AG Barr Plc: Market Analysis and Business Performance Report

This report provides a comprehensive overview of AG Barr Plc, a prominent UK-based manufacturer, distributor, and marketer of non-alcoholic beverages. The company's diverse portfolio includes carbonated drinks, juices, energy drinks, and packaged water, with well-known brands like IRN-BRU and Rubicon. The report details AG Barr's financial performance, including revenue, operating margin, and net margin, along with its strategic priorities such as connecting with consumers, building brands, driving efficiency, and building trust. It also highlights the company's investment case, emphasizing its strong brands, customer focus, and growth potential. The report analyzes AG Barr's business model, market strategies, and key performance indicators, as well as its commitment to responsible business practices, including environmental sustainability and community engagement. The analysis incorporates data from the 2020 Annual Report and focuses on the impacts of the COVID-19 pandemic on the soft drink and cocktail markets, providing insights into the company's resilience and adaptation strategies.

AG Barr Plc
- A manufacturer, distributor and marketer of non-alcoholic beverages
- Comprises a wide range of carbonated drinks, juices, still drinks, energy drinks and packaged
water
- Three reportable segments: Carbonates; Still Drinks and Water; and Other
- Manufactures and markets soft drinks
- portfolio comprises carbonated soft drinks, fruit drinks, juices, energy drinks and cocktails
- also offers packaged water, sugar free flavored water and sugar free squashes
- Brand Names: IRN-BRU, Barr Originals, KA, D&B, St. Clements, Simply, Sun Exotica, Rubicon,
Strathmore, St Clements Sparkling, Snapple, Rockstar, Primer Spremitura, Le Joli, Big Wille,
Bundaberg and Tizer
- various third-party brands including Rockstar and Snapple, through partnerships.
- Distributes Rockstar energy drinks in the UK and Ireland / Snapple fruit juices and iced teas in
the UK and EU territories
- Is headquartered in Cumbernauld, North Lanarkshire, the UK.
Revenues, Operating Margin and Net Margin
- Rvenues of (British Pounds) GBP255.7 million for the fiscal year ended January 2020 (FY2020), a
decrease of 8.4% over FY2019
- In FY2020, the company’s operating margin was 14.9%, compared to an operating margin of
16.2% in FY2019.
- In FY2020, the company recorded a net margin of 11.7%, compared to a net margin of 12.8% in
FY2019

Investor Area
We are a UK based branded multi beverage business focused on growth and creating long-term
shareholder value
○ Long established business (140+ years)
○ Conventionally governed, listed in 1965
○ Ambitious and value driven with strong consumer focus
○ UK-wide with significant growth potential
- Building a differentiated portfolio of great tasting soft drinks brands that people love
- Democratising cocktails with an unrelenting desire to make great tasting cocktails available to all
Strategic Priorities
Our overarching purpose is to create value, with values - for our shareholders, consumers, customers and
for society as a whole
o Connecting with consumers Consumer insight drives our business. Consumers’ needs and
preferences are changing and we ensure that we take the time to listen, to understand them
and to offer everyone a choice of great tasting, high quality products
o Building trust Building and maintaining long-lasting trust and successful relationships is central
to our business and always has been. Our responsible behaviour over the last 140 years has
created a firm foundation, but one we want to build upon further. Being a trusted business that
acts with integrity is fundamental to our stakeholder relationships - from our consumers and
customers to our suppliers and communities. Equally, as the world around us changes, with
climate change in particular becoming increasingly more pressing, our strategic choices are
more than ever informed and supported by our desire to do the right thing and to play our part
in addressing the key issues facing society.
o Building brands We are brand owners and builders, offering a diverse and differentiated
portfolio of products that people love. With our own powerful brands, complementary franchise
partner brands and a strong track record of bringing successful innovation to market, we seek to
build brand awareness, equity and product distribution such that we outperform the market.
o Driving efficiency We continually strive for greater efficiency across our business, investing for
growth while also ensuring strong financial controls are in place. As our business develops, we
are committed to driving continuous improvement across our processes and technology. As an

