Tag Archive | "soft drinks"

Metal cans on the rise in packaged water market


Metal cans achieved the highest volume growth of any packaging material in the packaged water category, according to Canadean’s latest soft drinks research.

Despite their negligible share, metal cans managed to increase by 17% in the global packaged water market and are slowly beginning to register more significant regional volumes. Metal moved up to third place in West Europe, overtaking HDPE, and expanded by more than 34% in North America. This trend has also been evident in Latin America where cans grew by 11% thanks to the success of the 23.7cl size in Mexico. Perrier also launched a 25cl can in Brazil targeted at World Cup consumers.

“In an increasing range of markets the growth of metal cans is driven by the success of flavoured sparkling water, mimicking the look and feel of traditional carbonates”, says Chris Strong, analyst at Canadean. By contrast, carbonates volumes held in metal cans fell by 1% in 2014 as consumers vacate the category in favour of healthier alternatives. “This is a development which is likely to continue as concerns over sugar intake increase and packaged water erodes further into the carbonates category”, adds Strong.

Metal cans offer sustainability advantages and major producers can be expected to continue to invest in developing new technologies for beverage can production, light-weighting techniques and improvement in can functionality. Offering different size formats targeting a range of consumption occasions and consumer groups – for example, smaller versions tapping into the portion control trend, slim versions for premium beverages, value added features such as resealability (e.g. Rexam’s Cap Can) and easier to pour options – all offer profitability opportunities.

In the years ahead, metal will continue to follow the growth trend in the packaged water category and is expected to increase by a further 9% during 2015. Although consumption in the traditional canned carbonates market will strengthen over the next few years, producers are seeking to take advantage of the health trend by offering innovative flavoured water alternatives. In a category where PET and other pack materials have typically held sway; there is great potential for metal cans to play a key role as new water products emerge.

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AG Barr Announces New Board Member


John Nicolson is to become as independent non-executive director of AG Barr, the UK branded soft drinks group. He replaces Jonathan Warburton, who has stepped down from the board, to cut back on his outside responsibilities in order to focus more on his role at Warburtons, the UK’s largest independent baker.

John Nicolson is currently president of Heineken Americas, based in New York with responsibility for a region including the USA, Brazil and Mexico. John Nicolson has also been deputy chairman of Compania Cervecerias Unidas (Chile), since 2009.

A UK citizen, John Nicolson has had a long career in consumer goods, in beverages in particular, including many years at Scottish and Newcastle Breweries where he was a PLC board director for eight years from 2000-2008.

John Nicolson has also held the positions of director of Baltika Brewery (Russia) from 2005–2008 and chairman of that business from 2006-2007; director of Yarpivo Brewery (Russia) from 2005–2006; and director of United Breweries (India) from 2007–2009.

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Cost of Britvic Product Recall Increases


Britvic’s recall of all Robinsons Fruit Shoot and Fruit Shoot Hydro packs featuring the new design cap is now expected to adversely impact on group profit before tax by between £15 million and £25 million across the current and next financial year. This includes an anticipated impact in the 2013 financial year of between £5 million and £7 million. There will be an additional negative impact on working capital which will reverse in 2013.

Britvic initially estimated that the recall would adversely impact profit before tax by between £1 million and £5 million in the current financial year.

In May Britvic reported that the UK soft drinks market and the group’s trading had been adversely affected by poor weather conditions and weak consumer sentiment. Since then trading conditions have not improved and Britvic now expects to deliver a result for the current financial year that is at the bottom end of market expectations, before taking account of the impact of the Fruit Shoot recall.

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Solid Interim Performance by Britvic


Britvic, the UK-based soft drinks group, has increased revenue by 1.7% to £641.1 million for the 28 weeks ended 15 April 2012 but EBITA declined 6.9% to £41.9 million and margins slipped 60bps to 6.5% due to the impact of higher raw material costs and continuing problems at its Irish business. Profit before tax sank 10.5% to £24.8 million.

During the first half Britvic increased group volumes by 1.9% to 1.1 billion litres and achieved revenue growth in its GB, France and International business units. However, the business in Ireland continued to have a negative impact on the group’s overall performance. Indeed, Britvic faces a challenging trading environment characterised by fragile consumer confidence in its three core markets of  GB, France and Ireland.

GB revenue rose by 2.4% to £430.9 million with comparable volume growth of 2.9%. Britvic France revenue advanced 6.4% to £123.1 million, led by strong price growth of 11.5%, as volumes were down 4.6% in the first half of the year. The International business unit delivered revenue growth of 13% to £14.4 million, driven by US Fruit Shoot and expansion into new states, including Texas.

Although volumes edged up 0.5%, revenue fell by 10% to £ 72.7 million at Britvic Ireland. The Irish soft drinks market remains challenging and shows no sign of recovery in the near term, according to Britvic. Britvic is taking further action on costs to mitigate the declining top line and to create a long term, sustainable and profitable business.

“Despite the challenging economic environment, Britvic has delivered a robust performance and made encouraging progress on key initiatives,” says Paul Moody, chief executive of Britvic. “Revenues increased for the group, GB, International and France, delivering improved cash flow, enabling a reduction in debt and a proposed further increase in the interim dividend.”

Looking ahead, he comments: “Although the GB soft drinks market in April and early May has been adversely impacted by the poor weather, Britvic has continued to grow market share and with the key summer months ahead, we currently, remain comfortable with delivering the full year performance in line with our expectations.”

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UK Soft Drinks Industry Exhibits Solid Growth


The soft drinks industry grew in value by 5.1% in 2011 to more than £14.5 billion, according to the 2012 UK Soft Drinks Report. Published by the British Soft Drinks Association, with data from Zenith International, the report also reveals that consumption grew by 0.7% to reach more than 14.6 billion litres, or 253.3 litres per person.

