AG Barr, the maker of Barr's Irn-Bru, has blamed a poor summer, as well as pressure from imports, as the reasons for a 'disappointing' rise in pretax profits. There are some signs of progress for Barr, including growing exports to Russia - but increased competition in its core Scottish market could make conditions even tougher in the future.
It's long been known that a poor season of weather can affect sales, from ice-cream to clothing and now drinks manufacturer AG Barr has been hit by one of the worst summers in Scotland for years.
For the six month period to July 27, poor weather in Scotland was blamed by the group for holding back the rise in pretax profits, which increased from GBP5.72 million to GBP6.17 million. A performance which Chairman Robin Barr described as "disappointing".
The weather has not been the only factor that has taken the fizz out of its performance. The group, which reportedly has a 45% share of the Scottish "non-cola, non-lemonade" market, has also come under pressure from soft-drink imports.
Mr Barr said "We've suffered a double-whammy". First, there has been competition between Coca-Cola and Britivic and secondly, there has also been the influx of franchised competitor's products entering the UK. The overall effect has been to lower price expectations.
Not all the news has been bad though: the firm managed to increase its market share in England and Wales by 30% off the back of special promotions, while export sales were also up - particularly to Russia. Overall turnover increased just less than 5% to GBP62.2 million. During H2, better weather has helped to lift like-for-like sales by 4% - but the market still remains tough.
Seasonal variations in sales will always remain a fact of life for drinks manufacturers, as indeed they will for manufacturers and retailers in many other areas. Some of this risk cannot be removed, but as the Russian export sales for Barr show, increasing distribution over wider areas can help to add a silver lining to any cloud.
Related research: Datamonitor, "Targeting Soft Drinks to Youths" (DMCM0059)
You can download a FREE food report at www.dmfreereports.com