginger beer since 1905, for approximately £38 million through a mix of cash and debt.
Fentimans originated in West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, discovered a recipe for its botanically brewed ginger beer. Today, the brand offers a variety 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 by expanding its brand portfolio.
Euan Sutherland, the CEO of AG Barr, noted that: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following the acquisitions, AG Barr’s shares increased by 33p, or 5 percent, reaching 683p.
AG Barr anticipates a 4 percent revenue increase, totaling £437 million for the year ending in January, with results set to be published in March. Analysts suggest that this indicates sales growth of 4.8 percent in the second half, compared to 3.1 percent in the first half of the financial year.
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The company reported “modest growth” for Irn-Bru in the second half, attributed to marketing and distribution efforts, noting that strong performances from its Rubicon and Boost brands offset a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to about 14.7 percent, up from 13.6 percent last year, driven by efficiency and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts at Panmure Liberum have remarked that AG Barr’s foray into the burgeoning adult soft drinks market will yield considerable cost synergies through in-sourcing production, reduced overheads, and substantial revenue synergies from expanded distribution.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its revenue within the UK. Other brands under its umbrella include Moma oat milk, Tizer, and Rio. Recently, the company decided to discontinue the Strathmore bottled water brand, acknowledging its difficulties in recent years.
Founded by Robert Barr in Falkirk in 1875, the business initially sold “aerated waters,” as soft drinks were referred to at the time. It has remained in the Barr family for generations, launching Iron Brew—its most recognized offering—in 1901. The drink was rebranded 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 for £38 million and £13 million respectively.
- The acquisitions aim to expand AG Barr’s brand portfolio and enhance growth.
- AG Barr anticipates a 4% revenue increase to £437 million for the fiscal year ending in January.
- Analysts note significant cost synergies from the entry into the adult soft drink market.
- Irn-Bru is experiencing modest growth owing to effective marketing strategies.
FAQ
Question
What brands did AG Barr acquire?
AG Barr acquired Fentimans and Frobishers to enhance its product offerings.
Question
How much did AG Barr pay for the acquisitions?
The company paid approximately £38 million for Fentimans and £13 million for Frobishers.
Question
What is the expected revenue growth for AG Barr?
AG Barr expects a revenue growth of around 4% for the year ending in January.
Question
What other brands does AG Barr own?
AG Barr’s portfolio includes brands such as Moma oat milk, Tizer, and Rio.
Question
What challenges has AG Barr faced recently?
The company has faced competition issues, leading to the closure of its Strathmore bottled water brand.
In conclusion, AG Barr’s recent acquisitions signal its commitment to evolving in the non-alcoholic beverage market, potentially increasing its market share and enhancing its revenue streams. As the beverage landscape continues to shift, AG Barr is poised to adapt and grow within this competitive space.
