AG Barr, the producer of Irn-Bru, has expanded its footprint in the soft drinks market by acquiring Fentimans and Frobishers. This strategic move is in response to the growing trend of consumers opting for non-alcoholic beverages.
AG Barr purchased Fentimans, renowned for its ginger beer since 1905, for approximately £38 million through a mix of cash and debt.
Fentimans originated in West Yorkshire, where Thomas Fentiman, an iron puddler from Cleckheaton, acquired a recipe for its botanically brewed ginger beer. The brand also features several other offerings, including Rose Lemonade and Curiosity Cola.
Additionally, AG Barr acquired Frobishers, a premium fruit juice brand based in Devon, for £13 million as part of its strategy to enhance growth by “broadening the brand portfolio.”
Euan Sutherland, AG Barr’s chief executive, remarked: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
AG Barr’s share price increased by 33p, or 5 percent, reaching 683p.
The company also anticipates a 4 percent increase in revenue, totaling £437 million for the year ending in January, with results due in March. Analysts predict this indicates sales growth of 4.8 percent in the second half, compared to 3.1 percent in the first half of the fiscal year.
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The company mentioned that Irn-Bru experienced “modest growth” in the latter half of the year, supported by marketing and distribution efforts. Positive performance from its Rubicon and Boost brands helped counterbalance a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to around 14.7 percent, up from 13.6 percent the previous year, attributed to efficiency measures and supply chain investment.
The Irn-Bru factory in Cumbernauld
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Analysts at Panmure Liberum noted that AG Barr’s entry into the appealing adult soft drinks market is likely to lead to significant cost synergies from in-sourcing production and lower overheads, alongside substantial revenue synergies from expanded distribution.
Based in Cumbernauld, North Lanarkshire, AG Barr primarily generates its revenue in the UK. The company’s portfolio also includes Moma oat milk, Tizer, and Rio. Recently, AG Barr decided to discontinue the Strathmore bottled water brand, admitting that it had struggled to maintain its competitiveness.
Founded by Robert Barr in Falkirk in 1875, the company began by selling “aerated waters,” the term used for soft drinks at that time. It has remained in the Barr family through generations, launching Iron Brew — its most notable product — in 1901. The name was changed to Irn-Bru in 1946 to comply with food labeling regulations requiring brands to be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to enhance its non-alcoholic beverage portfolio.
- The purchase of Fentimans was for approximately £38 million, while Frobishers was acquired for £13 million.
- The company anticipates a 4 percent rise in annual revenue, signaling robust growth.
- Irn-Bru has shown modest growth aided by strategic marketing efforts.
- Analysts project significant cost and revenue synergies from the acquisitions.
FAQ
What are the main brands owned by AG Barr?
AG Barr’s notable brands include Irn-Bru, Moma oat milk, Tizer, and Rio.
When did AG Barr acquire Fentimans?
AG Barr purchased Fentimans for around £38 million as part of a strategic expansion into the soft drinks market.
Where is AG Barr located?
AG Barr is headquartered in Cumbernauld, North Lanarkshire, UK.
What is Irn-Bru known for?
Irn-Bru is known for its unique flavor and is often referred to as Scotland’s national soft drink.
What led to the discontinuation of Strathmore bottled water?
Strathmore faced difficulties competing in the bottled water market, prompting AG Barr to discontinue the brand.
In conclusion, AG Barr’s recent acquisitions aim to strengthen its foothold in the non-alcoholic sector, indicating a forward-thinking approach in a rapidly evolving market. This strategy, combined with positive growth signals, positions the company well for future development.
