In a strategic move to adapt to changing consumer preferences, the maker of Irn-Bru has acquired both Fentimans and Frobishers. This shift signifies AG Barr’s commitment to expanding its non-alcoholic beverage lineup as market trends increasingly favor soft drinks over alcoholic options.
Recent Acquisitions
AG Barr purchased Fentimans, a company known for its ginger beer since 1905, for approximately £38 million, utilizing a mix of cash and debt.
Fentimans began in West Yorkshire when Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for botanically brewed ginger beer. Today, it offers a variety of soft drinks, including Rose Lemonade and Curiosity Cola.
Additionally, AG Barr has acquired Frobishers, a premium fruit juice maker located in Devon, for £13 million. This acquisition aligns with their strategy to enhance growth by expanding their brand portfolio.
Company Insights
Euan Sutherland, AG Barr’s chief executive, commented on the acquisitions, stating: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following the announcements, AG Barr’s shares increased by 33p, reflecting a 5 percent rise to 683p.
The company anticipates reporting a 4 percent increase in revenue to £437 million for the year ending in January, with results due to be shared in March. Analysts project a sales growth of 4.8 percent in the latter half of the year, a rise from 3.1 percent for the first six months.
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Irn-Bru has shown “modest growth” in the latter half of the year, attributed to various marketing and distribution initiatives. Meanwhile, the performances of the Rubicon and Boost brands have successfully countered a decline observed in Funkin Cocktails. Adjusted profit margins are expected to rise to around 14.7 percent, compared to last year’s 13.6 percent, bolstered by efficiency and supply chain enhancements.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Market Outlook
Analysts from Panmure Liberum mentioned that AG Barr’s venture into the adult soft drinks segment could lead to substantial cost synergies through in-sourcing production, lower overhead costs, and increased revenue from distribution expansion.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its revenue within the UK. Its diverse product range includes Moma oat milk, Tizer, and Rio. Last year, the company opted to shut down the Strathmore bottled water brand, acknowledging its challenges in recent competitive markets.
Founded by Robert Barr in Falkirk in 1875, the company initially sold “aerated waters,” a term used for soft drinks at that time. The Barr family has maintained ownership through generations, introducing Iron Brew in 1901, which was renamed Irn-Bru in 1946 to comply with food labeling regulations.
Key Takeaways
- AG Barr acquired Fentimans and Frobishers to expand its non-alcoholic beverage portfolio.
- The Fentimans purchase was valued at approximately £38 million, while Frobishers was acquired for £13 million.
- AG Barr forecasts a 4% increase in revenue for the year ending January.
- The adjusted profit margin is expected to rise due to various efficiency and investment initiatives.
- Analysts believe that entering the adult soft drinks sector could enhance cost effectiveness and revenue opportunities.
FAQ
What companies has AG Barr acquired?
AG Barr has acquired Fentimans and Frobishers to expand its brand offerings in non-alcoholic beverages.
Why did AG Barr acquire Fentimans?
The acquisition of Fentimans allows AG Barr to leverage its heritage in soft drinks and expand its portfolio in the growing non-alcoholic beverages market.
What is the expected impact of these acquisitions?
AG Barr anticipates cost and revenue synergies that will contribute positively to its financial growth in the medium term.
When will AG Barr report its financial results?
The company is expected to share its financial results for the year by March.
What brands does AG Barr own?
AG Barr’s brands include Irn-Bru, Moma oat milk, Tizer, and Rio, among others.
