Soft drinks sales pop at Irn-bru maker AG Barr and Fevertree

AG Barr and Fevertree have both reported a sales boost despite increased competition in the soft drinks market.

AG Barr’s share price ticked up a marginal 0.1 per cent in early trades, while Fevertree’s share price rose more than six per cent.

AG Barr, which owns brands Irn-bru, Rubicon, Boost and Funkin, told markets this morning that revenue increased by 5.1 per cent in the year ended January 25, driven by 6.4 per cent growth in soft drinks.

The company reported adjusted profit before tax of £58.5m, up 15.8 percent, and an operating margin of 13.6 percent.

It expects to deliver another year of revenue growth and margin improvement despite higher costs due to packaging regulations and a higher wage bill.

“AG Barr continues to pop… despite a challenging economic backdrop, and many of its brands are growing ahead of the market,” Zoe Gillespie, investment manager at RBC Brewin Dolphin, said.

“AG Barr has a lot of qualities as a business and continues to invest in its operations – while the drinks market is highly competitive, the company should remain in a strong position when others may struggle.”

Fevertree meanwhile, reported revenue growth of four per cent in the year to December 31, driven by 12 per cent growth in the Unites States. UK revenue fell by three per cent year on year.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) margin increased to 13.7 per cent.

The company announced a further £29m share buyback programme, 3.1 per cent of the current market cap.

Fevertree announced a landmark partnership with Molson Coors in the US earlier this year, which is currently front and centre of its strategy.

“This collaboration marks a step change for our presence in the world’s largest premium drinks market,” CEO Tim Warrillow said.

“Molson Coors’ powerful network of US distributors across both on and off-trade, combined with their dedicated, national salesforce and deep customer relationships creates the ideal platform to maximise our brand strength and future potential across both alcohol and non-alcoholic occasions.”

Panmure Liberum analysts rated the stock a ‘buy’, based on the Coors partnership.

“We believe [it] could supercharge Fever-Tree’s ability to capture the large US opportunity and ensures the long-term potential of the business much more realistically achievable,” analysts said.