asset backed business we drive operational improvements, flexibility and efficiency through our
expansionary capital investment programme, equipping us with some of the industry’s most
advanced operational capability.
Investment Case
o Ambitious with clear and consistent value driven strategy
o Brand owner and builder with differentiated portfolio
o Strong customer and consumer focus
o Asset-backed, simple and effective business model
o Disciplined capital allocation
o Growth potential within key markets
o A responsible business
o Long-term strong financial performance
Ambitious with clear and consistent value driven strategy
1. Successful selection and integration of acquisitions
 Acquisition -----Strathmore ------Consolidation of manufacturing operations
 Acquisition ----- Rubicon
2. Business Process Redesign implementation (new ERP system)
3. RTM development and manufacturing investment
4. Organisational capability development------ Britvic merger discussions
5. Supply Chain investment & rationalisation
6. Business re-org & Cumbernauld manufacturing investment
7. MK manufacturing investment
8. Margin Development
9. Minority investment in zero proof spirits brand STRYKK
10. Business re-engineering programme ------------------Currently 2019 and 2020
Brand owner and builder with differentiated portfolio

 National core brands complemented by regional brands with well established consumer
strongholds across the UK ○ Portfolio developing through brand extension, flavour development
and innovation
 c.98% of portfolio now lower or no sugar - exempt from UK Soft Drinks Industry Levy
 Opportunities to grow further through increased geographical and channel distribution points
1. Well established strong core brands in the UK such as IRN-BRU, RUBICON, FUNKIN, BARR,
STRATHMORE
2. Complementary long-term partnership brands such as SAN BENEDETTO, BUNDABERG, SNAPPLE
Strong customer and consumer focus
1. Understanding consumers’ attitudes and behaviours to drive category strategy and consumer
and trade engagement programmes
2. Broad-based consumer and trade engagement programmes such as ……..
3. Well balanced market coverage meeting consumers’ needs across a range of drinking occasions
Asset-backed, simple and effective business model
An approach that delivers sustainable growth, in an expandable category and maximises available
margins
Disciplined capital allocation
1. Partnerships and acquisition
○ Value driven, growth orientated and ambitious M&A track record and approach
○ Strong balance sheet provides optionality
○ Well funded business with supportive bank syndicate
2. Funkin Case Study
Growth potential within key markets
1. Soft drink --- Barr Soft Drink

2. Cocktails ---- Cocktails providing significant growth opportunities for both the GB on trade and
take-home markets
3. Emerging sectors --- Minority investment in Elegantly Spirited Limited (ESL) and consumer
perspective
4. Digital ------- consumers will continue to shop online after COVID and Significant opportunities to
leverage consumer digital dynamics
A Responsible Business
1. We act with integrity
Safety & well-being
Employee engagement
Responsible policies and practices
Long-term goals- Zero work related accidents 2022 : 80% employee engagement
2. We respect the environment
Carbon reduction
Packaging Waste & water
Sustainable sourcing
Long-term goals -Never again send non hazardous waste to landfill
2022 : IRN-BRU and Rubicon in 100% recycled PET
2023 : Full portfolio in 100% recycled PET
2025 : 15% Improvement in water usage efficiency (baseline 2015) 40% Reduction in greenhouse gas
emissions (baseline 2015)
3. We support healthy living
Calorie reduction
Responsible advertising & marketing

Labelling Inspiring active lifestyles
Long-term goals - To continue to advertise responsibly, offer a wide range of pack sizes to assist with
portion control and, by providing clear nutritional information on all of our products, enable our
consumers to make informed choices
4. We give back
Community engagement
Charity partnership
Employee volunteering
Long-term goals -To support our corporate charity partnership with Mental Health UK improving the
lives of those with mental health challenges by donating £150,000 over 3 years and raising awareness
across our own teams
No Time To Waste environmental sustainability programme ------ Ambition to be net zero by 2040
Long-term strong financial performance
 Long-term operating margin improvement
Tables and charts are provided in Investors Presentation file
2020 Annual Report
Our Business

