Britvic boosts advertising investment by nearly 40% to fuel expansion

Source: Britvic

Britvic boosted its advertising and promotional expenses by 38.9% in the six months ending on 31 March 2024. The company states that it achieved its strongest first half performance ever.

During the first half, Britvic spent £30.2m on advertising and promotions, showing a 38.9% increase compared to the same period last year. Advertising expenses made up 3.4% of own-brand revenue, rising by 2.7% from the previous fiscal year. This substantial rise was partially aimed at supporting the company's growth.

In the first half of the year, Britvic saw a significant 11.2% increase in revenues compared to the previous year, reaching £880.3m. This growth was driven by strong consumer demand for popular brands like Robinsons and Tango, leading to a 4.4% increase in sales volume.

During this period, Britvic focused its advertising efforts primarily on the Pepsi brand, which it produces and sells in the UK. The company invested in marketing campaigns to promote the brand's new visual identity, utilizing strategies such as out-of-home advertising and social media promotions.

The increase in advertising and promotional investment from last year was notable, attributed in part to a lower comparison number. Britvic had held back on spending in the previous year due to inflationary pressures, according to chief financial officer Rebecca Napier during an investor meeting on 15 May.

Napier also mentioned that the company anticipates a substantial rise in advertising and promotional expenditure throughout the year as they strive to invest in sustainable growth.

CEO Simon Litherland highlighted that Britvic is boosting its marketing budget "to help drive growth".

He expressed confidence in the marketing initiatives planned for the second half of the year, emphasizing the strong foundation they have to build upon. Litherland also praised the impressive momentum of the company's brands.

Accelerating New Growth Spaces

Britvic's brand portfolio includes well-known "family favourite" brands like Robinsons, as well as smaller brands that are considered "new growth spaces" for the company. One example of this is the plant-based juice and drinks brand Plenish.

The revenue for Britvic's "new growth spaces" portfolio, which includes London Essence and Aqua Libra, increased by 63.5%. This growth was driven by Plenish's exceptional performance in the first half, with new product innovations and wider distribution contributing to a revenue increase of 168.5%.

According to Litherland, these smaller brands are now making a positive impact on the company's overall revenue growth.

Pepsi showed an 8.5% increase in revenue for Britvic's more established brands. Robinsons, on the other hand, had a performance that was described as "stable" compared to the previous year.

Litherland mentioned that Robinsons is considered one of their key brands and had actually performed quite well in the first half of the year.

We are beginning to see the benefits of the efforts we made last year with the new brand look, shelf layout, and category growth drivers. We have been working closely with our customers and we can already see positive results coming through.

The second half of the fiscal year, particularly the summer period, is a key time for the Robinsons brand. During this time, we will be sponsoring The Hundred cricket tournament and hosting a Super Splashdown competition where families can win tickets to waterparks.

Litherland is confident in the sustainability story of Robinsons' concentrate drink, which offers multiple servings from one pack. He sees great potential in this concept for the brand to explore further.

As inflation rose, Britvic and other companies in the FMCG sector had to find ways to grow in the face of a challenging consumer environment and rising costs. Many companies raised prices to boost revenue. Now, with inflation starting to ease, the focus is on increasing sales.

Britvic described itself as being in a “transitionary phase” in November, aiming for volume growth in 2024. The first half of the year was successful, with a 1.7% volume increase in the first quarter and an impressive 7.4% growth in the second quarter.

CEO Litherland acknowledged the challenges of the past few years, expressing satisfaction in seeing the results of their hard work reflected in significant outperformance.

Editor's P/S:

Britvic's significant investment in advertising and promotion has paid off, with the company achieving its strongest first-half performance ever. The focus on the Pepsi brand, alongside the growth of new spaces such as Plenish, has driven revenue and volume increases. This success highlights the importance of marketing and innovation in the competitive FMCG sector, particularly as inflation begins to ease.

Britvic's strategy to transition towards volume growth in 2024 appears to be on track, with strong volume increases in both the first and second quarters. The company's confidence in the sustainability story of its concentrate drinks, such as Robinsons, suggests potential for further growth in this area. Overall, Britvic's performance demonstrates the resilience of the business and its ability to adapt to changing market conditions.