AG Barr eyes Scandinavia and England for growth

That helped it deliver an underlying pre-tax profit of £41.9m, up from £38.1m.

Sales volumes increased by 2.1 per cent to more than 53 million cases with carbonated drinks up 0.8 per cent after stripping out the effects of Orangina leaving the portfolio in the period. The still portfolio grew volume by eight per cent.

Industry research suggests the UK soft drinks market saw volumes decline 0.2 per cent in the period.

AG Barr said sales across England and Wales, which now make up almost 60 per cent of total revenue, increased 3.5 per cent while international sales were up 7.9 per cent from £6.65m to £7.2m. In Scotland there was a 1.2 per cent rise.

Chief executive Roger White outlined the potential to grow Irn-Bru into the rest of the UK and internationally. Irn-Bru sales were up 5.6 per cent across England and Wales with the sugar free variety 20 per cent ahead with the north of England, Lancashire and Yorkshire among the strongest performing regions.

Mr White said: "I was in Newcastle a few weeks ago and was delighted to see the amount of Irn-Bru being sold and consumed in the streets on a Saturday afternoon and Sunday morning.

"[We] now plan to target increased levels of distribution and brand awareness further into England and Wales in 2015."

The group's recent soft drinks sponsorship of the English Football League is seen as a way to up the profile of Irn-Bru and other brands across the Midlands and south of England.

Mr White pointed out the company already does well in many parts of England with its Rubicon brand.

An extension of AG Barr's distribution partnership with energy drink Rockstar is expected to lead to growth opportunities across Scandinavia.

Mr White said: "We will effectively join our business with the business they already have out there. For us that is good news as it cements our partnership further and gives us a stronger portfolio of brands to take to market in Scandinavia and develop our international footprint further.

"We have already got a decent presence with Rubicon in Scandinavia and have the right to sell Snapple in those markets as well.

"I see no reason why we wouldn't do something with Irn-Bru in those territories also."

AG Barr took full control of Snapple in the UK in January but Mr White downplayed expectations of large sales and indicated there was a "lot of learning" to be done about the brand.

He said he was happy with the integration of Funkin, bought in a £21m deal last month and which makes cocktail mixers, so far and excited by the opportunities the brand offers in the "medium to long term".

Total Irn-Bru sales across the year were up 1.2 per cent which included almost £1m worth of ice-cream. Mr White said: "We are not making a strategic push into ice-cream generally but the use of ice-cream with the Irn-Bru brand is a natural fit."

Across other core products the Barr range grew by more than six per cent while Strathmore water was up 20 per cent and Rubicon by 3.4 per cent.

AG Barr confirmed it had sold its water cooler business to Eden Springs in the year which led to the closure of a small bottling plant in East Lothian which employed three people.

Mr White said there had been recent price deflation in the soft drinks market as a result of factors including retailers changing pricing, promotional activity and product mix.

He said: "Each of those has some impact on the market and we are seeing some deflation as a consequence. We just need to navigate our way round that."

During the year a number of roles in supply chain planning were relocated from Bolton to Cumbernauld which Mr White said was to help improve business processes.

Installation of a new enterprise resource planning system is expected to further improve back office efficiency.

Mr White said: "It effectively is putting in the sort of scalable business processes and system that will allow us to continue to efficiently grow into the future. The business has grown reasonably successfully and we need to keep the plumbing and the wiring, to use the analogy, capable of supporting our growth ambitions."

Further investment in "capacity and capability" at its Milton Keynes canning and packaging factory is also pencilled in for this year.

Mr White said he had a cautiously optimistic outlook for 2015 and added: "We have a got a strong plan, the business is in good health, the brands are all performing well but we need to take account of the factors outwith our control to make sure that we can successfully navigate them. We are confident we are doing all the right things."

Analyst Nicola Mallard, from Investec, upped the target price on AG Barr's shares to 714p and said: "[This] could be a tough year for the category, but Barr has plans that should help deliver organic growth, albeit likely to be weighted [to the second half], plus we have the additional boost from Funkin.

"The balance sheets remain strong, even after the acquisition and further development of Milton Keynes."