In a strategic move to adapt to changing consumer preferences, the maker of Irn-Bru has expanded its portfolio by acquiring the soft drink companies Fentimans and Frobishers. This acquisition highlights a growing interest in non-alcoholic beverages, reflecting a trend among consumers seeking innovative drink options.
AG Barr’s Acquisition of Fentimans and Frobishers
AG Barr purchased Fentimans, known for its ginger beer since 1905, for approximately £38 million, financed through a mix of cash and debt.
Fentimans’ history dates back to West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, secured a recipe for botanically brewed ginger beer. Today, the brand offers several soft drinks, including Rose Lemonade and Curiosity Cola.
In addition to Fentimans, the company acquired Frobishers, a premium fruit juice manufacturer based in Devon, for £13 million. This move aims to enhance growth by “broadening the brand portfolio.”
Financial Implications and Growth Expectations
Euan Sutherland, the chief executive of AG Barr, indicated that: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr’s shares rose by 33p, or 5 percent, bringing the total to 683p.
The company anticipates a 4 percent increase in revenue, amounting to £437 million for the year ending in January, which will be reported in March. Analysts suggest that this indicates a sales growth of 4.8 percent in the second half of the fiscal year, compared to 3.1 percent in the first six months.
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The company reported that Irn-Bru achieved “modest growth” in the second half of the year, thanks to effective marketing and distribution strategies. Strong performances from the Rubicon and Boost brands helped balance declines in Funkin Cocktails. Adjusted profit margins are expected to rise to approximately 14.7 percent, up from 13.6 percent a year prior, driven by efficiency measures and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts from Panmure Liberum highlight that AG Barr’s entry into the appealing adult soft drinks market will result in considerable cost synergies. This includes in-sourcing production, reducing overhead costs, and expanding revenue through broader distribution.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr derives most of its sales from the UK. The company also owns other brands such as Moma oat milk, Tizer, and Rio. Previously, AG Barr decided to cease operations of the Strathmore bottled water brand due to increased competition.
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand its non-alcoholic beverage portfolio.
- Fentimans has been producing ginger beer since 1905 and offers various soft drink options.
- The acquisitions total approximately £51 million, a strategic move for growth.
- AG Barr anticipates a 4% revenue increase in the upcoming financial report.
- Shares of AG Barr saw a 5% increase following the announcement of the acquisitions.
- The company is focusing on enhancing profit margins and operational efficiencies.
FAQ
What brands does AG Barr own?
AG Barr owns several brands, including Irn-Bru, Moma oat milk, Tizer, and Rio.
How much did AG Barr pay for Fentimans?
AG Barr acquired Fentimans for about £38 million.
What led to the acquisition of Frobishers?
AG Barr aims to broaden its brand portfolio and enhance growth opportunities through the acquisition of Frobishers.
What are the expected financial impacts of these acquisitions?
AG Barr expects significant synergies and a revenue increase projected at 4% in its upcoming financial report.
Where is AG Barr headquartered?
AG Barr is headquartered in Cumbernauld, North Lanarkshire, Scotland.
This expansion by AG Barr showcases its commitment to adapting to market trends and enhancing its product offerings. By integrating established brands like Fentimans and Frobishers, the company is poised for sustainable growth in the evolving beverage landscape.
