Nichols’ drinks deal offers strategic benefits

28-Apr-2015 - Last updated on 30-Apr-2015 at 13:11 GMT

The deal gives Nichols access to customers at Merlin Group's visitor attractions nationwide

Nichols’ acquisition of a minority stake in slush and milk drinks distributor Noisy Drinks Co offers both firms considerable benefits, according to one leading analyst.

“The attractions of the deal for Nichols are both strategic and financial,” said N+1 Singer analyst Sahill Shan. “Under its ownership the Noisy Drinks Co will benefit from a clear need of access to capital to better exploit new growth opportunities, eg the new US trend in the slush category of frozen carbonate drinks (fizzy slush).

“In addition it will be able to cross-sell into the c13,000 outlets that Nichols currently serves via its out-of-home business versus the c1,300 that Noisy Drinks serves.”

Nichols has taken a 49% equity stake in Noisy Drinks Co, which distributes the Starslush brand, for £2.7M. Established 14 years ago, the business generated £6.6M of sales to September 2014.

Customers across the UK and Europe include the Merlin Group, the name behind attractions such as Alton Towers Resort and Legoland, Butlins, Whitbread and Haven Holidays.

Remaining stake

Noisy Drinks Co would sit within Nichols’ out-of-home division and Nichols had negotiated the option of securing the remaining stake in the business over three years, said Shan.

Nichols already owns Vimto Froozie and Burrrst slush drinks, so the deal ties in with its existing activities. A new Vimto Starslush product is set to be launched into the market and placed in major leisure venues, said Nichols.

David Pearce, one of the founders of The Noisy Drinks Co, will continue in the role of md, reporting directly to Nichols ceo Marnie Millard.

‘Increasing expertise’

“Coupled with the international business, our investment in Noisy Drinks is an important step in increasing our expertise in the foodservice and leisure industry as well as unlocking new regional and national accounts as part of our growth strategy within the out-of-home channel,” said Millard.

Pearce added: “Everyone at Noisy Drinks is very excited to be joining forces with Nichols Dispense. The popular, high profile Nichols brands will undoubtedly increase our frozen drinks market penetration.

“The skill sets, experience and resources of the two companies are complementary and will enable us to dynamically enhance our operations in the out-of-home market across Europe.”

At its annual general meeting today (April 29), Nichols’ non-executive chairman John Nichols reported trading for the first financial quarter of 2015 ahead of the prior year. He expected full-year results to be in-line with expectations, despite a challenging market.

‘Growth strategy’

“During the year we plan to continue delivering our growth strategy with a focus on value over volume,” said Nichols.

“We have already commenced a Vimto sales drive in the Midlands which will continue throughout the summer, this includes increased regional advertising and promotional activity aimed at enhancing distribution in this important region.”

One of Nichols’ major focuses for the year would be on implementing the Nichols Dispense deal clinched earlier this year to add Coca-Cola to its portfolio of drinks dispensed through out-of-home channels UK-wide.

Nichols clocks up revenue of £110M and employs 170 people.