Irn-Bru maker AG Barr swallows tropical drinks brand for over £12 million

It’s best known for making “Scotland’s other national drink” in Cumbernauld, now AG Barr has brought a ray of sunshine to North Lanarkshire after swallowing tropical drinks brand Rio.

The Irn-Bru maker is paying more than £12 million in cash to acquire Rio Tropical from Hall and Woodhouse, the brewing and pub business. Rio has been marketed, sold and distributed on an exclusive licence basis by Barr’s Boost drinks division since 2021.

Bosses at the iconic Scottish drinks firm said the deal fitted in with the company’s “brand building business model”. While an important contributor to a previously announced margin rebuild programme, the transaction is not expected to have a material impact on the group’s profits for the current financial year, ending January 28, 2024, they noted.

Chief executive Roger White said: “As brand builders we are delighted to acquire the Rio brand and secure its long-term position in our wider portfolio. This allows us to realise the benefits of full brand ownership and support Rio’s continued growth. This acquisition is a further positive indication of our strategic ambitions.”

Irn-Bru maker AG Barr is paying £12.3 million to acquire Rio Tropical from Hall and Woodhouse, the brewing and pub business.

Darren Shirley, an analyst at house brokerage Shore Capital, said: “The deal further underpins the strategic rationale for the December 2022 Boost acquisition, in our view, and provides additional security to the group’s enhanced medium-long-term margin targets. We see Rio as a further indication of the higher growth phase that high-quality Barr is engineering. We welcome this bolt-on deal.”

Last month, Barr posted half-year revenues of £210.4m, a year-on-year jump of a third, aided by the Boost acquisition and in line with an August trading update. Like-for-like sales were up by 10.4 per cent. The group, whose brands also include soft drinks Rubicon and Snapple as well as Funkin pre-mixed cocktails, added that adjusted pre-tax profit came in at £27m, up 6.7 per cent. Basic earnings per share amounted to 18.87p, down 0.6 per cent, with the firm attributing the drop to a higher tax rate, saying it would have been up 12 per cent otherwise. The interim dividend per share was hiked 6 per cent to 2.65p.

In August, Barr’s chief executive said he would be standing down after some 20 years in the post. White, who in 2004 became the Cumbernauld-based group’s first boss from outside the Barr family, agreed with the board that he would, at a “mutually agreed date” in the coming 12 months, step down from his role and retire from the company. Unveiling last month’s first-half results, White said the process to choose the next CEO was progressing.

He told investors: “We have made significant financial and strategic progress in the first half and have exciting plans in place for the balance of the year to sustain our growth momentum. We remain confident in delivering a full-year profit performance in line with our recently increased market expectations and are well positioned to deliver strong shareholder returns for the long-term.”

Across its soft drinks brands, revenue growth was driven by volume, price and mix, alongside “successful consumer marketing activity”.

AG Barr cracks open 'strong' H1 results while search for next CEO continues