Releasing its trading update for the six months up to 30 July, 2016, the UK soft drink company notes the uncertainty that follows the UK’s decision to leave the EU.
“The decision of the UK to leave the EU has resulted in a degree of economic uncertainty and a weakening of Sterling,” said the company in a statement yesterday. “The impact of weaker Sterling will not have a significant impact in 2016, but it is anticipated input costs will increase in 2017, providing management time to adjust plans accordingly.”
The company, which is behind brands such as Irn-Bru, Rubicon and Strathmore, says the UK soft drinks market performance has been challenging over the last six months, with continued deflation and volume declines.
A.G. Barr quotes data from IRI, which show value down 0.8% and volume down 0.4%. Poor weather in June and July is also expected to adversely impact the market.
“Consequently trading has been highly competitive but, despite this difficult market backdrop, we have maintained both value and volume overall market share. We anticipate revenue in the period of £125m ($167m), down 2.9% year-on-year on a like for like basis.”
Sugar reduction efforts
A.G. Barr notes the launch of a new Irn-Bru zero sugar variant called Irn-Bru Xtra, and other lower sugar products (Rubicon Light & Fruity and Rubicon Spring; and three reformulated Snapple Iced Tea flavors).
The UK is planning to introduce a sugar tax in April 2018, which A.G. Barr says it can tackle with a combination of ongoing product reformulation and brand strength. It also notes the development of consumer preferences towards lower sugar products.