By Kristy Dorsey

Irn-Bru maker AG Barr is opting into healthy alternatives with an agreement to take over porridge and oat milk maker MOMA Foods based out of London.

The move into plant-based drinks is a notable departure for the Scottish firm, whose portfolio is led by its classic bright orange fizzy soda, juice brand Rubicon, and the Funkin Cocktails range of pre-made mixers. It comes as AG Barr continues to reap benefits from this year’s easing of lockdown restrictions as sales grow ahead of expectations with the return of commuter and hospitality trade.

The Cumbernauld-headquartered company is now looking to capitalise on soaring demand for vegan milk alternatives, which is being driven by millennial and Gen Z consumers.

According to research earlier this year from Mintel, 32 per cent of Britons reported drinking milk derived from oats, almonds or soya in 2021, up from 25% in 2020. Uptake is even higher among 25 to 44-year-olds at 44%.

HeraldScotland:

MOMA began trading in 2006 when founder Tom Mercer started selling to commuters from a breakfast stall under a railway arch in Deptford. It was officially named the UK’s fastest-growing porridge brand in 2017 before launching its oat drink range in March of last year, and is now said to be the UK’s third-largest oat milk brand.

AG Barr has taken a 60% stake in MOMA and has agreed to take full control of the business within the next three years. Roger White, chief executive of AG Barr, said the investment is a “positive indication” of the company’s growth ambitions.

“I’m delighted that AG Barr is venturing into healthy oat-based products with such a great brand and an experienced team, led by Tom,” he said.

“Plant-based milk is a fast-growing category, in particular, and MOMA’s oat milk is a premium quality product with huge potential.”

Mr Mercer added: “I’m hugely excited to embark on the next phase of MOMA’s growth with AG Barr.

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“I believe that together we can harness the passion that is integral to MOMA and grow into a significantly bigger brand. We’re 100% focused on crafting oats into the tastiest food and drink products we can, and I’m looking forward to the next leg of our journey.”

AG Barr said the transaction is not expected to have a material impact on profits for the current financial year to January 30, which are forecast to be in the region of £41 million. That would be an increase both on last year’s pre-tax figure of £32.8m and the £37.4m recorded in the previous year prior to the pandemic.

In an unscheduled trading update issued last week, the company said sales through the hospitality sector and “on the go” channels have been particularly strong, although the fast-moving situation in relation to the pandemic remains a risk. Mr White told The Herald that the threat of the Omicron variant could have ramifications for AG Barr, but it was too soon yet to say whether the situation is serious.

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“The last 18 months have certainly taught me that trying to predict the future is pretty tricky, so we’re not sure what this all means but we’re close enough to the end of our financial year and we believe our end-of-line business resilience is there, and the stock and availability is there,” he said last week in the wake of confirmation that the Omicron variant is present in the UK.

“From our perspective this may have ramifications for us but at the minute we think the business is robust and the resilience that we have built in should hopefully support us, but it’s hard to tell because it is quite a fast-moving situation.”

The agreement to snap up MOMA follows a similar deal earlier this year in which fellow listed soft drink producer Britvic said it would take over health drink brand Plenish for an undisclosed sum. Plenish offers a range of plant-based milk and juices made with organic and sustainably sourced ingredients.

Shares in AG Barr closed yesterday’s trading 3p higher at 523p.