New low-sugar Irn-Bru going down well with customers
1 February 2018, 10:35
Irn-Bru maker AG Barr has insisted the response to its new low-sugar recipe for the popular Scottish fizzy drink has been "encouraging" as it toasted a surge in annual group sales.
The firm, which also makes Rubicon and Tizer, admitted it was still "early days" after stopping making the original full-sugar version in early January - a move which prompted a backlash among loyal Irn-Bru fans.
But it added: "Our extensive research and testing in the preceding years gave us confidence that we had an excellent taste match and, whilst it is still early days, the consumer response to the new product has so far been encouraging."
AG Barr expects 99% of its drinks to be low sugar - containing less than 5g per 100ml - by the time the new soft drinks sugar tax comes into force in April.
This is up from an earlier aim of 90%.
The Government's levy is aimed at tackling soaring obesity rates and relates to the sugar content of drinks, with a higher amount charged for the most sugary beverages.
But the Irn-Bru changes hit the headlines, with reports of fans stockpiling their favourite fizzy drink and a 40,000-strong petition from customers demanding the changes be reversed.
AG Barr's comments came in an update ahead of full-year figures next month, with the group revealing an expected 7.5% jump in group revenues for the year to January 27 despite the low-sugar shift.
It said profits are set to be in line with City expectations, although it has not been "immune to the external cost pressures faced by many businesses throughout 2017", in particular the weak pound.
Cumbernauld-based AG Barr said 2018 is set to be another "challenging year for UK businesses against a backdrop of continued uncertain economic conditions".
It added: "In addition the soft drinks industry faces significant changes in regulation, customer dynamics and consumer preferences, bringing both challenges and opportunities."
Shares lifted 2% after its update.
Phil Carroll, an analyst at Shore Capital, said AG Barr's plans for 99% of its range to be low sugar was an "exciting" development.
He added: "We believe the update is a positive one with a strong revenue performance through growth of around 7.5%, comfortably ahead of the UK soft drink market."