Soft drinks business AG Barr, whose portfolio includes IRN-BRU, Rubicon, FUNKIN and Boost, has reported strong revenue and profit growth for its fiscal year ended on 28 January 2024.
Revenue, including a full year contribution from the Boost portfolio, grew by 25.9 per cent year-on-year to touch £400 million, and the business finished the year with adjusted profit before tax of £50.5m, 16.1 per cent ahead of the prior year.
The group enjoyed strong revenue and volume growth across the soft drinks portfolio, with like-for-like revenue up 8 per cent.
Flagship brand IRN-BRU grew volume ahead of the market and delivered an 8 per cent increase in sales revenue. The Rubicon brand had an excellent year, with sales up 15 per cent, driven by growth across the full brand portfolio.
“I would like to take the opportunity to thank all of the teams across the group who have worked incredibly hard to deliver this excellent financial performance,” Roger White, chief executive, commented.
“With our business in a strong financial position, and our portfolio of differentiated brands poised for further growth, I have every confidence that our proven strategy, our results-driven teams and our well-invested asset base will continue to support long-term growth and value creation.”
AG Barr has successfully delivered year one of its margin rebuild programme, including an initial contribution from the first phase of Boost/Rio production in-sourcing, which commenced in November 2023.
The company acquired tropical drinks brand Rio in October last year, and last month, the group has announced plans to fully integrate the Boost business into Barr Soft Drinks, along with plans to change the route to market strategy in the symbols and independent retail channel.
The latest findings highlighted by Lumina Intelligence Convenience Tracking Programme reveal a shift towards lighter shopping trips, the impact of weather on daytime meal occasions, and strategic growth in forecourt impulse purchases driven by expanded meal deal offerings.
The Convenience Tracking Programme has uncovered significant shifts in the UK's convenience shopping landscape, indicating a continued rise in market penetration with a notable trend towards "lighter" shopping. The number of shoppers in the market has grown, with an impressive +2.8 percentage point increase in year-on-year penetration. Managed convenience channels are driving much of this growth, reflecting heightened consumer interest in convenience store options.
However, while more shoppers are making trips to convenience outlets, they are increasingly favouring lighter shopping trips. The data indicates a -10 per cent decrease in items per trip, paired with a modest -0.4 per cent decline in total spend per visit. This shift suggests a consumer preference for smaller, more frequent purchases as opposed to larger basket sizes, with customers prioritising efficiency and value.
The data also revealed an increase in share for daytime meal occasions, rising by +0.8 percentage points. This shift is partly due to a rebalancing in food-to-go purchases, which peaked last year during an extended period of favourable weather. This year’s comparatively poorer weather has driven shoppers to consume more meals at home, leading to a greater focus on in-home meal preparation. Consumers are purchasing ingredients and essentials to make meals at home, highlighting a sustained demand for convenient meal solutions that align with at-home dining.
In an otherwise stabilised market, forecourts have emerged as a unique growth channel for impulse purchases, registering a +1.3 percentage point increase year-on-year. Meal deals have been a pivotal driver of this growth, up +4.1ppts as a reason for purchasing on impulse. Leading forecourt operators, including BP and Shell, have expanded meal deal offerings in partnership with established retailers, delivering enhanced value and variety to time-pressed consumers. This strategic move addresses the evolving needs of busy shoppers, who are seeking quick, affordable meal solutions.
Two of the biggest brewers Anheuser-Busch InBev and Carlsberg sold less than forecast in the third quarter as consumers, particularly in China, cut their spending by drinking less or choosing cheaper beer.
The world leader AB InBev's profits and revenues fell short of analyst expectations, sending its shares almost 4 per cent lower as a $2 billion share buyback and a guidance raise failed to win over investors.
Its volumes and revenues slipped by double digits in China, with other large territories the US, Mexico and Europe also seeing volume declines. AB InBev cited lower consumer demand, and said sales in bars and restaurants in China were particularly slow.
