“We’ve always been able to get ‘the Bru’ through”, the boss of AG Barr, the firm behind Irn-Bru, said today (September 28).
Chief executive Roger White was speaking as HGV driver and CO2 shortages threaten to disrupt Christmas supplies of Scotland’s “other national drink”.
He said the company had not suffered any major difficulties to date, either with deliveries or production.
And he was confident Irn-Bru fans throughout Scotland and in other parts of the UK where it is readily available will be able to get their hands on the iconic fizzy drink this festive season.
Companies in every sector are suffering major supply chain headaches as a severe shortage of HGV drivers puts pressure on the logistics of moving goods around the UK.
Carbonated drink manufacturers are also facing limited supplies of carbon dioxide due to a drop in the production of nitrogen-rich fertiliser, of which CO2 is a by-product.
Mr White said AG Barr was”acutely aware” of the cost implications of current supply chain challenges – and factoring them into its full-year budget.
Christmas forecast
Asked if Irn-Bru and the firm’s other products would reach consumers this Christmas, he said: “That would be our intent as we manage the incremental supply chain effects that are under our control.”
Cumbernauld-based AG Barr relies on a mix of its own fleet, a national distribution network and local suppliers to get its products to market.
“It’s become a little more complex and somewhat more expensive lately but we have to date maintained a good level of service to customers”, he said, adding: “Availability of our products is good.
“We have always been able to get ‘the Bru’ through.”
CO2 supply squeeze
Production levels are also running normally despite the squeeze on CO2 supplies nationally.
Mr White said: “We have not had any material issues with supplies to date and are being told by suppliers there is no immediate problem.
“However, we are very aware the CO2 is all coming out of a limited number of sites at a more expensive rate.
In 2018 a shortage of CO2 was caused by a combination of higher-than-average temperatures, resulting in greater demand.
This time rocketing gas prices have severely curtailed fertiliser production and, in turn, C02 supplies.
Interim results from AG Barr revealed a near-20% jump in sales during the 27 weeks to August 1 to £135.3 million, from £113.2m a year ago.
Profits before tax and one-offs were up nearly 43% at £23.7m.
The latest performance was helped by growing demand for Barr’s cocktail mixer brand Funkin, before, during and after the last lockdown.
Being stuck at home drove many people to try new cocktails, either ready-to-drink or mixed at home.
The trend has carried into the on-trade since the reopening of pubs and nightclubs.
We remain on track to deliver a strong full-year profit performance, slightly ahead of our 2019-20 pre-Covid level.”
Roger White, chief executive, AG Barr.
Highlights for AG Barr since the half-year point have included a royal visit, with the Queen and Earl of Strathmore – Prince William – both enjoying a guided tour of the HQ.
The company has resumed dividend payments, with an interim 2p per share due around the end of next months to shareholders on the register on October 8 2021.
There will also be a special dividend of 10p per share, thanks to a balance sheet boost from the termination of a franchise deal, the removal of a wind turbine at the HQ and the disposal of surplus property, primarily distribution depots.
Mr White said: “We remain on track to deliver a strong full-year profit performance, slightly ahead of our 2019-20 pre-Covid level.”
John Moore, senior investment manager at wealth manager Brewin Dolphin, said: “AG Barr is a robust business and appears to be emerging from the pandemic stronger than it went in.”
