Britvic eyes return to volume growth in 2024
The drinks company is in a ‘transitionary phase’, says its CEO, with the goal that it will return to volume growth, rather than driving revenue growth through higher prices, as it has been doing during the period of higher inflation.
Britvic is aiming to return to “normal volume growth” in its next fiscal year, a commitment made after it reported a spike in revenue for its latest fiscal year with growth driven by increased pricing.
The drinks manufacturer, which produces brands such as Robinsons, Tango, and Pepsi, reported revenue growth of 6.6% to £1.75bn in its financial year ended 30 September, driven by increased pricing and a shift in mix to more premium products. Volume sales declined by 2.2%.
In a call with investors following the results announcement earlier today (22 November) CEO Simon Litherland emphasised that the drop still represented a “very resilient” outcome given the price increases made by the business. The company saw its volumes grow in its second and third quarters but decline in the first and fourth quarters.
“We’re definitely in that transitionary phase where you’ve seen the growth driven by price,” Litherland said. “[There have been] very resilient volumes, I would say given the amount of price we’ve taken, but as we look forward, we’ll transition back to more normal price and volume growth.”
Poor summer weather was identified as a reason for weak volumes in Britvic’s final quarter, as consumers bought in less to its largely cold drink offering. The business did continue to see “small” volume declines in October, the first month of its new financial year.
The soft drink category is strongly set up to see volume growth as whole, Litherland claimed. Over the past five years, category volumes as a whole have grown at 2.4% and is projected to grow at similar rate over the next few years, according to GlobalData figures, cited by Britvic.
In the UK specifically, it is also one of only two FMCG categories where brands are continuing to outgrow private label.
“Britvic has a long history of outperformance,” Litherland said, stating its strong portfolio of brands means it is well-positioned in the strong category.
The company increased its advertising and promotional spend by 9% across the year. In particular, it has been targeting the immediate consumption channel, by upping investment in proximity marketing.
Britvic also invested in marketing behind fruit-flavoured soft drink brand Tango in the year. In April, it launched a campaign bringing back its famous ‘Get Tango’d’ slogan across TV and digital. Litherland claimed the campaign had been “hugely successful”.
Why Tango is reviving its ‘forgotten’ focus on product
Tango saw revenue grow 20.7% in the year, with success driven by flavour innovation, as well as the ad campaign.
Litherland indicated that marketing and innovation will continue to be key priorities for the business going into its next financial year.
While Tango was a highlight of Britvic’s performance in most recent financial year, the energy drink brand Rockstar, acquired by by Britvic in 2021, continued to struggle.
Although the energy drink market is one where Britvic sees plenty of potential, the company has suffered from supply issues and an inability to “effectively activate marketing campaigns”.
The business remains committed to building the brand equity of Rockstar. This year saw it step up investment behind the brand, launching a new music platform, with Stormzy leading the series. While full year revenue for the brand declined 19%, it improved from the first half of the year, when it declined by 25% year on year.
