AG Barr is to enter the cocktail mixer market, with the acquisition of Funkin Cocktails in a deal worth up to £21m.

Funkin, founded in the late 1990s, sells a range of premium fruit cocktail mixers, purees and syrups. It has built a customer across the on-trade channel and, increasingly, in restaurants with sales reaching £9m in 2014. The business predominately trades in the UK, but has developed a presence in selected international markets, primarily the US and France.

AG Barr will pay the founding shareholders an initial cash sum of £16.5m, plus up to a further £4.5m subject to financial performance targets.

The acquisition would strengthen the soft drinks company’s portfolio and take the group into a new segment of cocktail mixers, AG Barr said. “We believe that Funkin has created a unique niche in a growing market and together we can drive exciting growth in a new sub category,” said Roger White, AG Barr CEO. “We have a proven track record of acquiring and developing high growth brands such as Rubicon. Under our ownership we believe Funkin is even more strongly positioned to take advantage of a number of exciting growth opportunities.”

Funkin chief executive Andrew King will remain with the business, which will operate within AG Barr as a standalone company.

The acquisition will be funded by an extension of the Irn-Bru owner’s existing credit facilities.

Last month, AG Barr reported a final quarter trading performance which was “well ahead” of the soft drinks market with revenue growth in the three months to 25 January of 5%. Full-year sales are expected to be £259m – a year-on-year growth of 2% but just below analysts’ forecasts of £266m.