Bottled water consumption rose by 2.2% to reach 33.6 litres per person. Carbonates consumption grew by 4.1%, of which 38% is now diet, low calorie or no added sugar.

Dilutables retail value increased by 3.7% in 2011 to reach £945 million. Fruit juice and smoothies grew in retail value by 4.2% to reach £1.8 billion, and with a volume of 1160 million litres provided 124 servings of fruit juice per person. Still and juice drinks consumption increased by 1.2% to 1.47 billion litres.

The market for sports and energy drinks grew by 10% last year to 660 million litres. The report has the title ‘Long-term commitment for long-term success’ and showcases examples of achievement in the soft drinks industry over the past 100 years and also in the past year.

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UK’s First Soft Drink With Stevia


PepsiCo UK and Britvic plan to launch zero-sugar SoBe V Water in the UK later this month. The SoBe V Water innovation means PepsiCo and Britvic are the first soft drinks companies in the UK to launch a product containing naturally-sourced Stevia extract. The new SoBe V Water will replace the existing range.

Stevia has been used as a sweetener inSouth America for hundreds of years and contains glucose components that naturally give the plant’s intense sweetness. The reformulation of SoBe V Water will offer health-conscious consumers vitamin water with zero-sugar and meet growing demand for low-calorie refreshment.

“SoBe V Water with purified Stevia extract has been a great hit in the US and we’re excited to launch a version for the UK market and deliver a wider choice in healthier drinks for UK consumers. Stevia delivers a great naturally sweet taste without the calories of sugar,” points out Amanda Thomson, marketing director of PepsiCo UK.

Jon Evans, head of seed brands of Britvic Soft Drinks, comments: “We have accelerated the development of our Stevia product in order to be first to market in the UK because this is a major innovation for soft drinks and allows us to offer consumers great taste with no sugar.”

All six SoBe V Water variants with purified Stevia extract will be available from the end of April.

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Strong Financial Performance By AG Barr


Despite the challenging trading environment, AG Barr has increased revenue and volume ahead of the UK soft drinks market to produce a strong profit performance. Turnover increased by 6.6% to £237.0 million for the year ended January 28th 2012 – a cumulative 27.6% increase in turnover over the last three years – and pre-tax profits, excluding exceptional items, increased by 6.2% to £33.6m reflecting the benefits of sales volume and value enhancing revenue growth and strong cost containment measures. Post exceptional items, profit increased by 16.4% to £35.4 million. All core brands performed well, with particularly strong growth in the company’s exotic juice brands, Rubicon and KA.

AG Barr delivered growth across both the carbonates and stills segments. In stills, AG Barr grew revenue by 9.4% against a market performance of 3.8%. This was primarily driven by growth and innovation in the exotic juice drinks brands – Rubicon and KA. AG Barr is continuing with its strategy of concentrating investment around the core brands Irn-Bru, Barr, Rubicon and KA.

Roger White, chief executive of AG Barr.

“AG Barr has demonstrated its resilience in the face of challenging market conditions, in particular coping with substantial raw material cost headwinds while achieving revenue growth based on brand development, innovation and improved focus on execution,” says Roger White, chief executive of AG Barr. “Our operational performance improved substantially in the final quarter of last year and we are now beginning to see the benefits of our investment in our production assets. We are further reinforcing our confidence in our future growth prospects with the confirmation of our plans to invest in a new site, with substantial future capacity, in the Milton Keynes area.”

He continues: “We anticipate 2012 will be another challenging year in the UK, with household disposable incomes remaining under pressure. Despite this, we remain confident that our financial strength, backed up with strong sales momentum across our core brands, excellent innovation and our anticipated capital investment programme will facilitate further good progress.”

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Another Record Year For Nichols


Driven by its strong brands and international business, UK soft drinks company Nichols increased sales by 18% to £98.9 million in 2011 and profit before tax by 20% to £18.1 million. Nichols’ UK soft drinks sales outperformed the market, increasing by 15%, more than twice the market growth rate of 7%. Whilst Vimto remains the key brand, the company is also continuing the strategy of broadening the portfolio and in April 2011 launched the Levi Roots range of Caribbean drinks, which added an incremental £2.5 million sales in its first 9 months of trading.

With the economic downturn continuing to affect the UK consumer, the importance and strength of Nichols’ significant international business is evident. In 2011 total international sales grew by 31% against the prior year, sales to the Middle East were 24% higher on the back of strong in-country sales of the Vimto brand and African sales were up by 28%.

“2011 was another record year with an outstanding performance in the face of the most challenging UK retail environment seen in a decade,” comments John Nichols, non-executive chairman of Nichols. “While 2012 will remain challenging we are confident of delivering profitable growth in the current year and beyond.”

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AG Barr Planning £40 Million Facility in England


Scottish soft drinks manufacturer AG Barr is reported to be planning to extend its presence still further south of the border by building a new £40 million bottling and distribution centre in England. AG Barr currently operates factories at Cumbernauld, Dunbar and Forfar in Scotland along with a production site at Tredegar in South Wales. In addition to its flagship Irn-Bru brand, the company’s portfolio includes Orangina, Strathmore, Tizer and Rubicon, which AG Barr acquired for £60 million in 2008 to enter the UK fruit juice market.

