In a strategic move to adapt to changing consumer preferences away from alcoholic beverages, the maker of Irn-Bru, AG Barr, has acquired two notable soft drink companies: Fentimans and Frobishers. This acquisition signifies a strong intent to expand their portfolio in the non-alcoholic sector.
AG Barr purchased Fentimans, renowned for its ginger beer since 1905, for approximately £38 million through a blend of cash and debt financing.
Fentimans has its origins in West Yorkshire, beginning when Thomas Fentiman, an iron puddler from Cleckheaton, came across a recipe for botanically brewed ginger beer. The brand also offers a range of other soft drinks, including Rose Lemonade and Curiosity Cola.
In addition to Fentimans, the company has acquired Frobishers, a premium fruit juice producer based in Devon, for £13 million, aligning with its strategy to broaden its brand portfolio and foster growth.
Euan Sutherland, AG Barr’s chief executive, noted: “The synergies associated with these acquisitions are expected to drive meaningful accretion over the medium term.”
Following these acquisitions, AG Barr’s shares saw an increase of 33p, or 5 percent, reaching 683p.
The company anticipates reporting a 4 percent increase in revenue, amounting to £437 million for the year ending in January when results are released in March. Analysts predict a sales growth of 4.8 percent in the latter half of the year, compared with 3.1 percent during the first six months of its financial period.
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AG Barr commented that Irn-Bru experienced “modest growth” in the second half, attributed to effective marketing and distribution efforts. The company noted that positive performances from its Rubicon and Boost brands helped counterbalance a decline in Funkin Cocktails. Adjusted profit margins are projected to rise to approximately 14.7 percent, up from 13.6 percent the previous year, bolstered by efficiency initiatives and supply chain improvements.
The Irn-Bru factory in Cumbernauld
PRESS ASSOCIATION
Analysts from Panmure Liberum observed that AG Barr’s foray into the adult soft drinks market is likely to yield significant cost synergies through enhanced production capabilities, reduced overhead costs, and increased revenue through expanded distribution.
Headquartered in Cumbernauld, North Lanarkshire, AG Barr primarily generates its sales within the UK. The company’s brand portfolio also includes Moma oat milk, Tizer, and Rio. Last year, AG Barr decided to discontinue the Strathmore bottled water brand due to its challenges in the competitive landscape.
Founded by Robert Barr in Falkirk in 1875, the business originally sold “aerated waters,” which is how soft drinks were described in that era. The brand has passed through generations of Barrs, launching Iron Brew in 1901 and renaming it Irn-Bru in 1946 to comply with food labeling regulations requiring brand names to be “totally true.”
Key Takeaways
- AG Barr has acquired Fentimans and Frobishers to expand into the non-alcoholic beverage market.
- Fentimans is known for its historic ginger beer, while Frobishers specializes in premium fruit juices.
- The total acquisition cost was approximately £51 million.
- AG Barr expects a revenue increase of 4 percent and improved profit margins due to efficiency initiatives.
- Analysts believe AG Barr will benefit from cost and revenue synergies as it enters the adult soft drinks category.
FAQ
What brands does AG Barr own?
AG Barr owns several brands including Irn-Bru, Moma oat milk, Tizer, and Rio.
Why did AG Barr acquire Fentimans and Frobishers?
The acquisitions aim to broaden AG Barr’s brand portfolio and capitalize on the growing non-alcoholic beverage market.
What financial growth is AG Barr expecting?
AG Barr anticipates a 4 percent rise in revenue for the year ending in January, alongside improved profit margins.
Where is AG Barr headquartered?
AG Barr’s headquarters is located in Cumbernauld, North Lanarkshire, UK.
In summary, AG Barr’s recent acquisitions underscore the company’s commitment to diversifying its offerings and embracing the trends in the beverage industry. By strategically expanding into the soft drinks market, AG Barr aims to drive growth and enhance its brand presence.
