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Anti-sugar lobby fails to stop Barr's growth

AG BARR has outperformed the soft drinks market in the opening 15 weeks of its financial year as the Irn-Bru maker announced that Ronnie Hanna will be standing down as chairman on December 31.

ever CHANGING: AG Barr chief executive Roger White says the firm is continuing its commitment to innovation.
ever CHANGING: AG Barr chief executive Roger White says the firm is continuing its commitment to innovation.

Cumbernauld-based AG Barr showed resilience in the face of the anti-sugar lobby by declaring that total revenue was up 5.2 per cent for the period ended May 11, compared with the same spell last year.

The update suggested AG Barr, which reported strong volumes for all of its core brands, is not suffering any ill-effects from the collapse of its £1.4 billion reverse takeover of rival Britvic last year.

AG Barr's performance compared favourably with a market showing value growth of 1.9 per cent and a volume decline of 0.6 per cent over the period up to May 10, according to data from Nielsen.

Britvic, which makes Robinsons, Tango and J2O, reported revenue growth of 4.7 per cent to £670.7 million for the 28 weeks ended April 13, with GB revenue up 5 per cent.

AG Barr said its brands, which include Strathmore, Rubicon and Rockstar, are responding well to increased marketing and promotional support, and noted progress on moves to increase distribution.

Chief executive Roger White told the company's annual general meeting in Glasgow its new canning facility in Milton Keynes was "fully operational and performing as we would have hoped".

The £40 million facility, which became operational last year, is a fundamental component of AG Barr's strategy to build sales in England. It handles canning for both Irn-Bru and Rubicon.

Prior to its development, AG Barr had bottled and canned all products in Cumbernauld before its distribution south.

Mr White added: "That's giving us also the opportunity to consider what else we could put in [to improve] the efficiency side in future. There is room for expansion."

Speaking after the AGM, Mr White said the firm was alert to and responding to growing concerns over consumers' sugar intake.

He noted that Sugar Free now accounts for about 35 per cent of Irn-Bru sales, a percentage the firm anticipates "growing at a rate faster than standard Irn-Bru, although standard Irn-Bru remains in growth".

Mr White added: "We've got a very strong brand and we act in the no-sugar end of the market and with standard Irn-Bru.

"You can see from the cans we've refreshed the look of Sugar Free Irn-Bru and we're very happy with the growth we are getting out of that, matching what consumers are participating in."

Looking ahead, AG Barr, a major sponsor of this summer's Commonwealth Games in Glasgow, reported the retail and consumer markets remain challenging and volatile.

The company said last summer's warm weather means it will be challenging to reach similar heights, but Mr White said the firm was as prepared as it could be.

He said: "We have got a strong plan across all our brands, both from a trading point of view [and] from an innovation point of view, and we are executing that plan.

"We are happy that things are going well at the minute and we will see what the weather delivers."

Mr White highlighted the firm's ongoing commitment to innovation, which in recent months has seen it launch a new Irn-Bru ice cream and coconut water under the Rubicon brand. He also said new some flavoured waters would appear under Strathmore.

He added: "We're trying to continue to build our innovation programme on what consumers want, which is changing all the time, and we want to keep up with that."

Asked if acquisitions remained on the agenda, Mr White said: "Our job is to maximise the value for shareholders, so we will do that by growing our business organically.

"The balance sheet is very strong and if the right opportunities come along to create enough value, we will look to execute."

Meanwhile, the company confirmed that John Nicholson had been appointed deputy chairman with immediate effect, and will succeed Mr Hanna as chairman on December 31. Mr Hanna, who joined the board 11 years ago, and has been chairman for the last five, said: "It's the right thing to do. I have been with the company for 11 years.

"It's a a really terrific company, and a very strong board, and I'm sure [it] will go from strength to strength.

"It's been a pleasure to be involved and [I'm] glad to be associated with some of the success."

Asked if his tenure had brought any particular high points, Mr Hanna said: "It's been a steady growth approach. I've always been impressed with the attitude of the company, right across the company, which is looking for constant and continuous improvement.

"It's a challenging environment, but everyone has the same ethos and it's marvellous to see how well people work as team. That's one of the things I will take away from it."

The AG Barr AGM, which was 110th in the company's history, passed without incident, with all ordinary and special resolutions proposed by the board carried. These included a resolution seeking approval for a second interim dividend, of 8.19p per ordinary share, instead of a final dividend.

The dividend will be paid on June 6.

The re-election of former executive chairman Robin Barr was carried, with 12.33 per cent of the votes, representing 7.81 per cent of the issued share capital, cast against the resolution.

Shares in AG Barr closed up 16.5p at 639p.

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