Irn Bru maker thinks functional for purchase plan

By Neil Merrett

- Last updated on GMT

Related tags Ag barr Soft drink Coca-cola Water

Soft drink maker AG Barr is to expand into the burgeoning market
for functional beverages and waters with the acquisition of the
Vitsmart and Vitaminsmart labels from Chartered Brands.

The acquisition of the brands, which include both a vitamin enriched water and a range of fruit-based drinks, will allow the group to further diversify into the market for nutritious and healthier beverage alternatives. Such a move by the UK-based soft drink maker, which produces the Irn Bru and Strathmore mineral water brands, highlights the growing potential of the functional beverages market to manufacturers amidst a backlash against the traditional carbonated beverage. Group chief executive Roger White said that adding Vitsmart and Vitaminsmart to its product portfolio would give the group an instant footing in the UK functional market. "The brands will allow us a credible early entry into this rapidly growing sector with great brands and products which have existing retail distribution and consumers,"​ he stated. "We plan to accelerate the development of our activity in this sector and believe this acquisition gives us a strong foundation."​ AG Barr said that the exact cost of the purchase remained undisclosed, though estimated the final price to be about £350,000, with possible further payments, based on future sales performance. The move follows on the back of AG Barr's strategy of focusing in the emerging "better for you"​ category. In 2007, this focus led to the company launching a number of new products including the St Clements Juice and Smoothies range, and the Rockstar Energy drink brand. The market for beverages linked to health and other functional benefits had undergone strong growth over recent years. Between 2002 and 2007, the market for functional beverages grew by about 30 percent, according to a Mintel report released last year. One of the major contributors to this growth has been a sharp increase in functional water demand. In Western Europe alone, consumption of the product rose to an estimated 273m litres in 2006 from just 30m litres in 2000, according to analyst group Zenith International. A growing number of the beverage industry's major players like Coca-Cola​ have therefore began to expanded their presence into the segment. The group revealed in October that it acquired Energy Brands, known as Glaceau, and its fortified ranges like Vitaminwater, for $4.1bn. Though Glaceau will continue to operate as a separate business entity from Coca-Cola North America, it will make use of its new parent company's supply chain, marketing power and foodservice.

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