Having suffered considerable disruption during the pandemic as restaurants, bars and nightclubs were closed, drinks manufacturer AG Barr has now come out the other side smiling. Full-year sales and profit are now ahead of pre-Covid days, and it is doling out more generous dividends once again.
While the company is sitting pretty, sustaining this positive momentum won’t be easy. There are considerable uncertainties about the strength of consumer spending once we move into April and energy prices shoot up. Inflationary pressures in general are intensifying and consumers will have to make some serious decisions about where they spend money, and where they cut back.
AG Barr will no doubt be banking on the consumer continuing to find some cash for small treats like its range of fizzy drinks including Irn Bru, as well as people refusing to give up small luxuries such as a night out with friends which is relevant to its Funkin cocktail brand.
“While it couldn’t have foreseen the Ukraine war pushing up the cost of living further, AG Barr last year taking steps to diversify its income might prove to have been a wise move. An investment in plant-based foods group Moma gives it a position in the foods sector and a new avenue through which to explore earnings growth opportunities,” said AJ Bell’s Russ Mould.
“Decent weather this spring and summer would be a major boost to the company, so too the Queen’s Jubilee bank holiday break which could turn out to be a four-day bumper sales period for all companies in the hospitality sector.”