Beer makers had anticipated a rebound in margins and volumes this year, but sluggish economies and high inflation and interest rates have held customers back. Adverse weather and competition from cheaper, local rivals has added to the impact.
The world's third biggest brewer Carlsberg, which makes beers including Kronenbourg 1664 and Tuborg as well as its namesake brand, saw volumes fall 1.3 per cent, citing factors including a "very weak" consumer in China.
Chief executive Jacob Aarup-Andersen told Reuters the company would, in the short term, adjust a strategy relied upon by brewers for years: developing and promoting more expensive brands, marketed as premium beers, to offset falling volumes.
"In markets where we are seeing a significant pressure on premium, we are reallocating some of our focus into making sure we are promoting properly around the right mainstream brands," he said.
For the long term, Aarup-Andersen said he remained confident, and that pricier brews would account for a significantly larger portion of Carlsberg's portfolio in a decade.
AB InBev's third-quarter statement highlighted stronger growth for its more expensive beers, like Corona, which grew 10.2 per cent outside of its home market, Mexico, during the period.
In China, however, where AB InBev's strategy is focused on its premium portfolio, revenues and volumes fell 16.1 per cent and 14.2 per cent respectively. It said this strategy "remains a compelling value creation opportunity".
For some, the third-quarter performance in China raised questions for the maker of Budweiser and Stella Artois, particularly because rival Heineken, the world's No. 2 beer-maker, said it had significantly outperformed there.
"Are they priced wrong?" Siphelele Mdudu, investment analyst at AB InBev investor Matrix Fund Managers, said of the brewer, adding if companies push too hard on prices or premium beers when drinkers are stretched, their customers may look elsewhere.
This may require brewers to reconsider the balance between more expensive and cheaper beers in their portfolios, he said.
Heineken's volumes rose 0.7% in the quarter, but it also flagged a challenging consumer environment and steep declines in markets such as Cambodia because of competition from cheaper local brands.
£40K in prizes go to 22 National Lottery retailers in latest quarterly draws
Allwyn, operator of The National Lottery, has announced that it has awarded 22 deserving National Lottery retailers with prizes totalling £40,000 in its two latest Site, Stock, Sell online quarterly prize draws.
Two National Lottery retailers took home a whopping £10,000 each, while a further 20 retailers won the £1,000 runner-up prize. All 22 independent retailers were entered into the quarterly draws because they achieved high scores out of 10 in Allwyn’s Site, Stock, Sell online in-store standards programme.
The programme assesses a store’s National Lottery point of sale (POS) items – such as the National Lottery Playstation, Scratchcard dispenser and signage – for their sales-driving ability. All independent retailers need to do is upload images of their POS to the National Lottery Retailer Hub each month to be scored out of 10.
Ravindrasinh Bhatti, owner of The Corner Shop in Hythe, took home one of the huge £10k top prizes, while the other top prize was won by a retailer in Carlisle who has chosen to remain anonymous.
“I’ve been a National Lottery retailer for 16 years now and I’m extremely happy to have won after so long. I’m also celebrating my 60th birthday, so this is a fantastic present,” said Ravindrasinh.
Kandasamy Thivakaran of VSN Convenience Store in Merthyr, who won one of the £1,000 prizes, said, “Uploading the pictures of my point of sale every month to The National Lottery Retailer Hub has paid off and I’ve finally won! It takes five minutes to do and I think £1,000 for five minutes of work is amazing.”
Allwyn’s Interim Retail Director, James Dunbar, added, “Congratulations to our latest Site, Stock, Sell online quarterly winners, your prizes are thoroughly deserved. Ensuring your POS is in the best possible shape to help drive sales not only helps boost your own bottom lines, but it also ensures that National Lottery players continue to raise around £30 million every week for Good Causes. Thank you for all the work you do in maximising National Lottery ticket sales.”
Retail industry stakeholders are giving a mixed response to Chancellor Rachel Reeves's first budget unveiled today (30).
