In a strategic move to adapt to changing consumer preferences, AG Barr, the maker of Irn-Bru, has acquired the soft drink companies Fentimans and Frobishers. This decision reflects a growing trend away from alcoholic drinks towards unique and flavorful non-alcoholic alternatives.
AG Barr purchased Fentimans, a producer of ginger beer since 1905, for approximately £38 million, financed through a mix of cash and debt.
Fentimans began its journey in West Yorkshire when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for brewing botanically-infused ginger beer. The company also offers a variety of soft drinks, such as Rose Lemonade and Curiosity Cola.
Additionally, AG Barr acquired Frobishers, a premium fruit juice brand based in Devon, for £13 million. This acquisition is aimed at expanding AG Barr’s brand portfolio to foster growth.
Euan Sutherland, the chief executive of AG Barr, remarked: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr’s shares increased by 33p, or 5 percent, reaching 683p.
In its financial outlook, AG Barr anticipates reporting a 4 percent rise in revenue to £437 million for the year ending January, with results expected in March. Analysts project a sales growth of 4.8 percent in the latter half of the fiscal year, compared to 3.1 percent in the first six months.
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AG Barr noted that Irn-Bru experienced “modest growth” in the second half of the fiscal year, driven by enhancements in marketing and distribution. The success of its Rubicon and Boost brands helped counterbalance a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to around 14.7 percent from 13.6 percent a year prior, bolstered by efficiency measures and supply chain investments.
The Irn-Bru factory in Cumbernauld
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Analysts from Panmure Liberum believe AG Barr’s foray into the adult soft drinks segment will yield considerable cost efficiencies such as in-sourcing production, lower overheads, and expanded distribution, resulting in increased revenue streams.
AG Barr, headquartered in Cumbernauld, North Lanarkshire, primarily generates its sales within the UK. Its brand portfolio includes Moma oat milk, Tizer, and Rio. The company recently discontinued the Strathmore bottled water brand due to its inability to compete in recent years.
Founded by Robert Barr in Falkirk in 1875, the company began by selling “aerated waters,” the term used for soft drinks at the time. It has been passed down through generations of the Barr family, launching Iron Brew — its flagship product — in 1901. The product 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 to diversify its non-alcoholic beverage offerings.
- Fentimans, known for ginger beer, was purchased for approximately £38 million.
- Frobishers, a premium fruit juice brand, was acquired for £13 million.
- AG Barr anticipates a revenue increase of 4% for the year ending January.
- We expect higher profit margins due to efficiency initiatives and improved supply chains.
- Expansion into the adult soft drinks market could bring significant cost and revenue synergies.
FAQ
What are the brands owned by AG Barr?
AG Barr owns several brands, including Irn-Bru, Moma oat milk, Tizer, and Rio.
When was Irn-Bru first launched?
Irn-Bru was first launched in 1901 as Iron Brew before being renamed in 1946.
Where is AG Barr headquartered?
AG Barr is based in Cumbernauld, North Lanarkshire, UK.
Why did AG Barr acquire these new companies?
The acquisitions are aimed at expanding AG Barr’s brand portfolio and driving growth in the non-alcoholic beverage market.
The recent acquisitions by AG Barr mark a significant step in its strategy to widen its range of non-alcoholic drinks, positioning the company well for future growth as consumer preferences continue to evolve.
