In a significant move to adapt to changing consumer preferences, the maker of Irn-Bru has acquired two notable soft drink companies: Fentimans and Frobishers. This strategy positions AG Barr to capture a growing market for non-alcoholic beverages.
AG Barr Acquires Fentimans and Frobishers
AG Barr purchased Fentimans, known for its signature ginger beer since 1905, for approximately £38 million through a mix of cash and debt.
Fentimans has its origins in West Yorkshire, where Thomas Fentiman, a local iron puddler, acquired a recipe for botanically brewed ginger beer. In addition to its celebrated ginger beer, the brand also offers beverages like Rose Lemonade and Curiosity Cola.
The acquisition of Frobishers, a premium fruit juice producer based in Devon, for £13 million, is also part of AG Barr’s strategy to enhance growth by “broadening the brand portfolio.”
Expectations and Market Response
Euan Sutherland, the chief executive of AG Barr, stated: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these developments, AG Barr’s shares experienced a boost of 33p, or 5 percent, reaching 683p.
The company anticipates announcing a 4 percent increase in revenue, estimating it at £437 million for the financial year ending in January, with results expected in March. Analysts suggest this reflects a sales growth of 4.8 percent in the latter half of the fiscal year, up from 3.1 percent during the first half.
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The company reported “modest growth” for Irn-Bru during the second half of the year, driven by effective marketing and distribution efforts. The strong performances from its Rubicon and Boost brands have balanced a downturn in its Funkin Cocktails line. Adjusted profit margins are projected to rise to around 14.7 percent, compared to 13.6 percent the previous year, aided by efficiency initiatives and investments in the supply chain.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts from Panmure Liberum noted that AG Barr’s expansion into the adult soft drinks market will offer substantial cost advantages through in-sourcing production and reducing overheads, along with increased revenue opportunities from broader distribution.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr generates the majority of its revenue within the UK. Its brand roster includes Moma oat milk, Tizer, and Rio. Recently, the company decided to discontinue the Strathmore bottled water brand, which had faced increasing competition.
Founded by Robert Barr in Falkirk in 1875, the business initially sold “aerated waters,” the early term for soft drinks. The company was passed down through generations, and it launched its most well-known product, Iron Brew, in 1901. The drink was later rebranded as Irn-Bru in 1946 to comply with food labeling regulations that mandated brand names be “totally true.”
Key Takeaways
- AG Barr has expanded its portfolio by acquiring Fentimans and Frobishers.
- The purchase of Fentimans was valued at approximately £38 million.
- Frobishers, a premium fruit juice brand, was acquired for £13 million.
- AG Barr anticipates a 4% increase in revenue for the fiscal year.
- Adjusted profit margins are projected to improve to around 14.7%.
- Analysts believe AG Barr’s expansion will lead to significant cost and revenue synergies.
FAQ
What companies did AG Barr acquire?
AG Barr acquired Fentimans and Frobishers to expand its non-alcoholic beverage offerings.
How much did AG Barr pay for Fentimans?
The acquisition of Fentimans was valued at about £38 million.
What is Frobishers known for?
Frobishers is recognized for its premium fruit juices, based in Devon.
What are AG Barr’s future expectations?
AG Barr expects a 4% rise in revenue and improved profit margins in the coming financial year.
In summary, AG Barr’s strategic acquisitions are expected to enhance its market presence in the soft drinks sector, allowing the company to meet the evolving preferences of consumers seeking non-alcoholic beverages.