- established over 140 years ago in Scotland and now operating across the UK and internationally,
we strive to grow our business both organically and through partnerships and acquisition.
- operate long-term partnerships
- 860 employees, 16 brands, 9 UK sites
- Whether it’s the iconic IRN-BRU, launched in 1901 and still going strong today, our vibrant
RUBICON fruit and juice drinks,
or our unique range of BARR flavours
- our brands offer people a choice of great tasting products and bring exciting innovation to the
market.
- offering a diverse and differentiated portfolio of products that people love.
CHAIRMAN’S INTRODUCTION
- Has continued to support the executive team and the wider business to navigate through this
extraordinary period
- The variable and fast-moving impacts of the COVID-19 pandemic have led to a volatile and
unpredictable 12 months.
- A.G. Barr delivered a resilient financial performance, with revenue of £227.0m (2019/20:
£255.7m)
- Both our Barr Soft Drinks and Funkin businesses felt the effects due to Covid pandemic; The
severity of the impact on our business lessened as the year progressed
- Our flexibility, alongside the resilience of our business model and the strength of our brands,
were key to delivering a robust performance in these testing times
- The considerable management actions to protect our financial stability the business ended the
year with an even stronger balance sheet than this time last year.
- In April 2020, given the unprecedented circumstances arising from COVID-19, we communicated
our decision to temporarily suspend dividend payments. However, we remain committed to our
plan to recommence dividend payments during the course of this financial year ending January
2022
- The Board remains confident in our value driven strategy
Our Business Model
Our business model is simple, effective and profitable
We Make:
- pride ourselves on our effective and safe manufacturing capabilities, producing high quality
products across our well-invested and efficient production sites.

- From sourcing our raw materials to designing our packaging, we aim to reduce our
environmental impact while delivering continuous improvement across our supply chain.
We Move:
- long-standing relationships with our key distribution partners
- Deliver great service to all our customers, from the biggest food service customer to the
smallest local shop
- Operating across multiple routes to market, we have a well established and efficient distribution
network, with our Barr Direct channel
- Offering a tailored and personal direct to store service to thousands of independent retailers
across the UK
We Market:
- Listening carefully to our consumers is paramount
- Have developed a diverse and differentiated brand portfolio of great tasting products to satisfy
their needs and offer choice
- And when it comes to marketing, innovating and building our brands we like to have some fun,
appealing to our broad range of consumers, whether that’s through TV campaigns, digital and
social media, sponsorship or supporting local community events
We Sell
- Building long-lasting relationships with our customers across all our key markets is fundamental
to our business.
- Grocer, a wholesaler, a regional restaurant group or a local independent retailer
- Work collaboratively with all customers to understand their businesses and find winning
consumer propositions in a practical and profitable way
- 96.5% Revenues generated in the UK
We behave responsibly:
- works to minimise our environmental impact and gives something back to the communities we
serve
- Years of Responsible actions: 140+
We create value with values:
Continues to create and deliver value, with values, to a wide range of stakeholders.
Shareholders - re-invested in long-term business growth through both annual capital expenditure of
£7.1m and a further £1m
Suppliers and customers - directly contracted with more than 70 suppliers with an annual spend of over
£100m while working closely with thousands of customers to co-create joint business plans.

Employees - 860 employees across the UK at the year end, £38.9m was paid in salaries and wages
UK economy and communities - With 96.5% of our revenue generated in the UK, and through our
£10.3m corporation tax and £4.5m national insurance payments to the government
-we continue to play our part in growing the UK economy while also donating the equivalent of over
£140k to 150 good causes across our communitie
As strategies priorities,
1. Connecting with customers
2. Building Brands
3. Driving Efficiency
4. Building Trust
Key Performance Indicators
Chief Executive Review
Our key financial metrics for the year were as follows:
– Group revenue £227.0m (2020: £255.7m)

