Britvic upped its advertising and promotional spend by 6.4% over the last 12 months, enabling the drinks giant to “unlock growth” despite inflationary pressures.
Group revenue increased 15.5% to £1.6bn over the year to 30 September, driven by rises in both price and volume sales. Adjusted EBIT profit jumped 16% to £206m, with margin up by 10 basis points to 12.7%. Profit after tax hit £140.2m, up 45.3%.
Speaking on a call with investors today (23 November), CEO Simon Litherland described 2022 as “an excellent year for Britvic”. The company said its brands’ “strength to take price” without impacting volume, alongside its promotional activity, innovation, and measures to control costs, have mitigated the impact of inflation over the last year.
Highlighting its “effective” marketing activity in Great Britain, Britvic points to Pepsi MAX’s continued sponsorship of the UEFA Champions League, Robinsons’ new marketing direction after deciding to end its long-running association with Wimbledon last year, and flavour innovations for Tango, Aqua Libra and Pepsi.
The group generated £108m in revenue from its innovation brands this year, up 49% on 2021.
Going into its next financial year, Britvic has committed to further investment behind its brands to drive growth, despite uncertainty about what the economic backdrop will look like.
In particular, the business is anticipating Robinsons’ market share will be “challenged” by private label brands. Litherland noted that in the squash category, its brands are “significantly higher priced” than private label competitors.
Britvic will attempt to fend off this challenge by driving value through price pack architecture for its Robinsons and Tessiere brands, he said.
“We’ll back that up by increasing our investment and we’ve got some really strong plans behind Robinsons in particular this year,” he added. Litherland hinted at a “major brand development” for the Robinsons brand, which will be announced in spring next year. This year saw the brand take its marketing in a new direction after ending its long-running association with Wimbledon.
This new direction included summer digital competition ‘The Big Fruit Hunt’, as well as sponsorship of cricket tournament The Hundred. The refreshed strategy has allowed the brand “to engage with more consumers and enabled a more extended activation period in store than before”, Britvic said.
Elsewhere, soft drinks brands like Tango and Pepsi are unusually sheltered from threats to market share from private labels, Litherland said. However, she predicts Britvic’s revenue growth will be price and mix led, with volume growth “partly dependent on how consumers respond to increasing pressure on their wallets”. Litherland added that the business is already seeing changing behaviours among shoppers, such as smaller baskets and increased shopping with discounters. Consumers are also looking for more and better deals.