The boss of Irn-Bru firm AG Barr has said he would be “surprised” to see a part or full reversal of a UK Government policy aimed at reducing obesity.
There is also a £300 million a year tax take from the levy, chief executive Roger White added.
According to some London-based media, Prime Minister Liz Truss and Chancellor Kwasi Kwarteng may cut or even abolish “nanny-state” obesity control policies such as the so-called “sugar tax”.
One tabloid even suggested full-sugar Irn-Bru could make a return in the event of a U-turn.
Barr and its rivals were forced to change the recipe for some of their products because of the soft drinks industry levy on sugary beverages, which came into force in 2018.
Some die-hard Irn-Bru fans launched an online campaign in attempt to save the old recipe.
Barr’s boss would be ‘surprised and disappointed’ by any U-turn on tax
“I would be surprised and disappointed if the government back-tracked on what is a very laudable policy, Mr White said today.
His comments suggest a return to the old recipes at Barr, including those for its iconic Irn-Bru fizzy drink, is unlikely.
The CEO also revealed the company is shouldering “very painful” increases in the cost of some of its raw materials.
Barr, which also makes Rubicon fruit drinks and Funkin cocktail mixers, is paying a lot more for imported passion fruit, mangos and guava, he added.
But energy costs are not a major headache as these account for less than 5% of total overheads, he said.
Mr White continued: “We are not very hugely energy intensive but, without doubt, it is painful what’s going on (elsewhere).
“We are mostly filling containers, and not doing any cooking or baking, so don’t have any big ovens on all day.
“Of course, we are facing indirect costs of energy, such as through the higher prices we’re paying for packaging materials.”
Mr White was speaking after Barr announced statutory pre-tax profits of £24.7m for the six months to July 31, up by 1.2% on a year earlier. Revenue increased by 16.7% to £157.9m.
The company had started the year well, enjoying continued strong demand for its cocktail mixes as well as a continued improvement in the on-trade, Mr White said.
Good weather also helped the business, particularly in July, he added.
But he also warned of headwinds in the shape of rising inflation and the cost-of-living crisis.
Mr White continued: “At the minute, we are assuming it is going to get tougher for households.
“The energy price cap was a very positive move, however, I do think it will be a tricky winter as inflation works its way through to consumers on a broad front.
“It is hard to tell how that will impact on our markets.”
Cumbernauld-based Barr reported strong first half sales momentum across both its business units, with the soft drink division up 12.3% and Funkin ahead by 21.4%.
The company said margins, while impacted by cost inflation, were supported by sales growth, cost control and its flexible pricing approach.
And it also announced a 25% year-on-year in its interim dividend to 2.5p per share.
Mr White said: “We made a very strong start to the year and continue to see good momentum across our business and brands.
“That said, the UK’s high level of inflation has accelerated across the summer and is creating a well-documented cost-of-living crisis for many consumers, alongside increasing challenges for industry.
“We continue to take action to mitigate the cost pressures we face, both in the short term across the balance of the current financial year and where possible into 2023.”
Confident outlook
He added: “We anticipate in the coming months that the current economic environment will impact consumer purchasing behaviour, however, we currently remain confident that our strategy and actions will allow us to deliver a full-year profit performance ahead of the prior year.”
Shares in the group moved nearly 1% higher to 501.4p.
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