Britvic Continues to Execute its Strategy
Britvic, the UK-based soft drinks group, has reported a 5.1% increase in revenue to £1.504 billion for the 52 weeks ended 30 September 2018 and a 2.7% rise on an organic basis, compared with last year. Adjusted EBIT increased 5.4% on a reported basis to £206.0 million, whilst organic adjusted EBIT increased 4.0% and organic adjusted margin increased by 10bps.
Britvic sold over 2.4 billion litres of soft drinks during the period – an increase of 1.6% on the previous year. Average realised price (ARP) of 60.5p increased by 3.2% on a reported basis and by 1.7% on an organic basis.
In a turbulent Great Britain market, Britvic successfully executed its commercial plans, growing its carbonates and stills portfolios and gaining market value share. The GB soft drinks market (as measured by Nielsen) continued to grow during the year, in both volume and value. The introduction of the SDIL and Britvic’s transparent approach of differential pricing has accelerated the consumer trend of switching away from higher sugar drinks into low and no sugar alternatives. This has benefited the group’s broad portfolio of low and no sugar brands, with Pepsi MAX, Robinsons, 7UP Free, J2O and Tango all in revenue growth.
Britvic faced a challenging year in France, where the soft drinks market (as measured by IRI) declined, with poor weather having a significant impact on the syrups category. The majority of revenue decline was in private label sales, while the revenue from Britvic’s branded syrups range and Fruit Shoot brand saw a more modest reduction and a corresponding loss of market share, in the face of intense competition. Pressade, the group’s juice brand, continued to grow, building on its organic credentials. Britvic is continuing to focus on growing margins and bringing to market new ranges to meet evolving consumer needs. It recently launched a premium Teisseire syrup range, ‘Fraîcheur de Fruits’, that has 85% juice and less added sugar, to broaden the appeal of syrups to more consumers. In the children’s category, Britvic also launched Fruit Shoot ‘Au-Jus’, a 50% juice variant that follows the launch of ‘Juiced’ in Great Britain.
Britvic’s strong market position in Ireland and its broad portfolio of low and no sugar brands have delivered another strong financial performance, despite a shortage of CO2 and the introduction of the Sugar Sweetened Drinks Tax (SSDT). Successful revenue management and positive pack mix has resulted in robust price realisation and has also driven excellent market value share growth, led by the group’s squash brands and Ballygowan water. The incremental benefit of the East Coast wholesale acquisition was fully realised in the first half of the year. This acquisition has enabled Britvic Ireland to accelerate the distribution of Britvic brands in the growing Dublin on-trade sector.
In Brazil, Britvic continued to invest for the long term, against a backdrop of macro uncertainty and a difficult consumer environment. The Bela Ischia acquisition is now integrated and delivering synergies ahead of guidance, and it has enabled Britvic to expand both market and channel coverage.
In the USA, Britvic has focused on improving the visibility and on-shelf position of Fruit Shoot multipack to drive the rate of sale and brand awareness, and has also increased distribution.
In the Benelux markets, Britvic is focusing on improving the underlying profitability of the business, offering a stronger platform to enable future growth.
Britvic is nearing the completion of the capital investment phase of its transformational business capability programme (BCP) in the Great Britain, which will give provide a strong platform for growth in the years ahead. Work at the sites in London and Leeds is now finished. In 2019, Britvic will complete the investment in its Rugby facility and close its Norwich site towards the end of the year. In Rugby, the installation of three new can lines has been completed and good progress has been made with the on-site warehouse, aseptic and PET lines.
Simon Litherland, chief executive of Britvic.
Upon completion, the GB production network will comprise of three sites located along the spine of the country in London, Rugby and Leeds. This will increase efficiency, reduce road miles, and help accelerate Britvic’s ability to respond to changing consumer trends with agility and pace by expanding its range of liquids, pack sizes and configurations.
Simon Litherland, chief executive of Britvic, comments: “We have delivered a strong performance in a challenging environment, with good revenue, margin and earnings growth. I am delighted that we have grown our stills brands, demonstrating that our investment in innovation and marketing is beginning to pay off. The investment in the transformational business capability programme is now nearing completion and is already delivering significant efficiency and commercial benefits. Free cash flow will increase materially in 2019 as capital spend falls back towards normal levels.”
He continues: “Britvic has consistently demonstrated that we are a strong, agile business, operating in a resilient category. In 2019 we have exciting plans for our portfolio of leading brands across our markets. Whilst political and economic uncertainty will undoubtedly continue, we are confident we will continue our long-term track record of growing earnings, dividends and shareholder value.”
