The Herald reports that the company previously reported a fall in profits and turnover for the six months ended July 27 as it stated that 2018 had been an “unprecedented year” for the soft drinks industry.

As Barr prepared for the introduction of the Soft Drinks Industry Levy (sugar tax), it controversially changed the recipe of Irn-Bru. The company simultaneously faced a carbon dioxide shorage and an increase in demand for its product in Britain throughout the summer heatwaves.

Upon revealing its results for the first half of this year, which indicated that profits had plummetted by £4.7 million to £13.5m, Barr emphasised that the promotional activity it staged to drive volume as the new recipe for Irn-Bru came into effect had come at the expense of value. While the strategy had boosted market share, revenue dipped to £122.5m from £136.9m.

Barr said the company had returned to its “value-driven approach” in the first half, “improving our price positioning and reducing our promotional intensity”.

Barr added: “We are now seeing positive indications of consumer acceptance of this new price and promotional positioning.”
Shares have increased by 9% in early trading before easing back, closing up 20p at 606p.

When asked whether the company would have an altered approach in its promotional activity in retrospect, AG Barr chief executive Roger White said the question was valid but “impossible to answer”.

Mr White told The Herald: “I still think the strategy we took on board was the right to thing to do, because if we had put the price up last year up, we might have had more of resistance to the changes we were making in the brand. We saw six to seven per cent volume growth last year, it was very well received. It would have been nice to have done a little bit less (price promotion).

“If we hadn’t had such a warm summer last year, if we hadn’t had a CO2 crisis, alongside the pricing, it would have given us less of a hill to climb this year. But it is what it is.”

Mr White said the shift in promotional strategy has seen the firm move from packs offering two bottles of Irn-Bru for £2 to £2.25 or £2.50, or six cans for £2.50 to £2.99.

He added: “It’s that change rather than a headline price change. We haven’t done anything material to our headline prices, obviously, that is for retailers to decide. But the promotional mechanics we are employing are much more aligned with the rest of the market now. We look much more in the middle of the pack now than we did last year.”

AG Barr said the firm has also moved to tackle “brand issues” on its Rockstar and Rubicon brands.

Mr White said that Rockstar had encountered “tough competitor activity”, which included “aggressive pricing”, with Barr now working on new product recipes. The timing of innovation on Rockstar is weighted towards the second half of the year, which had an impact on first-half sales.

Discussing Rubicon, the firm was caught up in “multiple years of decline” which have beset the juice drink category. Mr White added that, in hindsight, the quality of product introduced last year “isn’t good enough”.

Mr White also told The Herald: “We have a reformulated, much-improved product which will launch in the fourth quarter, alongside an upgrade to the packaging and branding. That said, the Rubicon sparkling and spring products are doing really well.”

He added that Barr has been preparing for Brexit by making sure it has three to four months of ingredients it imports from outside Britain in stock. Analysts are guiding on full-year profits of around £36m, with Barr stating it remains on track to meet its forecast, which it updated in July.

Barr previously warned in July that it expected its profit performance to decline by up to 20% versus the previous year.