Reacting to the different provisions in the budget, Chris Brook-Carter, chief executive of retail industry charity Retail Trust said, “Retail is the largest employer outside of the public sector so a healthy and happy retail workforce is important for our industry and for the country’s communities and high streets and its GDP.
“Yet right now, thousands of shop workers are contacting the Retail Trust say they’re now being forced to consider leaving a job they love and often have worked in for many years because they no longer feel safe there. We therefore welcome with open arms the new funding being announced to crack down on retail crime and provide more training to police officers to help better tackle this issue.”
“We’re also supportive of the government’s commitment to extend business rates relief and introduce permanent and lower rates from 2026 if it can help to give retailers more confidence to plan for the future to ease much of the uncertainty and insecurity currently facing everyone working in the industry.
“Increases to the national minimum wage and national living wage will also support many people across the retail sector by giving them the pay raise they deserve.
“And we fully agree with the Chancellor when she says that ‘healthy businesses depend on a healthy NHS’, and hope that new NHS funding will help address the declining levels of mental health we are seeing amongst the retail workers the Retail Trust supports, particularly the sector’s youngest workers who we’ve found are most likely to be taking time off or working whilst unwell.
“However, while we recognise that the need to raise more money to fund these vital NHS services comes with some difficult decisions, we echo the concerns from some in the retail sector about the long-term impact of increased National Insurance Contributions on both employers and their staff.”
Charlotte Broadbent, UK general manager at Faire, the online wholesale marketplace. said, “We welcome the Chancellor's commitment to easing the pressures on the UK high street and on small businesses, and it's a relief for retailers that this budget has taken some action on extending the business rates discount for retailers beyond April next year and freezing the tax multiplier. But reducing the rates discount from 75 per cent to 40 per cent will still mean a steep increase for them next year, at a time when many are already facing significant financial challenges.
“Permanent lower tax rates on retail, hospitality, and leisure properties from 2026-27 are promising, but proof will be in the detail and immediate relief is essential to keep high streets resilient in the face of economic pressures.
“We're also supportive of raising the employment allowance, which should come directly off every small employers' National Insurance bill next year.
“At Faire, we remain committed to supporting our community of over 50,000 independent retailers in the UK through these challenging times, by offering tools and solutions to help with financing, managing costs and growing sales.”
Michael Shapiro, Commercial Real Estate Partner at Spencer West LLP, comments, “For those in the retail and hospitality sectors, the cost of business rates is becoming prohibitive, and this is one of the major causes of so many high street units and pubs being empty. Anything that is giving support is welcomed. Whilst the business rates system needs a complete overhaul, this is at least a positive start.”
Immediate reaction to Chancellor Rachel Reeves’s first budget has not been positive.
Our regular columnist, CEO of the British Independent Retailers Association (BIRA), Andrew Goodacre, condemned the budget out of hand, calling it, “Without doubt the worst for independent retailers I have seen in my time representing the sector. The government's actions today show complete disregard for the thousands of hard-working shop owners who form the backbone of our high streets.”
He said, "This Budget betrays every independent retailer who has fought to keep their business alive through recent challenges. It's not just disappointing – it's potentially catastrophic for Britain's high streets."
There were crumbs, or rather drops, of comfort. Reeves made much of the fact that there is a penny off a pint of beer (thereby saving nearly a shilling when getting drunk), although Simon Shelbourn, Chief Financial Officer for employee-owned Kingsland Drinks pointed out that while publicans might be feeling optimistic, retailers are drinking the dregs of good fortune:
“Further taxing non-draft alcohol hurts everyone; Whilst the government is working hard to plug the hole in the country’s finances, the consumer is being further penalised despite already bearing the weight of the cost-of-living crisis, and much of the drinks industry will once again have to prove its resilience despite being positioned to drive economic growth.
He said that the move to wallop bottled beer is damaging to the industry and a setback to firms across the board “who have worked tirelessly in recent years to withstand relentless taxation in the toughest of trading conditions.”
