In a strategic move to adapt to changing consumer preferences, AG Barr, the maker of Irn-Bru, has acquired two prominent soft drink companies—Fentimans and Frobishers. This reflects the growing trend of consumers shifting away from alcoholic beverages and opting for quality soft drinks.
AG Barr purchased Fentimans, renowned for its ginger beer since 1905, for around £38 million, funded through a mix of cash and debt.
Fentimans has its origins in West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, obtained a recipe for botanically brewed ginger beer. The company has since expanded its lineup to include various soft drinks, such as Rose Lemonade and Curiosity Cola.
Additionally, AG Barr acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million, aligning with its strategy to bolster growth by “broadening the brand portfolio.”
Euan Sutherland, the CEO of AG Barr, stated: “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.
The company projected a 4 percent rise in revenue to £437 million for the year ending in January, set to be reported in March. Analysts indicated that this suggested sales growth of 4.8 percent in the latter half of the year, compared to 3.1 percent in the first half.
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In the latter half of the year, the company reported “modest growth” for Irn-Bru, attributing this to effective marketing and distribution strategies. Moreover, robust performances from its Rubicon and Boost brands helped to offset declines from Funkin Cocktails. Adjusted profit margins are anticipated to rise to about 14.7 percent, up from 13.6 percent a year prior, driven by efficiency initiatives and investments in the supply chain.
The Irn-Bru factory in Cumbernauld
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Panmure Liberum analysts indicated that AG Barr’s venture into the adult soft drinks segment is likely to yield substantial cost synergies by consolidating production, lowering overheads, and enhancing revenue through distribution expansion.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr generates most of its revenue in the UK. Its brand portfolio also features Moma oat milk, Tizer, and Rio. Recently, the company opted to close the Strathmore bottled water brand due to its struggles in the competitive market.
AG Barr was founded in Falkirk in 1875 by Robert Barr, selling “aerated waters”, the term used for soft drinks at that time. Passed down through generations, it launched Iron Brew in 1901—the product for which it is most renowned—and rebranded it as Irn-Bru in 1946 to comply with food labeling regulations.
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to diversify its beverage portfolio.
- Fentimans is known for its historic ginger beer and botanically brewed drinks.
- The total acquisition cost was approximately £51 million, combining both purchases.
- AG Barr’s revenue is projected to increase by 4 percent for the year ending January.
- The company’s profit margins are set to improve due to operational efficiencies.
- AG Barr aims to strengthen its presence in the adult soft drinks market.
FAQ
What brands does AG Barr own?
AG Barr owns several brands including Irn-Bru, Tizer, Moma oat milk, and Rio.
Why has AG Barr acquired Fentimans and Frobishers?
The acquisitions aim to broaden AG Barr’s product offerings and capitalize on the growing market for non-alcoholic beverages.
What is the significance of the Fentimans acquisition?
Fentimans has a long-standing history in the soft drink sector, enhancing AG Barr’s portfolio with quality, established brands.
When was AG Barr founded?
AG Barr was founded in 1875 in Falkirk, Scotland.
How has AG Barr performed financially recently?
AG Barr announced an expected revenue increase of 4 percent, indicating positive growth trends.