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Solid Performance by Britvic


Buoyed by volume and sales growth in Great Britain, France and its other international markets except Ireland, Britvic sold 2.1 billion litres of soft drinks in the 52 weeks ended October 2nd 2011 and increased operating profit (EBITA) before exceptional and other items by 4.3% to £138.1 million on revenue up by 14.6%, at constant exchange rates, to £1.29 billion. The UK-based international soft drinks group’s underlying revenue, excluding its French business, increased by 0.8% to over £1.0 billion. Group profit before tax was flat at £105.1 million.

 

Britvic, along with other soft drinks producers, faced a difficult year, characterised by sharp increases in raw material costs coupled with poor summer weather, which dampened sales. Britvic’s Great Britain business grew volumes by 0.8% during the year and delivered pricing growth, with average realised price (ARP) up 1.9% reflecting price discipline in the market. The strong growth in Britvic’s carbonates business in Great Britain more than offset a decline in the stills side.

 

Paul Moody, chief executive of Britvic.

Ireland continues to be problematic for Britvic with the poor summer and difficult economic climate impacting on both revenue and profits levels. However, the major restructuring of the Irish business started to show benefits in the second half but Britvic Ireland remains under review although management is confident that it will deliver growth when market recovery begins.

 

Britvic France, which was acquired sixteen months ago for Eur186.4 million, achieved high single digit revenue growth in its first full year.

 

“Britvic has delivered a robust set of results, despite the particularly challenging economic backdrop in 2011,” says Paul Moody, chief executive of Britvic. “This performance reflects the strength of our brands and the quality of our innovation programme, as well as the continued focus on revenue management.”

 

The group continues to make progress with the internationalisation of its Fruit Shoot brand, which has just secured three major new agreements in the US to add new territories, new distribution partners and, significantly, an agreement with Pepsi Bottling Ventures, the largest independent Pepsi bottler in the US, to begin production locally.

 

“The political, financial and social environment in which we operate will remain challenging, but we are confident in our ability to compete strongly and to deliver another solid set of results for the year ahead, in line with our expectations,” he adds.

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Poor Weather Restricts AG Barr


The poor summer weather has impacted upon the financial performance of UK soft drinks manufacturer AG Barr in the first six months ended July 30th 2011. Driven by the company’s core brands of Irn-Bru, Rubicon and Barr, turnover increased by 4% to £124.0m with volume up by 1.4% but profit on ordinary activities before tax, excluding exceptional items, was flat at £16.2 m.

 

“This is a particularly positive result given the challenging comparatives we faced in the first half of the year, the relatively poor summer weather, which has impacted the soft drinks market and a competitive market backdrop,” says Roger White, chief executive of AG Barr. “Whilst we remain cautious regarding the second half, given the market context, we are confident that we have a strong programme of activity including further innovation, which should help maintain our growth momentum.”

 

Roger White, chief executive of AG Barr.

The overall soft drinks market was characterised by an increase in the level of promotional intensity during the first half, as brand owners and retailers sought to pass on price increases on the one hand but increased promotional activity to maintain market share on the other. AG Barr’s pricing strategy was designed to minimise cost increases to consumers where possible and to ensure its brands remain good value for money without having to increase the level of price promotion.

 

To facilitate its further UK expansion, AG Barr is planning to invest in a new manufacturing facility in the South of England with canning capacity along with the potential for additional PET capacity. It is anticipated that this new facility will come on stream over the course of 2012/13.

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Another Strong Performance by Nichols


UK soft drinks group Nichols has increased profit before tax by 20.4% to £7.2m and sales by 14.4% to £50.5m for the first half ended June 30th 2011. Volumes in the UK soft drinks business were 11% up on last year, delivering a 13% sales increase to £28.3m, against a UK soft drinks market which grew by only 1% in volume terms and 6% in value.

 

Nichols’ international sales grew by 13% in the first half of the year, with sales to the Middle East up 11% and sales to Africa up 14%, following a strong performance last year.

 

Nichols’ brand portfolio includes Vimto, which is sold in over 65 countries, and Levi Roots (soft drinks), Sunkist and Panda which are sold in the UK. The group has a leading market position in both the ‘stills’ and ‘carbonates’ drinks categories and also in the soft drinks on dispense market.

 

In March 2011, Nichols acquired the remaining 50% equity of Dayla Liquid Packing and this has generated additional revenue of £1.4m, which contributed to a 20% increase in sales at the half year for the dispense business. Like for like sales without the incremental Dayla revenues increased by 5% year on year.

 

A combination of price increases, cost efficiencies, new product development and international business growth has allowed Nichols to maintain its half-year group operating margin despite the continued pressure from raw material cost inflation.

 

“We have again grown our UK market share and our international business continues to thrive. We expect full year profits will be significantly ahead of last year,” comments John Nichols, non-executive chairman of Nichols.

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PepsiCo Launches European Search for Emerging Communications and Technology Companies


PepsiCo has announced an open call for digital entrepreneurs across Europe to apply to take part in ‘PepsiCo10’, an innovation incubator program designed to discover and support emerging technology companies whose ideas and solutions can be applied to drive business value for the global soft drinks and snacks group.

Launched successfully in the United States last June, PepsiCo has now expanded PepsiCo10 to Europe. The goal of the PepsiCo10 Europe program is to identify up to 10 of the most promising companies and give them the opportunity to work with PepsiCo in the UK to deliver pilots of their technologies, whilst receiving the support and guidance from industry-leading mentors.

PepsiCo is looking to identify businesses with ‘ready-to-go’ technologies across five categories; social media; mobile marketing; place based technology; digital video; and gaming or learning platforms. Highland Capital Partners, OMD and Weber Shandwick will continue to serve as advisors to PepsiCo throughout the program.

