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AG Barr plans to reduce sugar content in its beverages ahead of UK tax

DBR Staff Writer Published 30 March 2016

Scotland-based soft drinks company AG Barr is planning to significantly reduce the sugar content in its beverages, ahead of the introduction of sugar tax on sweet fizzy drinks by the UK government.

Irn Bru

During its annual results announcement, the company stated that the move is intended to help reduce the financial burden of the levy, which was proposed earlier this month during Budget 2016.

The proposed sugar tax is believed to add to the woes of soft drinks companies such as AG Barr and its rivals Britvic and Coca-Cola, which are also dealing with changing consumer trends.

AG Barr stated: "To ensure success in the UK market we are focusing our marketing efforts on our "lower" and "no" sugar products and are substantially reducing the sugar content of our portfolio to reflect consumers' changing preferences."

The Scottish company said that it has already reduced the average calorie content of its portfolio of products by 8.8% in the past four years and hopes to accelerate the pace of reducing sugar content in its drinks over the next few years.

AG Barr said that its product reformulation and innovation will help in minimising the impact of the proposed tax.

Irn-Bru maker AG Barr reported statutory pre-tax profit increased to £41.3m for the year ended 30 January 30 from £38.6m a year earlier. Annual revenues fell 1% to £258.6m for the year to 30 January due to the struggling UK soft drinks market.

AG Barr CEO Roger White said: "Market conditions in the core UK soft drinks market are not expected to substantially change as we look forward.

"Top-line growth remains under pressure and changes in consumer preferences offer challenges and opportunities in equal measure.

"Although the details of the Chancellor's proposed soft drinks levy are still to be consulted upon, we believe our combination of brand strength, ongoing product reformulation and consumer driven innovation will allow us to minimise the financial impact on the business at the proposed point of implementation in April 2018."

He added: "Based on the government's currently proposed metrics, should a levy be introduced, we expect at least two thirds of our portfolio will be lower or no sugar, and would therefore be levy-free at that time."

Image: Irn-Bru maker plans to reduce sugar content in its drinks. Photo: Courtesy of Andrew Duffell/Wikipedia.