Nichols growth hit by UK soft drinks costs

By Dan Colombini

- Last updated on GMT

Related tags: Uk soft drinks, Soft drink

Vimto has further increased its market share in Northern Europe, Africa and the Middle East
Vimto has further increased its market share in Northern Europe, Africa and the Middle East
Rising costs in the UK soft drinks market has hit sales at Vimto manufacturer Nichols despite the firm posting a strong performance for the period ending December 31.

The firm said it had delivered “excellent growth​” for the year but claimed that high levels of cost inflation had seen a negative impact on its UK margins.

The year saw high levels of cost inflation in the UK soft drinks industry, affecting all our key raw materials​,” a Nichols statement revealed.

 “Whilst this had a negative impact on our UK gross margins, the effect on group operating margin has been mitigated by a combination of on-going productivity improvements in the UK and the strength of our international business. As a result, the group’s operating profit increased by 20% to £18.1m, maintaining the return on sales at 18%.”

Low volume growth

Nichols, which makes much-loved brands such as Levi Roots, Weight Watchers and Panda,  also said that the UK soft drinks market had suffered from relatively low volume growth last year.

This was a result of the economic downturn, which had a negative effect on consumer spending, according to the firm.

Despite these factors, Nichols’ UK soft drink divison outperformed the market by 8% for the year, reporting growth of 15%.

Group revenue for the year increased by 18% to £98.9M for the year, compared with £83.9M last year. Profit before tax was also up 20% for the period to £18.1M.

Internationally, the firm posted a strong performance for the year, with sales rising by 31% to £21.1M.

Core markets

This growth was driven by Vimto further increasing its market share in the core markets of the Middle East, Africa and Northern Europe, according to the firm.

John Nichols, non-executive chairman, described the firm’s performance as “outstanding​” and cited the firm’s growing international presence as a key factor.

He said: “2011 was another record year with an outstanding performance in the face of the most challenging UK retail environment seen in a decade. Our strong portfolio of brands and our growing international presence have helped drive significant growth in sales, profitability and cash generation.

“While 2012 will remain challenging we are confident of delivering profitable growth in the current year and beyond​.”

Related topics: Drinks

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