Barr slams sugar tax as revenue falls to £126m

Cumbernauld-based soft drinks maker A.G. Barr took a swipe at the UK Government’s proposed soft drinks sugar tax as it revealed that its revenue fell to £125.6 million in the six months to July 31 from £130.3 million during the same period last year.

Barr also said up to 90 job losses — 10% of its staff — are possible as it carries out a business-wide reorganisation, “creating an improved organisational design better aligned to our strategy and better structured to improve our service, efficiency and speed to market.”

“Subject to consultation, we expect that the majority of the changes will be implemented before the end of the current financial year,” said Barr.

“The likely one-off cash cost associated with this reorganisation is c.£4 million but with an ongoing annual benefit of c.£3 million.”

Profit on Barr’s ordinary activities before tax and exceptional items for the six months was flat at £17 million compared to £16.9 million in the same period of 2015.

Barr declared an interim dividend of 3.53p per share, an increase of 5%.

Barr said the recent reduction in the value of the UK currency following the Brexit vote, if sustained, would lead to higher input costs across a number of its key commodities. 

The company is currently forecasting this to have a year on year impact of between £3 million and £4 million in 2017.

Barr said revenue grew 16% in its international business “supported by a further territory extension agreement with our partner Rockstar, signed on 1 September 2016, covering the Russian Federation, a number of central eastern European countries.”

In its outlook, Barr said market conditions remain volatile and somewhat unpredictable however, assuming a strong trading performance in its key festive period, it remained on track to deliver profit before tax and exceptionals slightly ahead of last year.

“The Government’s proposed soft drinks sugar tax is now in the consultation phase and we will participate fully in the process,” said Barr.

“We believe this proposed tax is a punitive and unnecessary distortion to competition in the UK market which will be very complex, expensive and difficult to implement.”

Barr added: “Recently published official National Dietary and Nutritional Survey data shows that soft drinks are continuing to reduce their contribution of sugar to the UK diet, in stark contrast to many other food and drinks categories where sugar contribution is increasing.

“We have continued to reformulate and reduce sugar across our portfolio, as well as bringing new lower and no sugar products to the market.

“We continue to play our part in delivering the soft drinks industry-wide five-year voluntary target of 20% calorie reduction by 2020, as well as being on track to have two thirds of our own portfolio lower or no sugar by 2018 …

“We believe our positive actions and sugar reduction progress, along with those of many of our competitors within the soft drinks industry, make the implementation of a soft drinks only sugar tax an unnecessary measure in the context of Government health policy objectives.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.