AG Barr has made a strategic acquisition of two brands, positioning itself to tap into the expanding adult soft drinks market as alcohol consumption declines. This move not only enhances Barr’s offerings but also opens doors to new consumer segments and occasions for enjoyment.
These new additions, Frobishers and Fentimans, join a robust portfolio that already includes established brands like Rubicon and IRN-BRU. By diversifying its lineup, AG Barr aims to connect with a broader audience seeking appealing alternatives to traditional alcoholic beverages.
Commenting on the acquisitions, Clive Black, vice chairman of Shore Capital, which advises AG Barr, noted: “We see considerable merit in the acquisitions of Fentimans and Frobishers, adult soft beverage brands that perfectly complement the firm’s existing assortment; with Boost and Barr as entry price labels, IRN BRU as an iconic CSD national brand, and Rubicon as part of healthy hydration and world foods.”
“Indeed, group CEO Euan Sutherland has made it clear that healthy hydration and the broadening of the portfolio to include soft drinks for adults is central to his inorganic strategy.”
“While this acquisition may benefit the future more than the present, it notably enhances AG Barr’s portfolio value and provides opportunities for increased in-house manufacturing as seen with Boost.”
“I think it’s a great move,” added Mark Lynch. “It broadens the portfolio and addresses the trend away from alcohol towards adult soft drinks, while also steering away from heavily carbonated options.”
Lynch provided further insights, stating: “In 2015, 54% of the sales were from IRN-BRU, 14% from Rubicon, and the remainder from other brands. Last year, sales shifted to 33% for IRN-BRU and 21% for Rubicon. This change demonstrates a reduction in reliance on IRN-BRU alone, although it remains a strong brand. This strategy aligns well with evolving market trends.”
Additionally, Lynch highlighted a notable shift in consumer preferences, driven by concerns about ultra-processed foods. While energy drink brands have introduced ‘natural energy’ alternatives, AG Barr’s latest move strategically positions it to adapt to future market shifts.
Both Frobishers and Fentimans stand out for their ‘cleaner labels’, featuring natural flavorings, fruits, and botanicals prominently on their packaging.
Discussing the acquisition with Frobishers’ managing director David Pearce, he noted AG Barr’s “impressive heritage” in the soft drink sector makes it an ideal partner for advancing the brand.
Lynch concurred, mentioning that Frobishers and Fentimans are well-positioned to benefit from AG Barr’s extensive market reach.
“Fentimans has faced some challenges in recent years, largely tied to distribution and marketing efforts that could have been more strategic,” Lynch observed. “AG Barr has demonstrated its skills as a strong brand manager with consistent business growth.”
Julian Wild, director of Wilkin Chapman Rollits, echoed this sentiment, stating these acquisitions are a wise move, with AG Barr possessing the “firepower to support niche brands and position them effectively.”
Key Takeaways
- AG Barr acquires Frobishers and Fentimans to capitalize on the growing adult soft drinks market.
- The acquisitions aim to diversify AG Barr’s portfolio and connect with new consumer demographics.
- Industry experts see the potential for future growth, aligning with shifts in consumer preferences away from alcohol.
- Natural ingredients and ‘cleaner labels’ are prominent features of the newly acquired brands.
- AG Barr’s extensive distribution network is expected to benefit these brands significantly.
FAQ
What motivated AG Barr’s recent acquisitions?
AG Barr aims to enrich its product portfolio and address the growing demand for adult soft drinks as alcohol consumption declines.
How do Frobishers and Fentimans fit into AG Barr’s strategy?
Both brands feature natural ingredients and appeal to health-conscious consumers, aligning with AG Barr’s focus on healthy hydration.
What expertise does AG Barr bring to its new acquisitions?
AG Barr has a strong heritage in the soft drinks market, demonstrating effective brand management and a capability to enhance distribution and marketing.
The acquisition of Frobishers and Fentimans undoubtedly showcases AG Barr’s commitment to expanding its portfolio in alignment with evolving consumer trends. As the adult soft drinks sector continues to grow, these strategic moves could pave the way for sustainable success in the industry.
