AG Barr, the company behind Irn-Bru, has recently expanded its portfolio by acquiring two notable players in the beverage industry: Fentimans and Frobishers. This move reflects a growing interest in soft drinks as consumers increasingly shift away from alcoholic options.
Acquisition Details
AG Barr purchased Fentimans, a producer of ginger beer since 1905, for approximately £38 million, utilizing a mix of cash and debt financing.
Fentimans has its origins in West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, secured a recipe for botanically brewed ginger beer. The brand has since expanded to include various soft drinks, such as Rose Lemonade and Curiosity Cola.
Additionally, AG Barr acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million. This acquisition aims to enhance the company’s growth through a more diverse brand portfolio.
Company Performance
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 announcement of these acquisitions, AG Barr’s shares increased by 33p, or 5 percent, reaching a value of 683p.
Alongside these developments, AG Barr anticipates reporting a 4 percent rise in revenue, projecting £437 million for the fiscal year ending in January, and plans to unveil results in March. Analysts indicate this suggests a sales growth of 4.8 percent in the latter half of the year, in comparison to a 3.1 percent increase during the first half.
Product Growth
The company noted that Irn-Bru has seen “modest growth” in the latter half of the year, thanks to effective marketing and distribution strategies. Positive contributions from its Rubicon and Boost brands have countered a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to around 14.7 percent, up from 13.6 percent a year earlier, propelled by efficiency and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Industry Insights
Analysts at Panmure Liberum noted that AG Barr’s entry into the appealing adult soft drinks market is likely to yield substantial cost savings through in-sourcing production, lowered overheads, and enhanced revenue opportunities from expanding distribution channels.
AG Barr, headquartered in Cumbernauld, North Lanarkshire, primarily generates its revenue within the UK. The company’s existing portfolio includes brands such as Moma oat milk, Tizer, and Rio. Recently, it decided to discontinue the Strathmore bottled water brand, acknowledging its challenges in competing in the current market.
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to diversify its beverage offerings.
- The purchase of Fentimans was for approximately £38 million, while Frobishers cost £13 million.
- AG Barr anticipates a 4 percent revenue increase in the coming year.
- Marketing strategies have contributed to modest growth in Irn-Bru sales.
- The company is experiencing increased profit margins due to efficiency investments.
- AG Barr aims to tap into the growing adult soft drinks market for future growth opportunities.
FAQ
What brands does AG Barr own?
AG Barr’s portfolio includes notable brands like Irn-Bru, Moma oat milk, Tizer, and Rio.
Why did AG Barr acquire Fentimans and Frobishers?
The acquisitions aim to broaden AG Barr’s brand portfolio and capitalize on the shift towards non-alcoholic beverages.
What impact do these acquisitions have on AG Barr’s market position?
The acquisitions are expected to generate significant cost and revenue synergies, enhancing AG Barr’s competitive edge in the beverage market.
Founded in 1875 by Robert Barr in Falkirk, AG Barr originally sold “aerated waters,” a precursor to modern soft drinks. The company is best known for launching Iron Brew in 1901, which was later rebranded as Irn-Bru in 1946 to comply with food labeling regulations.
