SHARES in AG Barr dropped by nearly five per cent yesterday after the Irn-Bru maker warned further regulatory upheaval is coming down the track for soft drinks producers.

Barr controversially changed the recipe of its flagship Irn-Bru early last year to avoid being hit by the sugar tax, which since April has applied a levy to producers whose drinks include at least five grams of sugar per 100 millilitres.

The Cumbernauld-based company faced opposition from diehard fans over the recipe alteration but took the change in its stride. It told the City yesterday that it was on course to report revenue of around £277 million for the year ended January 26, up five per cent on the previous year, with the company increasing market share and signalling it is on track to beat last year’s profits. That is despite the recipe upheaval and other challenges such as the freezing weather brought by the Beast from the East in February and March, a carbon dioxide shortage and economic volatility.

READ MORE: AG Barr boss says too early to gauge sugar tax

However, AG Barr warned investors that “further regulatory intervention is on the horizon”, adding that it expects the current political and economic uncertainty in the UK to continue.

The company declined to comment on the suggestion by one analyst that “takeover speculation persists” around the firm, an allusion to the recent consolidation which has taken place in the drinks industry.

Asked to elaborate on the reference to regulatory intervention, AG Barr chief executive Roger White highlighted plans by the UK Government to launch a consultation which would levy a tax on single use plastics which contain less than 30 per cent of recycled content. Mr White noted the company is already moving towards using recycled PETs on its bottles and hopes the effect of the government proposal on the business would be minimised.

READ MORE: New Irn-Bru formula shows thirst for innovation

He also referred to consultations in Scotland and England on deposit return schemes, designed to promote recycling and reduce littering, and to consultations on the marketing and promotion of products and brands.

Mr White said: “There are still quite a number of areas which will provide both opportunities and indeed challenges as we go forward. We always feel it is important to be balanced in our outlook. Not mentioning these, because they are important things, would be neglectful I think.”

Mr White noted that AG Barr is broadly supportive of the idea of a deposit return scheme, while stating he would prefer it to be introduced on a “national” basis.

He said: “All of our packaging is 100 per cent recyclable, and we want people to be recycling it. Somewhere in the region of 17%-plus of bottles are already recycled, but anything that can close the gap is a good thing. We like the idea of circular environments where what we use, we can use again. From our point of view, we want to make sure our impact on the environment is minimal.”

READ MORE: AG Barr on track to beat City forecasts

John Moore, senior investment manager at stockbroker Brewin Dolphin Scotland, described the update from Barr as a “sweet set of results… despite previous worries over the effect of the sugar tax”.

Mr Moore added: “While takeover speculation persists, investors should look beyond that and focus on a business that offers the potential for self-financed growth served by a very robust balance sheet.”

Asked to comment on the reference to takeover speculation, Mr White replied: “We’re getting on managing and growing our business. If anyone is speculating on that, it is up to them.”

Sophie Lund-Yates, equity analysts at Hargreaves Lansdown, said: “Sugar tax related price hikes mean volume growth has been slow for the wider soft drinks industry, but AG Barr’s bucked the trend. With wider uncertainties lingering, though, there’s no telling how much of a headache Brexit will be. Added to that, it’s very likely we’ll see more regulatory clampdowns in the medium-

term, and that’ll mean another round of shake-ups for the industry.”

Mr White added: “We are very pleased we have delivered a very strong performance in this unpredictable and slightly volatile market.”

Shares in AG Barr closed down 36p, or 4.51%, at 762p.