Selected applicants will undergo a series of rigorous assessments, and a subset will be invited to participate in a second round and submit video presentations, which will be judged by senior brand representatives from PepsiCo brands Pepsi, Walkers, Tropicana and Quaker. Companies’ ideas and solutions will be evaluated on their potential ability to impact PepsiCo’s business and to deliver on ‘Performance with Purpose’, the company’s commitment to finding innovative ways to minimise its impact on the environment; to provide a great workplace for its associates; and to respect, support and invest in the local communities where it operates.  Prospective applicants can find out more about the program and apply online until July 15, 2011 at www.pepsico10.com.

Near completion, PepsiCo10’s pilot programs in the US have resulted in the execution of successful digital marketing activations across US brands. These winning technologies include: Tongal, a video sharing platform that is currently sourcing animation video for the Brisk Tea brand; BreakOut Band, a collaboration music platform that worked with Pepsi MAX to execute at the 2011 South by Southwest Interactive and Music conference; and Evil Genius Designs, a mobile gaming platform with which PepsiCo has worked to develop a virtual reality video game featuring products across the PepsiCo portfolio.

“There is a huge appetite amongst consumers for new and exciting social media technologies and for us as a business, digital is a dynamic and increasingly important area for innovation,” points out Ian Ellington, general manager for Walkers Crisps, one of the brands which will benefit from the PepsiCo10 technologies. “We’ve already used digital and social media to great success in our past campaigns, such as Walkers’ Do Us A Flavour campaign and we now look forward to harnessing the emerging tech and start-up landscape and cultivating the next generation of digital pioneers.”

CAPTION:

PepsiCo10 winner BreakoutBand brought an interactive music beat maker to the Pepsi MAX Lot at SXSW Interactive 2011, giving music fans a chance to mix their own beats on-site, form virtual bands and create original songs via their mobile phones.

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Stevia Sweetens Health Trends


Stevia has enjoyed a meteoric rise in popularity on the global stage over the past four years. A new study by leading food and drink consultancy Zenith International estimates that worldwide sales of stevia reached 3,500 tonnes in 2010, a 27% increase on 2009, taking its overall market value to $285m.

“As rising levels of obesity and diabetes continue to dominate headlines, there has never been so much emphasis on reducing our caloric intake as well as consuming healthier foods and beverages,” comments Zenith senior market analyst Anya Hembrough. “After persistent efforts by key producers, legislators worldwide are finally giving the green light to this new zero-calorie sweetener.”

Originating from Paraguay, where stevia leaf has been valued for centuries because of its sweetening properties, stevia has been used as a sweetener in Japan and parts of South America for decades. The high intensity sweetener offers a sweetening power some three hundred times that of table sugar, without adding any calories. Widely used as a table top sweetener, stevia is increasingly being recognised as an ingredient in finished products – in particular soft drinks – thanks to its versatility. However, it is the ingredient’s all-natural credentials which make it stand out from the crowd.

The turning point in stevia’s fortunes came in 2008 when steviol glycosides, the sweetening components of the leaf, were deemed to be safe and Rebaudioside A, one particular steviol glycoside, was granted GRAS (Generally Recognised as Safe) status in the US. Since then, approval by legislators across the world has opened the door to new formulations and reformulations of foods and beverages with zero or reduced calorie content. Its status as a global ingredient was secured with its incorporation into leading soft drinks brands manufactured by Coca-Cola and PepsiCo.

If the rise in stevia has been impressive to date, the future looks even more promising, with approval still pending in a number of regions, and European authorisation widely anticipated for later in 2011. Zenith forecasts that the global market for stevia will reach 11,000 tonnes by 2014, equivalent to $825m by value.

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Another Strong Performance by AG Barr


UK soft drinks manufacturer AG Barr has increased pre-tax profit, excluding exceptional items, by 13.3% to £31.6m for the twelve months to January 29th 2011 and turnover by 10.4% to £222.4m, achieving double-digit like-for-like sales growth for the second consecutive year. The company again outperformed the UK soft drinks market, which grew by 7%.

AG Barr made solid progress in both its key trading segments – carbonates and stills including water – and increased focus on its core brands of Irn-Bru, Barr and Rubicon. Continuing efforts to offset cost pressures allowed the Scottish drinks producer to maintained margins.

The investment programme at AG Barr’s Cumbernauld production facility in Scotland progressed well, as did the move into third party primary logistics and storage. These two major projects have enabled closure of the company’s site at Mansfield in England.

Roger White, chief executive of AG Barr.

Overall capital expenditure during the year totalled £9.8m, which is well ahead of the previous year when £5.3m was spent. It is anticipated that 2011/12 will see further value adding and cost reducing capital projects such as in-house sleeving of PET bottles and the completion of a wind turbine project.

“AG Barr has maintained its track record of strong financial performance, delivering double digit sales and profit growth, despite the challenging macro economic environment. We have increased investment across the business in our brands, assets and people to support this growth,” says Roger White, chief executive of AG Barr. “Across 2010 we also made significant investments in our operations and supply chain, which will give us the ability to improve service to customers and drive efficiency in the future.”

He continues: “The soft drinks sector will face tough comparative trading across 2011, as well as further cost volatility and general economic uncertainty. However, we face these challenging conditions with good momentum, a well invested business, excellent operational plans and a strong financial position.”

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Storm Brewing For UK Tea Industry


Latest research from Mintel finds that while 88% of British consumers aged over 65 drink tea, penetration drops to 73% for younger (15-34 year-old) adults. With ever increasing competition in the soft drink sector and more consumers dropping out of the category than are actually entering it, the next generation of traditional tea drinkers may be in jeopardy.

