AG Barr’s two-brand acquisition comes as the drinks business looks to capitalise on the growing adult soft drinks category which is benefitting from dwindling alcohol consumption.
The duo joins the likes of Rubicon and IRN-BRU already in the AG Barr portfolio, with the acquisition of Frobishers and Fentimans set to widen its net into other avenues, including new demographics and drinking occasions.
Commenting on the deal, Clive Black, vice chairman of Shore Capital which advises AG Barr said: “We see considerable merit in the acquisitions of Fentimans and Frobishers, adult soft beverage brands that perfectly complement the firm’s existing assortment; with Boost and Barr as entry price labels, IRN BRU as an iconic CSD national brand, and Rubicon as part of healthy hydration and world foods.
“Indeed, group CEO, Euan Sutherland, has made it clear that healthy hydration and complementary broadening of the portfolio to embrace soft drinks for grown-ups a central part of his inorganic thinking.
“Whilst a deal more for tomorrow than today, these acquisitions, notably build the portfolio value of AG Barr, offering scope for elevated in-house manufacturing in time, as it the case with Boost.”
“I think it’s a great move,” agreed Mark Lynch. “It broadens the portfolio and helps address the trend away from alcohol to adult soft drinks, and also, to some extent, moves it away from heavily carbonated drinks.”
He continued: “In 2015, 54% of the sales were IRN-BRU, 14% were Rubicon and the rest was other. Last year, 33% were IRN-BRU, 21% Rubicon. Clearly, it reduces their exposure in terms of IRN-BRU. It’s a growth brand but ultimately, it’s a category where there is more pressure. They’re appealing to those longer-term trends.”
Indeed, as Lynch said, there’s been an evident shift in consumer behaviour, spurred on by concerns around ultra processed foods. And while energy drink players in the industry have responded with ‘natural energy’ options, this move essentially enables AG Barr to protect itself against any seismic trend quakes in the future.
Looking at Frobishers and Fentimans both benefit from ‘cleaner labels’, with natural flavouring, fruits and botanicals all taking centre stage on their packs.
Speaking to Frobishers managing director David Pearce about the move, he said AG Barr’s “impressive heritage” in soft drinks makes it an ideal owner, with the brand firm in the belief it will take it forwards.
Lynch agreed, noting that both Frobishers and Fentimans are set to benefit from AG Barr’s mass and market access.
“Fenttiman as a brand has struggled a bit in the last few years; I think part of that is down to the distribution, the marketing side of things – which arguably could have been a bit more savvy,“ said Lynch. “AG Barr has showed that it is a good brand manager, that has consistently grown its business.”
Julian Wild, director of Wilkin Chapman Rollits shared similar thoughts, saying the acquisitions are a smart move, with AG Barr equipped with the appropriate “firepower to get behind niche brands and position them effectively”.
