Britvic slashes costs to juice profits

Britvic today (16) has posted a healthy rise in interim profits and revenue after seeing strong demand for its soft drinks, with standout performances from Tango and Pepsi MAX.

Over the six months to March 31, the group’s operating profit climbed 21.5 per cent on a constant currency basis to £80.7 million on revenue up 7.9 per cent to £794m. Operating margin rose 120bps to 10.2 per cent, aided by a planned phasing of A&P expenditure into the second half.

That comes despite a wider surge in the cost of many of Britvic’s key ingredients, with sugar prices soaring by 40 per cent while the prices of many types of fruit have risen significantly as well.

Britvic stated that it was “successfully” managing the challenging inflationary environment, with consumer demand remaining solid and only a modest decline in volumes. The company noted that it had been able to mitigate cost inflation pressures through a combination of revenue growth management actions and cost discipline.

It has also invested in growth capacity with the rollout of new production lines in the UK and Brazil. From a brand perspective, its Tango and Pepsi Max brands performed well, while it relaunched Robinsons to accelerate its positioning in the flavour concentrates category.

Chief Executive Simon Litherland said: “We’re very focused on making sure we provide great tasting soft drinks. Like many businesses we have experienced serious cost increases which we have tried to mitigate through better procurement.

“We’ve made packaging changes too. For example we lightweighted the Ballygowan bottle which improves cost. And Rockstar and London Essence we brought in house which reduces cost.”

“Looking ahead, we will be activating a series of exciting marketing and innovation campaigns this summer,” Evening Standard quoted Litherland’s statement, pointing to a Pepsi Max partnership for the upcoming UEFA Champions League final.

“We have a fantastic portfolio, a well-invested business, and a very talented team, so I am confident that we will continue to make further strong progress this year and beyond, creating value for all our stakeholders.”