In a strategic move to capitalize on the growing demand for non-alcoholic beverages, the maker of Irn-Bru has expanded its portfolio by acquiring Fentimans and Frobishers, two renowned soft drink companies.
AG Barr’s Acquisitions
AG Barr purchased Fentimans, a company renowned for its ginger beer since 1905, for approximately £38 million through a mix of cash and debt.
Fentimans began its journey in West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, obtained a recipe for botanically brewed ginger beer. The company now produces a variety of soft drinks, including Rose Lemonade and Curiosity Cola.
Additionally, AG Barr has acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million. This acquisition is a part of the company’s strategy to enhance growth by “broadening the brand portfolio.”
Financial Outlook
Euan Sutherland, the chief executive of AG Barr, mentioned, “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr’s shares surged by 33p, or 5 percent, reaching 683p.
AG Barr anticipates a 4 percent increase in revenue, projecting £437 million for the year ending in January, when results are published in March. Analysts have indicated that this reflects a sales growth of 4.8 percent in the latter half of the financial year, compared to 3.1 percent during the first six months.
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The company reported that Irn-Bru has seen “modest growth” in the latter half of the year due to robust marketing and distribution efforts. Good performance from its Rubicon and Boost brands helped mitigate a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to about 14.7 percent, up from 13.6 percent the previous year, attributed to efficiency initiatives and supply chain investments.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts at Panmure Liberum have noted that AG Barr’s entry into the expanding adult soft drinks market will yield significant cost synergies through in-sourcing production and reducing overheads, along with notable revenue synergies due to distribution expansion.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr predominantly generates its sales within the UK. Its brand portfolio also includes Moma oat milk, Tizer, and Rio. Last year, the company decided to discontinue the Strathmore bottled water brand, which had struggled to remain competitive.
The company was established by Robert Barr in Falkirk in 1875, initially selling “aerated waters,” as soft drinks were called at the time. Generational legacy has seen the launch of Iron Brew in 1901, which was later renamed Irn-Bru in 1946 to comply with food labelling legislation that required brand names to be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to diversify its beverage portfolio.
- The purchase of Fentimans was valued at approximately £38 million, while Frobishers was acquired for £13 million.
- AG Barr expects revenue growth of 4% for the current financial year.
- Irn-Bru has shown modest growth, buoyed by marketing efforts and distribution strategies.
- Profit margins are anticipated to increase due to improved efficiency and supply chain investments.
FAQ
What are the main brands acquired by AG Barr?
AG Barr has acquired Fentimans and Frobishers to enhance its beverage offerings.
How much did AG Barr spend on the acquisitions?
The acquisition of Fentimans cost approximately £38 million, while Frobishers was acquired for £13 million.
What is AG Barr’s revenue growth forecast?
AG Barr expects a 4% increase in revenue for the year ending in January.
How is Irn-Bru performing in the market?
Irn-Bru has experienced modest growth thanks to effective marketing and distribution initiatives.
Overall, AG Barr’s strategic acquisitions and focus on growth in the non-alcoholic beverage sector indicate a commitment to evolving alongside market trends.
