Irn-Bru continues march south with plan to build £40m plant in England

IRN-BRU, Scotland’s “other national drink”, will continue its “march south” under plans by drinks firm AG Barr to build a £40 million bottling and distribution centre in England.

The FTSE 250-listed company generates more than half of its sales in England and Wales following a concerted push south of the Border in recent years.

That expansion has included sponsorship of the Rugby League and of Sky Sports’ coverage of the Super League.

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In addition to its factories at Cumbernauld, Dunbar and Forfar, the firm already has a production site at Tredegar in South Wales.

Adding a plant in England is considered vital for the group’s “medium-term future” according to Charles Pick, an analyst at Numis Securities.

While he hailed Barr’s “long Scottish heritage”, he said the group’s 2011-12 sales had reached only £234m, a relatively small slice of the £13.9 billion UK soft drinks sector.

“There is good scope to grow revenues of all key brands in coming years as increased market penetration is achieved, especially in England and Wales,” he said. Pick expects an update on the plans for the south of England plant late next month or early March, once the company has told the market at the end of this month about its Christmas trading.

He forecasts a “reassuring” update, despite heavy promotions in the supermarkets over the festive period.

About £20m will need to be set aside for aluminium can and plastic bottle equipment at the English plant, Pick said, with a similar sum for the buildings, land and a distribution centre.

But Pick said he believes the company will be able to pay for the site out of its existing cash thanks to its “strong balance sheet” which has little debt.

Numis Securities began its coverage of Barr last week with a “hold” rating and said: “The group can tick most of the boxes that investors seek and has an exemplary record.”

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Barr said that opening the site in the south of England would also help it to expand distribution of its fruit juice brand Rubicon in the north and in Scotland.

A spokeswoman for the company confirmed the timescale for an announcement on the English site but said it was not yet ready to name a location.

She said: “We’re still looking for a site as Irn-Bru marches south and Rubicon marches north.”

Barr already has infrastructure in place in the south of England to support the new production plant, including a regional office at Wembley and a sales office at Walthamstow.

The group bought Rubicon – which sponsored Sky Sports’ coverage of the 2011 ICC Cricket World Cup and the Friends Life Twenty20 competition – in 2008 for £60m, marking its move into the UK’s £1.7bn fruit juice market.

Barr – which owns the Orangina, Strathmore and Tizer brands – traces its roots to 1875, when Robert Barr founded a soft drinks business at Burnfoot Lane in Falkirk.

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