Furthermore, Mintel’s exclusive consumer research shows that younger consumers are less enamoured with ‘traditional English tea’ than their older counterparts – just over half of 16-24 year olds (53%) drink it regularly (ie at least once a week), compared to 68% of over 55s. As a result, despite tea having a large penetration in the UK market with eight in ten UK adults drinking it, tea has been experiencing a long-term decline in usage. Indeed, the proportion of UK adults who drink tea has dropped from 87% in 2006 to 81% in 2010 – at a time when overall soft drinks revenue is on the increase.

With the market value of tea currently standing at £647m, the standard (or ‘traditional English breakfast’) tea segment which accounts for by far the majority (89%) of the value sales in the tea market, has seen declining volume sales as a result of failing to resonate as strongly with the younger generation as it does with the old. Instead, this generation are much more likely to be among the 23% of the population who drink standard ‘English breakfast’ tea alongside newer varieties such as herbal/fruit tea (eg green tea/rooibos) and speciality (eg Assam, Earl Grey) teas. A third (34%) of 16-34 year-old tea drinkers drink all three tea types, but among consumers aged over 55 brought up on traditional tea, this figure declines to 18%.

“Tea is capitalising on the short-term increase in the share of over-65s but failing to convert the younger generations in significant enough numbers to replace those falling out of the market. Our consumer research identifies a younger tea drinking generation who differ markedly from previous generations of tea drinkers. They have a much more adventurous attitude towards drinking tea, enjoying the variety of flitting between standard ‘English’ breakfast, speciality and herbal tea rather than just sticking to one type; and they are keen to try new tea brands and new flavours,” explains Jonny Forsyth, senior drinks analyst at Mintel.

And it seems the decline is not attributable to economic uncertainty either. Ironically, the recent economic downturn has been a short term help to sales. While value sales continue to rise due to rising commodity prices, volume sales from 2005-08 declined 5% (from 82.5m kgs to 78.5m), but 2008/10 saw an 8% increase to 84.6m as consumers spent more time at home and took solace in cheap indulgences – especially ones as psychologically reassuring as standard tea.

“The recent economic climate has played a big part in consumer attitudes to tea and two of the worst winters on record have also assisted the market, not to mention heavy discounting activity. However, the sector remains too reliant on traditional English breakfast tea, which is failing to resonate with younger consumers, and needs to do more to attract new consumers to the health benefits of herbal tea and the premium tasting benefits of speciality.” Jonny Forsyth adds.

Meanwhile, herbal tea hit the £80m mark for the first time in 2010 (up from £73m in 2009) and has grown its share of the market to stand at 11%. However, Mintel’s research reveals that almost a third (31%) of standard tea drinkers do not believe in the health benefits of herbal/fruit teas, which is a problem for a niche sector trying to broaden its user base.

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Another Successful Year For Nichols


UK-based soft drinks group Nichols increased profit before tax (pre-exceptional) by 23% to £15.1m on sales up 16% to £83.9m for the year ended December 31st 2010. Nichols’ brand portfolio includes Vimto, which is sold in over 65 countries, and Sunkist and Panda, which are sold in the UK. The company operates in both the ‘stills’ and ‘carbonated’ drinks categories and also in the soft drinks on dispense market, where its brands include Cabana, Ben Shaws and Dayla.

Whilst the UK soft drinks market grew by 7%, the group’s domestic sales increased by 15% to £69m, buoyed by the launch of Cherry Vimto, which delivered incremental sales of £3.7m. Nichols’ international revenues increased by 24% to £15.4m, with significant growth coming from Africa (+56%) and the Middle East (+13%). The overseas operations are a significant contributor to the group, hedging against the uncertainties of the UK economy and diluting the impact of raw material inflation, currently affecting the food and drink industry in the UK.

Sales of soft drinks on dispense increased by 8%, largely as a result of the acquisition of the Ben Shaws dispense business in January 2010. Nichols has now announced that it is strengthening its dispense business by acquiring the remaining 50% stake in Dayla Liquid Packing (Dayla).

“2010 was another outstanding year, despite the difficult economic environment,” says John Nichols, non-executive chairman of Nichols. “We made excellent progress and were well ahead of 2009, which was also a record year for us and therefore a tough target to beat. In a challenging consumer market, once again we have delivered double digit growth in volume, revenue and profitability. We remain confident in producing further profitable growth in 2011 and beyond.”

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Refresco Acquires Spumador to Strengthen European Leadership


Netherlands-based Refresco Group is acquiring Spumador, the largest producer of private label carbonated soft drinks and mineral water in Italy from private equity firm Trilantic Capital Partners for an undisclosed sum. Refresco is the market leader in the production of private label soft drinks and fruit juices in Europe.

Spumador is a major producer for the Italian retail market with five production locations in Northern Italy. In addition to private label carbonated soft drinks and mineral water, Spumador also manufactures ready-to-drink (RTD) iced teas, sport drinks and fruit juices and owns a number of trademarks, including San Antonio, Valverde and San Attiva.

In 2009, the company generated Eur170m in revenue, an increase of 7% compared to 2008, and produced a total of 958m litres, up more than 9% over the previous year.

The acquisition of Spumador is Refresco’s second substantial acquisition within a year. It follows the acquisition of Soft Drinks International (SDI), a German producer of soft drinks and mineral water with revenues of Eur140m in September 2010. The acquisition of Spumador is in line with Refresco’s ‘buy and build’ strategy, which is geared towards further strengthening and expanding Refresco’s leading position in Europe in the area of soft drinks and fruit juices. This is Refresco’s first move into the Italian market and marks another step towards the consolidation of the fragmented European market for private label soft drinks and fruit juices.

