The maker of soft drinks IRN-BRU and Rubicon and cocktail brand Funkin posted a strong first half performance (27 weeks ending August 1, 2021): with revenue of £135.3m / $184.2m USD, up 19.5% on the prior year (On a like-for-like basis, excluding the extra week of trading, revenue was £128.5m / $175m USD, an increase of 13.5%).
“The overall measured soft drinks market has once again proven its resilience. IRI Marketplace data for the 27 weeks to 31 July 2021 records the total UK soft drinks market increasing in value by 8.0% and in volume by 4.0%. Within this, still drinks have recovered from the prior year's decline, up 9.7% in value terms. While carbonates volume growth slowed to 1.4% in the period, value continued to accelerate, growing 6.9%.
“The 2020 soft drinks market was characterised by the migration of out-of-home consumer demand into the home environment. This position is now reversing as the hospitality sector and on-the-go channels begin to recover. As a consequence market share data, skewed by these unusual market dynamics, is now beginning to return to a more normalised read.”
AG Barr’s cocktail brand Funkin – which includes premixed cocktails, syrups, hard seltzers and mixers – has been able to pivot from on-trade to off-trade and back again, says the company.
“The response to the COVID-19 pandemic has been especially challenging for the hospitality sector, however we are pleased to see positive momentum as consumers return to hospitality venues. Funkin has delivered a strong first half performance in the on-trade, with sales in this sector up 229.5%. This has been driven by both one-off customer restocking and a significant increase in cocktail rate of sale experienced during the reopening of the sector.
“During the various lockdown periods, Funkin capitalised on the increase in demand for cocktails at home, through both traditional retail and direct to consumer channels, becoming the UK's No.1 ready to drink cocktail brand (Source: Nielsen pre-mixed alcoholic drinks total coverage value sales data MAT 31/07/2021).
“Our "at home" cocktail sales have grown by 114.3% to £10.2m, representing 54.5% of Funkin's total sales in the first half of the year. This significant growth has been supported by a continued strong rate of sale and an increasing level of brand distribution. We will accelerate our investment in the second half of the year as we continue our strategy to develop Funkin as a premium consumer brand.”
Distribution challenges
The UK is suffering from a shortage of lorry drivers: affecting supplies across the country, most evident in the fuel and food sectors.
AG Barr notes these challenges: "In recent weeks we have seen increased challenges across the UK road haulage fleet, associated in part with the COVID-19 pandemic, impacting customer deliveries and inbound materials. In addition, the risks associated with the wider labour pool and the current COVID-19 pandemic response are areas we continue to monitor closely.
"We believe the commitment and capability of our workforce and supply base will stand us in good stead in these uncertain times."
On track for full year
Roger White, Chief Executive, commented: "AG Barr is a growth-focused business operating in resilient and growing market categories, with dynamic brands, great people and a strong financial position.
"Our positive first half performance reflects these fundamentals as well as the encouraging performance of recent innovation launches in both soft drinks and cocktails.
"We remain on track to deliver strong full year profit performance, slightly ahead of our 2019/20 pre-COVID level."