Britvic reveals Texas Fruit Shoot boost but says acquisitions ‘unlikely’

Britvic felt the pinch with lower branded sales in carbonates (₤91.1m of ₤262.1m in H1 2012: down from ₤93.3m in H1 2011) and CEO Paul Moody told analysts on an earnings call that Nielsen data for the four weeks to May 5 showed a 12% volume and 8% value decline in GB take home soft drinks.

Although Pepsi volume and value shares grew (Britvic is PepsiCo's bottler in Great Britain (GB) and Ireland) carbonate margins declined due to high raw material costs, while in GB Stills volumes fell 4.2% to 234m litres, as did revenue (168.8m: -3.6%) due to adverse channel and product mix.

Britvic grabs its stetson...

Moody said Britvic completed due diligence in H1 2012 on a potential acquisition in continental Europe, but felt unable to proceed due to the transaction’s complexity and economic conditions. One City analyst told BeverageDaily.com today that he had "no idea" who the other party was.

“Given the current macroeconomic challenges that we face, it is unlikely that we will make any acquisition in the current calendar year,” Moody said.

Fruit Shoot is central to Brtivic’s plans for international expansion, and Moody said the firm had inked a third deal with PepsiCo distributor and bottler PepsiCo American Beverages (PAB) – which distributes 75% of Pepsi products in the US – to roll-out Fruit shoot into a third state, Texas, following Florida and Georgia deals.

Asked why Fruit Shoot was taking Fruit Shoot to the States in such a big way - rather than other brands J20 or Robinson's - the City analyst said that Britvic was avoiding category overlap with similar Pepsi brands, and that the kids' drinks market was "underdeveloped" in many countries.

Folllowing successful Fruit Shoot launches in Belgium and France (and an Australian distribution deal akin to the US move signed last year), Britvic currently only had a "very small US presence - but the potential is there", he added.

Discussing the Texas move, Moody said: “As you’ll appreciate this is a large population approaching 26m people. Clearly, this is a scaleable opportunity that further cements our relationship with the Pepsi network in the US."

“Adding an additional state agreement with an existing partner reaffirms the potential for Fruit Shoot. The focus remains the same: to build brand credibility via the convenience and gas channel before we consider a wider grocery roll out," he added.

Fruit Shoot private label hit

In just over 12 months Fruit Shoot had grown its US footprint from one to eight states – via the PAB deals and agreements with other Pepsi bottlers - and had access to a combined population approaching 100m, Moody said, and Britvic hoped it would be available in 20,000 gas stations and convenience stores gas by the end of its financial year.

But in the GB and Ireland, Moody warned that the stills category (Fruitshoot, Robinsons, J20) faced “choppy waters”.

“With regard to Fruit Shoot, the performance of the brand has undoubtedly been impacted…by a series of retailer own-label ‘me toos’ that have come in under price relative to our position,” he said.

“But if you look at the brands performance versus other branded players – principally Capri Sun – then it’s continued to perform very strongly.”

The City analyst told BeverageDaily.com: "Nielsen data points to pressure on brands from private label, which is quite natural in this climate with consumers searching for value. But Britivc is taking market share against its major competitors."