Vimto Dilutes Range Shots

A shift in strategy at Nichols to focus on the core Vimto brand and reduce exposure to the out-of-home channel has paid off in the first half of 2023, according to group CEO Andrew Milne.

Nichols kicked off a strategic review of the out-of-home channel in March last year as it struggled to fully recover from the pandemic.

As a result of the focus to accelerate growth in the packaged division, which includes the Vimto, Levi Roots and Slush Puppie brands, group revenues jumped 6.6% to £85.5m in the six months to 30 June, with strong growth overseas.

In the UK, the strength of the Vimto brand helped sales rise 4.5% to £43.1m, but price rises led to a decline in volumes as the group sought to protect margins.

But Milne told The Grocer he agreed with recent statements from Premier Foods that inflation had passed its peak.

“We had big input cost increases at back of last year and first half of 2023,” he said. “What we’re now seeing is some material costs still going up, such as sugar, but that has been offset in softening in prices in other areas, such as aluminium.”

Internationally, sales soared 25% in the half as all regions experienced double-digit growth, with the Middle East boosted by Ramadan and the US seeing increased brand awareness.

The out-of-home division saw sales fall 3.5% to £21m as expected following the planned reduction in activity.

“We have really delivered on the strategic direction we took in March in terms in accelerating growth in packaged division, particularly internationally,” Milne said.

“The group achieved significant strategic progress during the period, particularly in relation to our out-of-home business where we are making positive changes to simplify operations and focus on the areas of greatest opportunity and profitability,” he added in a statement to the stock exchange.

“We are on track to deliver the material benefits of these changes from FY 2024.”

The Nichols out-of-home channel operates in pubs, clubs, theme parks and trampoline parks and cinemas, selling soft drinks brands such as Coke, Pepsi and Irn-Bru dispensed from guns.

Group pre-tax profits in the half increased 10.5% to £11.2m.

“We are mindful that consumer spend is still under pressure from continuing high levels of inflation,” Milne added.

“However, the group’s track record, strong brands and diversified business model, alongside the resilience of the wider soft drinks market, support the board’s confidence in the group’s long-term growth prospects, and that the group’s adjusted PBT for FY 2023 will be in line with expectations.”