AG Barr benefits from soft drink demand despite bad weather

AG Barr’s sales were boosted by strong demand for soft drinks in the first half of the year, despite ‘disappointing weather at the start of the summer’, which offset the weakness of the cocktail division.

Total revenue rose 5.2 per cent to £221.3m in the six months to July 27, driven by 7 per cent growth in the Irn-Bru maker’s soft drinks business on higher prices and volumes.

But a slump in sales of canned cocktails caused profits to fall 10.4 percent to £24.9 million.

The Scottish company said the decline in profitability was mainly due to at one-time costs related to the closure of the Barr Direct delivery service and the integration of energy drink Boost.

The increase in cocktail sales in the period came despite a slight decline in volume in the broader UK soft drinks market, which “partly due to the disappointing weather at the beginning of this summer,” the group said.

AG Barr added that the Rubicon and Irn-Bru brands grew due to positive trading linked to the Euro 2024 marketing campaign.

Strong performance in the soft drinks trade helped offset weaker sales of pre-mixed cocktail brand Funkin, which has been under pressure in the on-trade.

Funkin’s revenue fell 9.4 percent, as late night venues in particular suffered from weak consumer demand.

The company reiterated its guidance for the year, but stressed it remains “conscious of the current pressures on consumers.”

Euan Sutherland, CEO of AG Barr, said: ‘We expect a strong second half of the year, particularly from our four core brands – Irn-Bru, Rubicon, Boost and Funkin – with current trading momentum supported by further marketing and innovation activity.’

This was only Sutherland’s second trading update since becoming CEO in May.

Sutherland, a veteran of the consumer goods industry, was most recently CEO of over-50s holiday and insurance group Saga and previously held senior roles at fashion retailer Superdry and The Co-op Group.

After the trading update, AG Barr Shares fell 4.38 percent to 633p early Tuesday afternoon.