“With the acquisition of Spumador, we will create a very sizeable position in an attractive new region. It is our first step into the growing Italian private label market, where growth of 6% is predicted in the soft drink market segment for the coming years,” points out Hans Roelofs, chief executive of Refresco. The transaction is expected to be completed within a few months.

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Irish Business Puts Britvic in the Red


Continued market share gains in Great Britain, a successful innovation programme and further expansion into continental Europe, were behind an 18.1% increase in operating profit (EBIT) before exceptional and other items to £129.6m at Britvic for the 53 weeks ended October 3rd, 2010. The rise was due in part to the Eur237m acquisition of Britvic France, which contributed £85.2m to group revenue of £1.14b. Underlying revenue rose by 5.9% to £1.05b.

However, £137.9m of exceptional and other items, including a one-off impairment charge of £104.2m for the Irish business, left the UK-based soft drinks producer with a pre-tax loss of £28.8m against a pre-tax profit of £66.2m in the previous year.

Although the Great Britain and international businesses performed strongly, Britvic Ireland had another tough year but managed to grow volume by 1.3% in stark comparison to last year’s 10.7% fall.

Paul Moody, chief executive of Britvic.

“Britvic has again demonstrated its ability to grow the business despite the difficult conditions in the wider economy. This performance was achieved through the breadth and quality of our brand portfolio, strong delivery of innovation and a targeted and focused programme to grow our business internationally,” says Paul Moody, chief executive of Britvic. “We are taking further steps to restructure our business in Ireland and believe that this, along with our strong brands and leading market positions will create a platform to enable us to rebuild the profitability of this business.”

He continues: “Whilst we expect the consumer and cost environment to remain challenging, we are confident in our ability to compete strongly in the markets in which we operate. The group’s extensive brand and innovation plans, combined with satisfactory trading in the first few weeks of the new financial year, mean we are in good shape to deliver another robust set of results for the year ahead.”

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PepsiCo Plans to Revolutionise its Farming with New i-crop Technology


PepsiCo plans to roll-out globally its new i-crop farming technology that will enable the soft drinks and snacks group’s farmers around the world to monitor, manage and reduce their water use and carbon emissions, while also maximizing potential yield and quality. The web-based crop management system was developed by PepsiCo in conjunction with Cambridge University in the UK.

Trials of i-crop are currently underway at 22 farms in the UK, where PepsiCo has ambitious plans to reduce carbon emissions and water usage by 50% across the farming of its core crops in the next five years.

The technology will be rolled-out throughout Europe during 2011, with planned introductions in Holland, France, Germany, Belgium, Spain, Portugal and Turkey. The company hopes to take it to India, China, Mexico and Australia by 2012.

As one of the world’s largest food and beverage businesses, with brands including Quaker, Tropicana, Gatorade, Pepsi-Cola and Frito-Lay, PepsiCo is a major investor in global farming. In 2010, the company announced 15 global goals and commitments to guide its work to protect the Earth’s natural resources through innovation and more efficient use of land, energy, water and packaging.

In the UK, the company is the largest purchaser of British potatoes and one of the largest purchasers of British oats and apples, using 100% British produce in Walkers crisps, Copella English Apple juice, Quaker Oats, Oatso Simple and Scott’s porridge.

“Farming is in the DNA of our business – we rely on fresh produce every day. Finding ways to produce more food with less environmental impact is essential to our future,” explains Richard Evans, president of PepsiCo UK and Ireland. “I-crop has the potential to revolutionise the way we farm, enabling our farmers to save costs and water and carbon consumption, while at the same time improving their yields.”

In its first ‘Sustainable Farming Report’, PepsiCo UK outlined how it is working in partnership with its 350 British farmers to reach its aim of ‘50 in 5’. Other initiatives announced include trials of new low-carbon fertilizers and plans to replace more than 75% of PepsiCo UK’s current potato stock with varieties that will significantly improve farmers’ yields and decrease wastage by 2015.

Commenting on the PepsiCo UK sustainable farming report, Richard Perkins, senior commodities adviser at WWF says: “The food industry is starting to recognize that in order to fully embed sustainability and biodiversity in its business practices, a large part of the focus must be on the agricultural supply chain. In this respect PepsiCo UK has taken a leadership role in recognising that it is, at its heart, an agricultural business. The focus of the business on improving its key environmental impacts, such as greenhouse gas emissions – in the field and on the farm – is most welcome.”

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Positive First Half Performance by AG Barr


British soft drinks group AG Barr has increased turnover by 13.9% to £119.2m in the first half ended July 31st last, as its core brands Irn-Bru, Rubicon and Barr all performed significantly ahead of the total soft drinks market. Profit before tax, excluding exceptional items, increased by 18.8% to £16.0m.

The UK soft drinks market grew by 7% in value terms and 3% in volume terms during the period, benefiting from good weather in the early summer months. Carbonated drinks increased volume by 2% and still drinks grew volume by 4%.

Roger White, chief executive of AG Barr.

AG Barr’s operating margins were resilient in the period. A combination of operational gearing due to strong volume performance and continued strong cost control underpinned margins. However, the volatility of raw material costs has become increasingly challenging.

“We are delighted to have built on last year’s strong overall performance with a very positive start to the 2010/11 financial year. We have achieved sales growth well in advance of the market for our core brands and during the period have further increased our marketing investment,” say Roger White, chief executive of AG Barr. “We are up against tougher comparatives in the second half of the year but, while we remain cautious regarding the overall economic and consumer outlook, we believe we are well positioned to meet our expectations for the full year.”

