Britvic aims for volume growth comeback in 2024
Britvic CEO aims for volume growth instead of raising prices to drive revenue amidst inflation, as the company navigates a transitionary phase
Britvic has set its sights on achieving "normal volume growth" in the upcoming fiscal year, following a significant surge in revenue during its latest fiscal year. The growth was attributed to heightened pricing, driving the company's success.
The manufacturer of popular brands such as Robinsons, Tango, and Pepsi reported a 6.6% growth in revenue, reaching £1.75bn for the financial year ending 30 September. This growth was attributed to an increase in pricing and a shift towards selling more high-end products, despite a 2.2% decline in volume sales. During an investor call today, CEO Simon Litherland highlighted the company's resilience, noting that the decline in volume sales was offset by the price increases. The company experienced growth in the second and third quarters but saw a decline in the first and fourth quarters.
"We are currently in a transitional phase where we have witnessed growth fueled by price," stated Litherland. "Despite the significant price increases, we have experienced very resilient volumes. However, moving forward, we anticipate a return to more typical price and volume growth."
The underperformance of volumes in Britvic's final quarter was attributed to unfavorable summer weather, resulting in decreased purchases of its predominantly cold beverage products. Additionally, the company noted a slight decline in volumes during October, the initial month of its new fiscal year.
The soft drink category is poised for significant volume growth, according to Litherland. Over the past five years, the category as a whole has seen a 2.4% increase in volume, and GlobalData figures cited by Britvic project similar growth in the coming years. In the UK, it is one of only two FMCG categories where brands are consistently outpacing private label products.
Litherland highlighted Britvic's history of strong performance, attributing it to the company's robust brand portfolio and favorable positioning in the market. Furthermore, the company raised its advertising and promotional expenditure by 9% over the year, focusing on the immediate consumption channel through increased investment in proximity marketing.
Britvic increased its marketing investment in the fruit-flavoured soft drink brand Tango last year. In April, the company relaunched the famous 'Get Tango'd' slogan through a successful campaign across TV and digital platforms. This resulted in a 20.7% revenue growth for Tango, with success attributed to both flavor innovation and the impactful ad campaign.
Litherland emphasized that marketing and innovation will remain top priorities for the business in the upcoming financial year. Despite Tango being a standout performer for Britvic in the past financial year, the acquired energy drink brand Rockstar continued to face challenges.
Britvic recognizes the potential of the energy drink market but has faced supply challenges and struggles to effectively execute marketing campaigns. Despite these obstacles, the company is dedicated to strengthening the Rockstar brand. This year, Britvic increased its investment in the brand by introducing a new music platform featuring Stormzy. Although Rockstar's full year revenue decreased by 19%, it showed improvement compared to the first half of the year, when revenue declined by 25% year on year.
