AG Barr increases investment in core brands

AG Barr, the soft drinks group that earlier this month announced its intentions to merge with Britvic, has marked a drop in pre tax profits in the financial half year as it increased investment in its core brands ahead of the proposed tie up.

Rubicon Ice Pop

Profit before tax fell 8 per cent to £14.9m in the six months to 28 July. Revenue rose 5 per cent to £130m, driven by increases in market share for core brands Irn-Bru, Barr and Rubicon.

Soft drinks industry experts claim that Rubicon and Irn-Bru are set to be the likely winners of AG Barr’s merger with Britvic, as the latter company would provide the brands with increased marketing investment and distribution.

AG Barr claims recent Irn-Bru advertising campaigns have helped the brand achieve its strongest ever consumer awareness, impact and enjoyment scores. Sales of the product were slightly down in the reporting period, however, which the company says reflects elements of promotional phasing.

Rubicon grew in volume by more than 6 per cent, although this growth was behind 5 per cent in the same period the previous year.

AG Barr says it has “underpinned” its position in the “increasingly important” exotic sub sector by supporting its growth ambitions with greater brand investment, which included its first ever national TV campaign and new product development, such as the launch of Rubicon ice cream.

The Barr range of flavoured carbonates grew 10 per cent in revenue, reflecting geographical brand distribution improvements and the low cost of the product.

The company says its main operational priority in the period was to deal with the increased short term volatility of demand driven by significant national events this summer, the weather and higher levels of promotional activity across the market, which has affected margins.

It adds that it remains “cautious” for the second half of the year, given the difficult ongoing economic environment, poor weather and its continued investment in the long term potential of its core brands.

Roger White, AG Barr chief executive, says: “We have continued to outperform, delivering further consistent growth in volume and value ahead of a market which has seen volume declines in the period. In addition we have maintained investment in the long term equity of all of our core brands.”

White is set to become the chief executive of the new AG Barr and Britvic business, despite the fact that his current company is set to take 37 per cent ownership of the group compared with Britvic’s 63 per cent.

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