AG Barr builds on growth with Snapple deal

23-Sep-2014 - Last updated on 24-Sep-2014 at 17:14 GMT

AG Barr's Born to support Commonwealth Games campaign helped boost brand sales this summer

AG Barr’s Strathmore Water brand proved a powerhouse of growth for the maker of soft drinks brands including Irn-Bru, Rockstar and Rubicon in the first half of its financial year.

The business is now building on that by signing a 10-year licence deal with Snapple Beverage Corp to distribute its Snapple brand in the UK and some EU markets.

Reporting results for the six months to July 27, the company, which is based at Cumbernauld in Scotland, said its growth had outstripped the UK soft drinks market as a whole.

The progress had been driven by Strathmore Water and the success of its ‘Born to support’ campaign for the Glasgow 2014 Commonwealth Games, while the warm summer had stoked consumers’ thirst, it added.

Innovation had played a strong part in performance, with AG Barr launching Rubicon Coconut Water, Irn-Bru ice cream and low-calorie product Barr Xtra Cola during the six-month period.

Snapple deal

The deal with Snapple Beverage Corp, a subsidiary of the Doctor Pepper Snapple Group (DPSG) to distribute its Snapple brand in the UK and some EU markets was announced alongside the results.

As part of the agreement, the two companies said they would work to identify further expansion opportunities in European markets where Snapple is not currently available.

“We are very excited about our new partnership with DPSG,” said AG Barr ceo Roger White. “Snapple is an authentic, high quality brand that is very successful in the US and we strongly believe in the significant potential of Snapple in Europe.”

A spokeswoman for AG Barr told FoodManufacture.co.uk: “To date, Snapple has predominantly been available in London and the South East to a premium customer base.

“Under the new partnership agreement, Snapple will benefit from AG Barr’s strong marketing, sales and distribution capability, impulse and other multi-channel customer relationships, throughout the UK and internationally, across a wider consumer demographic.”

She said there was potentially scope to expand the deal to include distribution of other brands, but it was too early to comment further at this stage.

‘Further investment’

“Snapple is highly complementary with our existing soft drinks portfolio of leading brands and will benefit from our further investment in a brand category which we believe has attractive potential,” she added.

In its results, AG Barr confirmed its Tredegar factory in Wales would close in early 2015 as planned, incurring redundancy costs of £1M, plus a £1.4M charge related to impairment of assets there.

AG Barr reported underlying pre-tax profit up 11% to £18.4M on turnover up 5.4%, from £128.7M in the same period last year to £135.7M.

By comparison, according to market analyst Nielsen, the overall value of the soft drinks market grew by just 0.8% during the period, with volume sales down 1.2%.

‘Challenging market’

Investec analyst Nicola Mallard called it “a good result … despite an increasingly challenging market”. She added: “The growth was broadly spread across carbonates and stills and also regionally (Scotland, England and international).”

White commented: “We have delivered strong, balanced growth across our core brands in the year to date, with volume growth well ahead of the total market.

“We have traded well across all channels and have benefited from the excellent execution of our Commonwealth Games sales and marketing plans.”