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Coca-Cola Enterprises Sees Solid Growth Opportunities in Western Europe


Coca-Cola Enterprises, the world’s largest bottler of Coca-Cola products which will soon be focused purely on some of the largest but also most mature soft drinks markets in Western Europe, is optimistic about the long-term growth prospects for this territory. The group aims to achieve in currency neutral terms: revenue growth of 4% to 6%; operating income growth of 6% to 8%; earnings per share growth in a high single-digit range; and return on invested capital improvement of 20 basis points or more per year.

“These metrics reflect the solid growth opportunity that lies ahead in Europe,” says John Brock, chairman and chief executive of Coca-Cola Enterprises. “They exceed our current long-term objectives. We are committed to these financial objectives, and in turn, to creating real value for our shareowners, our customers, and our employees.”

CCE currently sells approximately 80% of The Coca-Cola Company’s bottle and can volume in North America. However, once it has completed the sale of this business to Coca-Cola, CCE will be left as the sole licensed Coca-Cola bottler in Great Britain, Belgium, continental France, Luxembourg, Monaco, and the Netherlands. The disposal of the North American operations is on track for completion in the fourth quarter of 2010.

For its 2010 financial year, CCE expects, on a comparable and currency neutral basis, Europe to achieve high single-digit to low double-digit operating income growth, while operating income in North America is expected to grow at a mid to high single-digit rate. Also, on a comparable and currency neutral basis, the company now expects Europe to achieve mid single-digit revenue growth, while in North America revenue is expected to be approximately flat.

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Refresco to Acquire Soft Drinks International


Netherlands-based Refresco, Europe’s leading manufacturer of private label soft drinks and fruit juices, is to acquire Soft Drinks International, a German producer of soft drinks and water, for an undisclosed price. SDI is a strong, regional producer, primarily active in the German market and the Benelux, with production facilities in Erfstadt (Germany) and Heerlen (The Netherlands). SDI’s products are also exported to other European countries.

SDI focuses solely on the private label segment. Turnover in 2009 was Eur140m and production was approximately 1b units. The deal is expected to be completed within several months.

The acquisition is in line with Refresco’s ‘buy and build’ strategy, which is focused on further strengthening and expanding the company’s leading position in non-alcoholic beverages in Europe. The takeover signifies an important step for Refresco in the growing German market for carbonated soft drinks (CSDs). It allows Refresco to further expand its product range – which in Germany currently consists primarily of fruit juices – with CSDs. The deal will transform Refresco Germany, which had a turnover of over Eur240m in 2009, into a full service provider of non-alcoholic beverages.

In addition, the acquisition allows Refresco to integrate the activities of SDI into its existing organisation and consequently further optimise its production processes and improve its competitive position to become one of the top three biggest manufacturers of soft drinks and fruit juices in Germany. Furthermore it will reinforce Refresco’s position in the growing private label market.

Established in 2000, Refresco currently operates 19 production sites in eight countries across Europe and employs more than 2,200 people. In 2009, Refresco achieved a turnover of Eur1.14b.

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Nichols Outperforms UK Soft Drinks Market


Nichols, the soft drinks group, has increased profit before tax by 39% to £6.0m on sales ahead by 17.8% to £44.2m for the six months to 30th June 2010. Whilst the total soft drinks market has grown by 5.1% in value terms, sales in Nichols’ UK soft drinks business grew by 19.3% in the first half year as the company’s carbonated and stills sales significantly outperformed the market in each category.

Growth has been driven by further distribution gains and continued strong growth of the Vimto brand along with the successful launch of ‘Cherry Vimto’ in January 2010. Sales of Cherry are currently running at 9.1% of total ‘Vimto Original’ sales, the majority of which is incremental business.

“We have continued to increase our market share and have again significantly outperformed the sector,” says John Nichols, non-executive chairman of Nichols. “The momentum we have built up over the past few years has certainly continued and we anticipate profits at the year end will be significantly ahead of last year.”

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Refresco Opens New Canning Line in Spain


Refresco Iberia has installed a new line for cans at its production plant in Marcilla, in the north of Spain. The canning line is producing carbonated soft drinks and still drinks, ranging from fruit and sports drinks to ice teas in 33cl cans. The installation marks an important extension of Refresco Iberia’s product-portfolio, which until now consisted of carton and PET.

”With the installation of the canning line, we are now in Iberia able to better respond to our customers’ needs and to offer a total product-portfolio, in line with the Refresco strategy. We explicitly chose to install the canning line at our production location in Marcilla because of its strategic location to supply international customers of the European Refresco group,” explains Dominique Luna, managing director of Refresco Iberia.

Cans will account for about 5% of Refresco Iberia’s volume production this year but is expected to increase to 15% next year and to then reach 30%, in line with the Refresco Iberia’s objective to achieve a better diversification in formats between carton, PET and cans.

Refreso Iberia is part of Netherlands-based Refresco, which is one of the largest producers of fruit juices and soft drinks in Europe. The group had a turnover of Eur1.14b in 2009 and employed about 2,300 people.

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Cott Extends Private Label Beverages Leadership With $500m Acquisition


Cott Corporation, the world’s largest retailer brand soft drinks company, is acquiring Cliffstar Corporation, the leading private label manufacturer of shelf stable juices, for a cash consideration of $500m.

Founded in 1970, New York-based Cliffstar is one of the leading suppliers of private label beverages and the largest private label producer of apple juice, grape juice, cranberry juice and juice-blends in North America. With revenues of $654m, Cliffstar operates eleven facilities in the US and has approximately 1,200 employees.

Cott has identified cost synergies of $20m on an annualised basis from the deal, of which $14m are expected to be realised in 2011.

