AG Barr is scrapping its bottled water brand Strathmore as part of a restructure to simplify the company’s structure and boost profits.
The discontinuation of Strathmore later in the year could lead to the closure of its Scottish manufacturing facility in Forfar, the company said.
The restructure will also see the integration of the Funkin businesses acquired a decade ago into the wider drinks business, which contains Irn-Bru, Rubicon and Boost.
Funkin struggled last year as sales fell 6% due to weak on-trade demand, though AG Barr noted the ready-to-drink cocktail brand remained the biggest in the sector.
The announcement came as the company reported a 5.1% rise in revenue to £420.4m for the year to 25 January, while pre-tax profits grew 15.8% to £58.5m.
AJ Bell investment director Russ Mould said that while such an efficiency drive may seem odd when the company was reporting record annual profits, profit margins were still some way below prior peaks “after a torrid series of challenges and cost pressures” over the past five years.
Andrew Ford, an analyst at Peel Hunt, said integrating Funkin should help costs but “more importantly [will] mean that the full capabilities of the group’s front office can now be deployed behind the brand”.
AG Barr invested around £19m this year on a new small format PET line and upgraded its large format PET line as part of a multi-year investment programme at its Cumbernauld site.
Its board has also approved the initial phases of an expansion at its Milton Keynes site, which will increase capability and capacity over the next three to five years.
“Looking forward, we have a refreshed strategy centred on growth and are committed to our long-term financial targets,” said CEO Euan Sutherland. “I am confident that successful execution of our plans will see another year of positive progress towards our long-term goals.”
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