Irn-Bru boss keeps a weather eye on sugar tax as soft drinks firm braces for ‘punitive’ levy.
Watching the weather is an “occupational hazard” admits Roger White, chief executive of Irn-Bru maker AG Barr.
We are the one area being singled out for a specific taxRoger White
“It’s the only job I’ve ever had where you go on holiday and look at the weather back home and pray that it’s better than where you are,” he says.
“That’s a huge departure because for years I used to go on holiday and hope it would be absolutely horrible at home, but now it’s exactly the opposite.”
The soft drinks market did not have the best of luck in the early part of what passed for this year’s summer, with AG Barr highlighting the poor weather in the crucial early months of the period – along with continued price deflation in the UK and an overall “challenging” environment for consumers – as it last week reported flat pre-tax profits of £17 million for the six months to the end of July.
“I think we had a reasonable run in relative terms, it’s just that the six weeks in the run into our half-year was absolutely awful,” says White, who has been chief executive of Cumbernauld-based AG Barr since 2004 – the first person outside the Barr family to hold the top job since the firm was created in 1875.
He adds: “We made a reasonable fist of what was an awful market – if you look at the four months from June to September, we’ve had an average summer. It was split into two halves, with a poor first half and a good second half. Our numbers encapsulate the poor first half.”
Total first-half revenues at AG Barr fell 3.6 per cent to £125.6m, down from £130.3m a year earlier, with like-for-like revenues – excluding its discontinued Orangina franchise – dipping 2.8 per cent.
The results were accompanied by news that the firm would be cutting about 90 jobs, or a tenth of its workforce, in an efficiency drive. The plans are still subject to a three-month consultation period and White says that “nothing is set in stone”, but points out that 60 per cent of the group’s workforce is based in Scotland, which would equate to about 55 job losses north of the Border.
He says: “Over the three-year programme we’ve invested a huge amount of capital in our infrastructure, building new sites and refreshing existing ones and putting faster, bigger filling technology in. The second leg was a full business process redesign, and the final leg – once we had the assets, the infrastructure and systems and processes in place – was always going to be looking at the organisation.”
AG Barr also attacked plans for what it dubbed a “punitive” tax on sugary soft drinks. The proposed levy, which was announced back in March by former chancellor George Osborne, is currently out for consultation and was described by the firm as an “unnecessary distortion to competition in the UK market which will be very complex, expensive and difficult to implement”. The tax would only apply to soft drinks and not other sugar-laden products such as a tall Starbucks Double Chocolaty Chip Crème Frappuccino, which contains 38g of sugar – or almost ten teaspoons’ worth.
White says: “All we’re highlighting is the relative level of balance between a can of Irn-Bru and a bar of chocolate. I haven’t seen the adoption of ‘traffic light’ labelling or any reduction in the quantum of sugar in any of the confectionery lines at all. Our industry has been a leading light in reformulation, changing consumer behaviour and supporting the government’s drive to improve the health of the nation.
“I look across the rest of the food industry and I see very little activity, yet we are the one area that’s been singled out for a specific tax. Three per cent of the sugar consumed in the UK comes through soft drinks – that amount has fallen dramatically, yet we’re still facing a tax which is only pointed towards soft drinks.”
White is not keen to get into a discussion over whether he sees the soft drinks industry as a political football to kick about in the health debate, but says: “The facts speak for themselves.”
He adds: “It’s not particularly a line we want to peddle, whether it’s fair or not. But if you want to impact diet, then you need to do something a little more than tackling 3 per cent of the market.”
But AG Barr has been making changes on a number of fronts, including the launch of a no-added sugar variant of “Scotland’s other national drink”, dubbed Irn-Bru XTRA, its first new core product in 35 years. “It’s very early days but we’re delighted with the consumer response so far, particularly to the taste of the product,” White says.
XTRA also appears to be tickling tastebuds on the board, with former chairman Robin Barr – the great-grandson of company founder Robert Barr – taking part in a recent taste test for the new drink, which first hit the shelves in August.
White says: “I’ve never seen him, in my 14 years in the company, get a taste test wrong, but he did.”
Job: Chief executive, AG Barr
Place of birth: Dumfries
Education: Dumfries Academy, Edinburgh University (geography, specialising in the human impact on landscapes)
First job: Graduate trainee at food manufacturer Rank Hovis McDougall
Hobbies: Supports Queen of the South FC