James Lowman, CEO of the Association of Convenience Stores (ACS), quickly drew up a list of disappointments, which he apostrophized as “two-thirds of a billion pounds to the direct cost base of the UK’s local shops” – although he pointed out that, “The smallest retailers, with low NICs bills and lower rateable values for their shops, will benefit from the welcome increase in the employment allowance and the retention of 40% of the retail business rates relief.”
Lowman was enthusiastic about the Chancellor’s commitment to tackling shop theft, but stressed that his long-disillusioned members “are interested only in action and in crime against their stores and their colleagues being tackled effectively.” – in other words, we’ll believe it when we see it.
The Institute of Economic Affairs predictably criticised Reeves on ideological grounds, with Tom Clougherty, Executive Director, stating, “The Government came into office promising to prioritise growth. But the reality of their first Budget – heavier burdens on business and more borrowing for public sector capital spending – does not inspire much confidence in their approach.”
He added, more in anger than sorrow: “Coming alongside an inflation-busting increase in the minimum wage and heavy-handed changes to employment law, higher employer National Insurance Contributions will be a bitter pill for firms to swallow. Businesses will see their costs rise and it will be workers who pay the price – in the form of lower wages, reduced benefits, and fewer job opportunities. The idea that this Budget does not increase taxes on workers is an economic fantasy.”
The Fed’s National President, Mo Razzaq, welcomed the alleged “crackdown on crime” and the end of the infamous “£200 rule”, but also echoed the sentiment that a higher minimum wage will lead directly to fewer retail establishments:
“A bigger-than-expected rise to the national living wage to £12.21 an hour from April 2025 is a step too far for hard-pressed small businesses,” he opined.
“As well as paying our staff more in wages, we must pay more in national insurance and pension costs, at a time when many of our other costs, including energy, are rising. There is no easy way for small retailers to combat these increases. As so many of the products that convenience store owners are price marked, we cannot pass these costs onto our customers.
“The only solution available to independent shop owners is to reduce staff hours and staff numbers and, somehow, take on even more hours ourselves.”
Pleasures are being penalised, some would say as usual. Nuno Teles, Managing Director of Diageo GB, felt betrayed by increased taxes on spirits – which will take the minimum tax burden on a bottle of Scotch Whisky above £12 for the first time – saying, “On the campaign trail, Keir Starmer pledged to ‘back the Scotch whisky industry to the hilt’. Instead, the Government has broken this promise and slammed even more duty on spirits. This betrayal will leave a bitter taste for drinkers and pubs while jeopardising jobs and investment across Scotland.”
Speaking of Scotland, the MD of the Scottish Licensed Trade Association (SLTA), Colin Wilkinson, although he welcomed the 40 per cent relief on business rates for retail, leisure and hospitality (up to a cap of £25,000), spoke of a “triple blow of an increase in the NLW, risen by 50 per cent in five years, increased employer National Insurance contributions and a 50 per cent reduction in the threshold level for Employer National Insurance contributions.
“These will be yet another fiscal burden for all businesses and will restrict investment, restrict growth and increase the risk of job losses,” he said. “As a staff-intensive sector, many in the licensed hospitality industry will now be questioning whether or not they can even maintain their current staffing levels.”
Mo Razzaq also raised the alarm at the tobacco and next gen gantry, arguing that byputting duty up by 10 per cent on hand-rolling tobacco, a flat rate duty on all vaping liquids, a one-off increase in tobacco duty in line with RPI “were further blows to independent retailers”.
He pointed out something that we have been talking about until blue in the face recently: “When tobacco prices rise, more smokers are lured to the illicit market, which damages the business of legitimate retailers and damages communities. The government needs to do more to tackle the illicit market to better protect the livelihoods of members who legitimately sell tobacco.”
The last word should go to Mike Salem, the UK Country Associate for the Consumer Choice Center (CCC), who said that “Reeves wants to punish consumers for spending their own money, and these taxes were never really about public health or nudging, but a cash grab from hard-working British people.”