– Profit before tax and exceptional items* £32.8m (2020: £37.4m)
– Profit before tax and after exceptional items £26.0m (2020: £37.4m)
– Operating margin before exceptional items* 14.8% (2020: 14.9%)
– Strong balance sheet with net cash at bank* of £50.0m
In Covid 19.
Focused on 3 key areas,
1. Puttingourpeopleandsafetyfirst
2. Supporting Group operating resilience
3. nsuring our financial security and stability
Soft Drink Market
- The 2020 soft drinks market was characterised by the migration
of out of home consumer demand into the home environment
- Hospitality sector
- grocery multiple channel
- some positive spill-over for soft drinks purchasing into online and neighbourhood convenience stores
- The switch of consumer purchase habits and the data read in take home will reflect reality but will not
reflect the impact of reduced consumption in the less measured but materially impacted channels
Cocktail Market
- cocktail consumption at home has risen dramatically.
- The Funkin brand capitalised on this increase in demand with its range of premium ready to drink (RTD)
cocktails and is now the UK’s No.1 RTD cocktail brand and a Top 5 RTD grocery brand, leading the growth
of the RTD category.
Strategy Execution
- continued to invest for growth and made progress in some key strategic focus areas such as
environmental sustainability, digital development and our increasing drive towards a multi-beverage
operating model.
OUR STRATEGY IN ACTION
1. Finding better ways
With representation from all parts of our business, our value optimisation programme is
creating and delivering a continuous pipeline of product optimisation actions
2. Rubicon – The Unboring Choice

With a totally new positioning and fresh new design, Rubicon encourages consumers to make the “unboring
choice”, supported in 2020 by a broad consumer engagement programme across TV, digital and social media,
out of home advertising and shopper communications
3. IRN-BRU – Gets You Through
As part of its “Gets You Through” campaign across the summer of 2020, IRN-BRU invited fans to create and
star in their own TV adverts, providing a lockdown lift. Superfans of all ages submitted some incredibly
inventive and entertaining entries. The five winning videos featured in a special IRN-BRU TV ad-break takeover
on STV in July, showcasing the creativity and humour of our amazing IRN-BRU fans.
4. FUNKIN – Best served everywhere
Not only did our Funkin brand confirm its position as the UK’s No. 1 ready to drink
cocktail brand in 2020 but it also made its first ever TV appearance, with an exciting
advertising campaign supporting the launch of our great tasting ready to drink cocktails.
5. IRN-BRU Energy for the real stuff
IRN-BRU Energy combines the iconic flavour of IRN-BRU’s top secret essence with
taurine, caffeine and B vitamins, and comes in sugar and no sugar variants.
6. Capitalising on our investment
Our £14m capital investment in a new liquid processing facility at our Cumbernauld site has delivered a wide
range of efficiency improvements including greater automation, faster processing, waste reduction and
increased product yields. It’s also keeping our employees safe, through reduced manual handling and an
improved working environment for our process team
7. Playing our part
The UK’s frontline workers have been heroic during the COVID-19 pandemic and we’re not alone in being
incredibly grateful to them all. We have tried to play a small part in supporting them, and our wider
communities, by donating over 500,000 drinks and lifting spirits in a time of crisis. We also donated 40,000
empty bottles and caps to local distilleries for production of hand sanitiser at the start of the pandemic.
8. NO Time To Waste (Their Main Sustainability program)
- It’s a long-term vision and an ongoing commitment, but we have the bottle, and there’s no time to waste.
- Towards a circular economy and net zero. No time to waste increasing our sustainable packaging
- we now have 100% renewable electricity at all our sites, 100% of our soft drinks packaging is recyclable
and 100% of our non hazardous waste is now diverted from landfill.
- by early 2022 and all our plastic bottles will be in 100% rPET by the end of 2023. We’re also one of the first
businesses to introduce 100% recyclable packaging film made from 100% recycled content, which will be
on all consumer multipacks by the end of 2021.
Key Sustainability Commitment

Non-Financial KPIs
Financial Review
Overview
- Trading was nonetheless disrupted, particularly in the hospitality and ‘out of home’ channels.
- This resulted in an 11.2% reduction in reported net sales, down £28.7m to £227.0m, and a 12.3%
reduction in profit before tax and exceptional items, down £4.6m at £32.8m.