“As the clear leader in private label shelf-stable juice, Cliffstar is an ideal partner for Cott as we strengthen our position in private label beverages,” says Jerry Fowden, chief executive of Cott. “A combination with Cliffstar expands Cott’s product portfolio and manufacturing capabilities, enhances our customer offering and growth prospects, and improves our strategic platform for the future. Combined with Cliffstar, Cott will be a more diversified company with long-term advantages for our shareowners and retailer partners.”

The combined business has pro forma annual revenue of $1.8b in North America and $2.3b globally with adjusted EBITDA of $246m.

Employing about 2,800 people, Cott operates bottling facilities in the US, Canada, the UK and Mexico. Cott markets non-alcoholic beverage concentrates in over 50 countries around the world.

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UK Concern Over the Effects of Soft Drinks Advertising on Children


A YouGov SixthSense report into the UK drinks market has shown that 1 in 4 adults believe fizzy drinks contribute significantly to obesity, and 71% feel that soft drinks are largely responsible for bad teeth, while a significant minority would support a blanket ban on sugary drinks advertising.

For many parents, getting their kids to eat and drink healthily can be challenging, especially taking into consideration some of the aggressive marketing ploys used by companies to make their products more attractive to children.

It comes as no surprise, therefore, that two thirds (66%) of adults are concerned about the influence drinks companies have on young children, with 29% going as far as to suggest a ban on all advertising for carbonated or sugary soft drinks.

Despite the apparent concerns about fizzy drinks and their effect on health, 51% of parents have let their children drink Coca-Cola in the last year, while 57% have given their kids Robinson’s, including Squash, Barley Water and Fruit Shoots. In contrast, 34% of parents have given their children bottled water in the past year.

“Many people are concerned about the role of soft drinks companies in the lives of young people. However, bearing in mind that the majority of parents are still willing to serve soft drinks, it could be argued that a high level of media saturation seems to negate perceived health concerns,” points out James McCoy from YouGov SixthSense. Indeed, 75% of respondents associated the term ‘heavily advertised’ with the drinks brand Coca-Cola.

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AG Barr Sparkles as it Breaks £200 Million Sales Barrier


Having broken through the £200 million sales barrier and lifted profits by 20% while significantly outperforming the UK soft drinks market in its 2009 financial year, Glasgow-based AG Barr has now commenced a £10 million expansion programme at its Cumbernauld site in Scotland.

According to AG Barr, the UK soft drinks market, in contrast to the prior year, when volume declined by over 2%, increased by 1% in volume terms and by 2% in value terms in the 52 week period ending 23rd January 2010. Indeed, the difficult economic environment appears to have had limited impact on the overall market and carbonates in particular have continued to show good growth across the year.

“Consumers have continued to purchase a wide repertoire of soft drinks and have maintained a preference for established product groups that deliver both quality and value. Retailer branded soft drinks have not increased their share of the market, perhaps reflecting the competitive nature of pricing and promotion across the category as a whole,” explains Roger White, chief executive of AG Barr. “The soft drinks category has once again demonstrated its ability to deliver growth in volume and in value terms despite difficult macro economic conditions. The landscape remains competitive but consumers continue to respond well to both existing brands and products and to well executed innovation.”

Roger White, chief executive of AG Barr.

Market growth was driven by the strong performance of carbonates with all sectors performing strongly with the fastest growth coming from energy drinks. The water market recovered, registering 5% volume growth and 2% value growth during the year.

“Over the period we have seen excellent growth across our key brands as we look to appeal to more people, more often, in more areas across the market,” he adds.

Financial Performance

AG Barr outperformed the UK soft drink market to increase profit on ordinary activities before tax and exceptional items from £23.1 million to £27.9 million on turnover ahead by 18.7% to £201.4 million for the twelve months to January 30th 2010. Like for like sales, stripping out the impact of the Rubicon acquisition, increased by 10.6% as AG Barr’s core carbonate brands and still juice brands grew well ahead of the market. Indeed, the group’s flagship Irn-Bru brand increased revenue by over 5% with strong growth in England and Wales.

Having successfully integrated the Rubicon juice business over the course of its last financial year, AG Barr increased operating margins by 1.2%. Net debt was reduced by 29.5% during the year and stood at £22.1 million on January 30th last, reflecting continuing efforts to improve cash management and capital efficiency across the business.

“Our core business sales performance was excellent and the Rubicon brand has added a new dimension to our business. Our sales growth continues to be underpinned by substantial investment in our brands and infrastructure. In the last year we have maintained a tight control of all our costs allowing us to improve margins once again,” points out Roger White. “We continue to face an uncertain economic outlook with the additional challenge of substantial operational changes across 2010/11. However, looking forward we remain confident in our ability to deliver against our strategy.”

Broader Portfolio

AG Barr has been successfully broadening its product portfolio, which was traditionally dominated by carbonates, headed by the Irn-Bru brand. The company’s carbonates grew by 10.1% in value terms, well ahead of the overall market in 2009. The addition of Rubicon helped the group’s still drinks and water segment, which also includes the Strathmore brand, to contribute £17.2 million to turnover growth. Indeed, still drinks and water now account for 22.4% of group revenue, up from 16.5% in the previous year.

£10 Million Investment

The UK’s largest independent soft drinks producer has recently commenced an investment and restructuring programme, including a £10 million investment to expand production capacity at its Cumbernauld site in Scotland and the planned closure of its Mansfield site in England. This will entail moving between 60 and 70 million litres of production from Mansfield to Cumbernauld.

“The £10 million investment at the Cumbernauld facility is largely about replacing our filling capacity with higher output machinery which will allow us to consolidate all of the production from our Mansfield site into the Cumbernauld site,” says Roger White. “The investment is really about underpinning what we already do in Cumbernauld, but to make bigger, faster and more efficient production facilities around the site.”

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