Irn-Bru maker AG Barr has revealed that current trading is “well ahead” of last year on the back of surging demand for cocktails as it warned it is facing “significant inflationary pressures”.
The company, which also owns the Funkin cocktail brand, saw shares lift higher on Tuesday after it posted a rebound in profits for the past year.
Pre-tax profits jumped by 62.3% to £42.2 million for the year to January 30 compared with the same period last year.
The Scottish business said it saw costs soar by 25% over the year as logistics expenses rose but it saw margins improve on the back of increased sales volumes and investment in its operations.
Revenues during the year were up by 18.3% to £268.6 million for the year, on the back of particularly strong Funkin and Rubicon sales.
Like most companies, we are facing significant inflationary pressures but we are well placed as a group to deal with these
AG Barr chief executive Roger White said sales in the first weeks of the new financial year have “been well ahead of the prior year and in line with our expectations”.
He added: “Like most companies, we are facing significant inflationary pressures but we are well placed as a group to deal with these and will continue to seek to manage our exposure proactively through mitigating actions across revenue management, pricing, procurement and cost control.”
He told the PA news agency that the company increased prices earlier this year after cost inflation accelerated.
“We acted early to the inflationary pressures we saw, so have covering and hedging from the second half of last year which has given us some protection,” Mr White said.
“We spoke to our customers and made changes to our pricing as a result at the start of the year.
“Because our products are more an ‘affordable treat’ than a ‘luxury’ we haven’t felt any customer concerns, and based on the last financial crisis, think we are well positioned.”
AG Barr said it is optimistic about the recovery of the UK hospitality market despite the cost-of-living crisis as the return of younger punters to pubs and bars helped drive strong demand for cocktails.
The group said its cocktail business has “performed extremely well” since pandemic restrictions eased last spring.
It said 7.4 million people drink cocktails when out at bars and clubs, representing a 13% increase on pre-pandemic levels.
