Soft drinks group AG Barr has reported a slight fall in sales but a 7% rise in statutory profit before tax for the year to 30 January.
The Irn-Bru producer reported total revenue of £258.6m, compared to £260.9m the year before. Adjusted revenue, taking account discontinued business, increased by 0.9% to £257.4m (2015: £255.2m).
Chief executive Roger White said he was confident the company would weather the storms of the sugar levy through brand loyalty and a continuing drive to reduce the calorific content of its products.
The company stressed that it had maintained market share in a “challenging UK market” and had seen strong performance from its premium cocktail arm, Funkin, during its first year of ownership. AG Barr said it planned to further develop the brand to “ensure it continues to meet our acquisition expectations”.
Chief executive Roger White said the UK soft drinks market had not yet appeared to benefit from the improvement in underlying consumer purchasing power. It said data provided by IRI showed the impact of general price deflation, poor summer weather and retail competition feeding through into the overall soft drinks category performance.
He said said the growth driver in overall soft drinks was once again water, offset by significant value declines in fruit juice, dilutables, sports drinks and some areas of carbonates. The carbonated energy market, which has seen significant growth in recent years, only grew by 1% in volume terms and was flat in value in the period. Adjusted year-on-year revenue from carbonates declined 3.1% (£6.1m) during the period.
White said: “The market has seen growth in brands which appeal to consumers’ changing lifestyles and preferences - sugar free products, lower sugar brands and premium products, such as those within mixers, have continued to outperform the overall category.
“Our portfolio continues to develop to meet these market challenges and opportunities. We are well positioned to benefit from the high levels of loyalty to our existing brands along with the opportunities to further drive the distribution of our differentiated portfolio of increasingly relevant brands.”
White said marketing efforts were now focussed on the group’s “lower” and “no” sugar products and it was substantially reducing the sugar content of its portfolio to reflect consumers’ changing preferences. The average calorific content of the company owned portfolio has reduced by 8.8% in the past four years, he said, with the scale set to accelerate over the coming years.
He added: “Although the details of the Chancellor’s proposed soft drinks levy are still to be consulted upon, we believe our combination of brand strength, ongoing product reformulation and consumer driven innovation will allow us to minimise the financial impact on the business at the proposed point of implementation in April 2018.”
