The introduction of zero-based budgeting helped grow profits last year at Lucozade Ribena Suntory despite Covid slashing its on-the-go sales.
The soft drinks supplier’s sales fell 9.5% in the year to 31 December 2020, from £425.6m to £385.2m, as impulse and out-of-home purchases and those relating to sporting occasions were hit by lockdowns.
It mitigated this drop with the introduction of ‘drink later’ and ‘drink now’ formats in retail to reflect the rapidly shifting consumer dynamic.
Despite the fall in headline sales, operating profits improved from £73.1m to £77.2m as the company implemented zero-based budgeting for marketing and administrative expenses, cutting such costs from £120.5m in 2019 to £95.3m in 2020.
Suntory Beverage & Food GB & Ireland finance director Conor Brew said this was introduced as part of a best-practice drive to “ensure every penny we spend is effective and efficient”.
“Embedding these principles throughout our business will help unlock even more ATL and BTL media spend as we drive sales through our customers’ depots and stores,” he said.
Since year-end he said the company had “outperformed the category”, with sales up 22.3% against a wider 10.2% increase in the soft drinks category.
Lucozade Energy and Ribena have both been in double-digit growth, while the reintroduction of community sport has helped elevate Lucozade Sport sales by 60%.
Brew added: “Of course, it takes longer than a few quarters to recover and soft drinks manufacturers and the wider industry are facing yet more challenges during this key sales period.
“We’ve demonstrated our capacity to adapt and fight back, and we’re confident we can tackle these latest obstacles to deliver a year of growth.”
During the year the company’s headcount dropped marginally from 680 to 670, but there was a more significant 8.4% drop in total staff costs to £49.6m from £54.1m.