Innocent and AG Barr let loose with juice in UK health push

By Neil Merrett

- Last updated on GMT

Related tags Ag barr Soft drink

Two major UK-based soft drink manufacturers have stepped up their operations in fruit Juice production amidst growing national and European demand for the products’ perceived nutritional benefits.

Both AG Barr and smoothie maker Innocent have revealed their intentions to target juice demand through respective investment and product launches in their operations over the last week.

In the UK market alone, fruit-based drinks continued to show strong growth potential despite on overall decline in the country’s soft drink consumption in 2007, reflecting a wider European trend towards the segment.

This potential has not gone unnoticed by major international manufacturers such as Coca-Cola and PepsiCo who have moved to expand their portfolio of soft drink brands, particularly in Eastern Europe. However, Innocent and AG Barr stress that they are committed solely to the UK market at present.

Euro demand

The strategy could prove to be prudent according to consumer analyst Euromonitor, which said that the country lay behind only Germany in terms of EU juice demand rates last year.

Annual fruit and vegetable juice consumption within the UK during 2007 was 2.2bn litres, ahead of third placed Poland, which drank 1.49bn litres over the same period. However, Germany was found to be the largest market in Europe for juice demand, consuming 3.3bn litres of the product, the analyst said.

It is in this market that AG Barr announced that it had entered into a conditional agreement to purchase the operations of exotic soft-drink maker Groupe Rubicon for £59.8m (€76.4m).

Barr, which produces the Irn Bru carbonated beverage brand, added that although this wasn’t it first foray into fruit juices, should the deal go ahead, it would provide a major expansion of its presence in the UK branded beverage market.

Aside from further product diversification following its recent push into energy drinks, the Scotland-based soft drink maker claimed that the acquisition would allow it to attempt a number of cost efficiency improvements in its operations.

Roger White, AG Barr’s chief executive said that the potential acquisition of the Rubicon beverage brand would offer a number of benefits for its own fruit juice product development

“The acquisition is in line with our core strategy of developing our portfolio and increasing the scale of our business through differentiated quality brands,” ​he stated. “At the same time it strengthens our position in the growing juice drinks category.”

Innocent, which has previously concentrated solely on manufacturing smoothie products, is also hoping to establish itself within the juice market by launching its own brand of natural orange juices.

Unlike AG Barr, the group said that it was currently committing itself only to orange juice, which it said was a key component of its smoothie products, and not to other varieties of the product.

Available either with or without orange ‘bits’, Innocent claims that its orange juice, which will be sourced from various different areas throughout the year, will be preservative and additive free.

Market development

While the British soft drink market shows strong potential ahead for juice makers, there are also some challenges as well.

The British Soft Drinks Association (BSDA) director general Jill Ardagh said that in 2007, drinks that were either naturally produced or could offer functional benefits had created new opportunities for manufacturers.

"Health and wellbeing should continue to be key drivers of growth in theUKsoft drinks industry,"​ she stated. "[About] 61 per cent of soft drinks are now low calorie or no added sugar and this trend is set to continue."

A key trend recorded by the association in 2007 was the growing importance of still, juice-based and 100 per cent juice drinks to the industry as a whole.

Despite this growth, orange juice, the UK's favourite flavour of the product posted a further decline in market share to just 54 per cent, as consumers looked to try new flavours and varieties, the report stated.

Related topics Manufacturers Juice Drinks

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