Tuesday 16 July 2019

The chickens come home to roost at AG Barr

Before the sugar tax was introduced, someone on Twitter bet me that AG Barr’s share price would be higher in April 2019 than it was in April 2018 (when the tax came into effect).

I didn’t bet against him, but he was right. Fair play. The makers of Irn Bru have done a good job of keeping up investors’ confidence by increasing dividends and putting out good news stories like this....

Irn-Bru maker AG Barr has reported a rise in sales and profits after shrugging off the new sugar tax, the March cold snap and CO2 shortage. 
The Cumbernauld-based firm reported a 4% rise in underlying pre-tax profits to £18.2m for the six months to 28 July after sales climbed 5.5% to £129.8m. 

Earlier this year, headlines such as ‘Low-sugar Irn-Bru still hits sweet spot’ may have led you to believe that delisting your best-selling brand and replacing it with a government-approved, artificially sweetened forgery was the route to success for a soft drinks manufacturer.

Alas, today the chickens came home to roost...

AG Barr's share price plummets after profit warning

Irn-Bru maker AG Barr's share price fell sharply on Tuesday after the company issued a profit warning.  
The Cumbernauld-based said it expected sales to drop by 10% and profits by up to 20% as they struggle against a strong year in 2018. It cited poor weather and "challenges" facing some of its brands, particularly its Rockstar energy and Rubicon juice drinks. 

The weather in Scotland is becoming an all-purpose excuse for the broken promises of the ‘public health’ lobby, isn’t it?

More realistically...

AG Barr's Rubicon division has faced challenges since the introduction of the sugar tax, with several drinks companies having to change their recipes to reduce sugar levels. 

Narrator: They didn’t have to reduce them.

This has led to a backlash among some customers, who have complained about the new tastes.

No kidding. It would take a heart of stone not to laugh.

Imagine sitting on a recipe that is proven to make you money and voluntarily refuse to sell it to people who have told you repeatedly that they don’t mind paying more for it.

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