AG Barr plc

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AG Barr plc

1306 Gallowgate
Glasgow
G31 4DS
United Kingdom
Telephone: ( +44) 1415 541899
Fax: ( +44) 1415 545768
Web site: http://www.agbarr.co.uk

Public Company
Incorporated: 1904
Employees: 915
Sales: £128 million ($217.30 million) (2003)
Stock Exchanges: London
Ticker Symbol: BAG
NAIC: 312111 Soft Drink Manufacturing

AG Barr plc is the United Kingdom's leading focused soft drinks manufacturer and maker of the world-famous Irn Bru. Popularly known as "Scotland's other national drink," Irn Bru is the only soft drink in the world that has managed to maintain its leading home market position against the Coca Cola Company, although that company's rise in Scotland has put Barr under pressure in the early 2000s. Barr's response has been to make its own move on the export market, pushing south into England and continental Europe. Irn Bru has also become one of the most popular soft drinks in Russia, in part because of its suitability as a vodka mixer. AG Barr also produces another well-known "vintage" British soft drink brand, Tizer, which originated in Manchester in the 1920s. The company has been extending that brand with the launch of a new range of fruit-flavored drinks in 2004. The company also produces D&B, Findlays Natural Mineral Water, and Simply Citrus, as well as Orangina, under license from France's Pernod Ricard. AG Barr produces its syrups and bottles its drinks in four Edinburgh-area manufacturing plants, as well as operating distribution centers throughout much of the United Kingdom. The company has been listed on the London Stock Exchange since 1962, and the founding Barr family retains more than 25 percent of its shares. AG Barr is led by CEO Roger White, who, in 2004, became the first non-Barr family member to head the company. In 2003, the company posted sales of £128 million ($217 million).

A Scottish Soft Drinks Company in the 19th Century

Although the Barr family had long been involved in manufacturing, its original business was as a cork cutter providing stoppers for local bottlers in Falkirk, Scotland. Founded in 1830 by Robert Barr, the family business thrived into the second half of the 19th century. The invention of new bottle closure systems largely replaced cork stoppers, and the Barrs were forced to look for a new area of business. In 1875, Barr's son, Robert, launched a new company producing so-called "aerated water," a precursor to modern soft drinks.

The practice of injecting carbon dioxide into water had been developed in the late 18th century; among the first to market the new carbonated water was London's Schweppes in 1792. Drink makers soon began mixing fruit juices, such as the popular lemonade, with the carbonated water, and by the mid-19th century "effervescent" drinks had become popular. The Barr family's own shift toward producing soft drinks coincided with their rising popularity, spurred in part because of the growing temperance movement in the United Kingdom at the time.

Robert Barr's son, Robert Fulton Barr, established his own soft drinks plant in Glasgow in 1887. The larger population of the Glasgow region enabled the second Barr company to flourish, and later to become the dominant of the two family-owned soft drinks businesses. Nonetheless, the Falkirk Barr company grew strongly into the mid-20th century as well.

Robert Fulton Barr turned over his company to his younger brother, Andrew Greig Barr, who left his career as a banker to join the Glasgow company at the turn of the 20th century. The two Barr companies established something of a working partnership, inventing common drink flavors. Yet Andrew Barr proved a driving force and is credited with providing the recipe for the Barrs' most lasting success, "Iron-Brew," launched in 1901.

The Barrs' Iron Brew was one of many similar—and similarly named—soft drinks available in the first half of the 20th century. Although not brewed, the drinks did indeed contain a small percentage of iron and were touted for their healthful properties. Later legislation provided for an iron content of at least 0.125 milligrams per fluid ounce. Barr's variation on the Iron Brew theme—each manufacturer had its own recipe—was backed up by a knack for advertising. The original bottle labels featured a strongman raising a bottle of Iron-Brew. Andrew Barr did not live to see the full success of the Iron-Brew brand; he died in 1903 at the age of 31. The following year, the company adopted its permanent name, AG Barr & Co.

Under the next member of the Barr family to lead the company, William Barr, who took over in 1909, AG Barr turned to celebrity endorsers, hiring popular local athletes to endorse the "brew." These included John Blair, Benny Lynch and Willie Lyon. William Barr, himself a weightlifter, was known for being able to tear a telephone directory in half. The company's talent for advertising provided such lasting slogans as "Your Other National Drink" and "Made from Girders." Early deliveries were made by cart drawn by the world's tallest working horse, Camera. In the 1930s, the company launched a highly popular comic-strip advertisement, Ba-Bru and Sandy, featuring the adventures of the Indian Ba-Bru and the Scottish Sandy in their search for a bottle of Iron-Brew. That campaign ran for more than 40 years.

World War II nearly spelled the end of AG Barr. The government led a rationalization of the country's soft drink sector, which was then nationalized and subjected to a streamlining to just six authorized "standard" soft drinks. Unfortunately for Barr and many other Scottish drinks makers, Iron Brew was not included among the standard drinks formulas, and the company was forced to cease production for the duration of the war.

By the end of the war, most of Scotland's soft drinks makers had disappeared. Both Barr companies held on, however, and prepared to return to independent production at the end of the 1940s. Yet even as the Barrs prepared to restore their own branded products and recipes, including Iron-Brew, they came under a new threat. With the war over and with the privatization of the soft drink industry in view, the British Parliament now proposed to introduce new truth-in-labeling laws. A major feature of the proposed legislation demanded that soft drink names reflect the products' true nature. This meant that such popular soft drinks as Ginger Ale, which, if it contained ginger, was not an "ale," would be discontinued.

Branding Success after World War II

In the Barr companies' case, the truth-labeling laws threatened the branding of their most popular product, Iron-Brew, which was not brewed. However, the new head of AG Barr, Robert Barr, hit on an ingenious means of skirting the impending legislation. In 1946, the company adopted the phonetic spelling for its soft drink, renaming it Irn Bru, and therefore shielding it from the new labeling legislation. Although the labeling guidelines were not made into law until the 1960s—and existing soft drinks were allowed to keep their names under that legislation—Irn Bru quickly captured the hearts of Scottish consumers and became the region's most popular soft drink.

The success of Irn Bru encouraged the company to begin expanding. At first the company remained in Scotland, where it opened a number of new plants to support its growing sales throughout the country. In the early 1950s, however, Barr made its first move south into England, acquiring Hollows, based in Bradford, in 1954. The steadily building success of AG Barr's Irn Bru in the meantime made it the focus of the Barr family's strategic efforts, and in 1959 AG Barr finally acquired the Barr business based in Falkirk. The two companies then merged under the single AG Barr name.

With operations now spanning seven plants in Scotland, as well as the Hollows operations in England, AG Barr went public in 1965, listing its shares on the London Stock Exchange. Nonetheless, the company remained tightly controlled by the Barr family.

The public offering enabled Barr to begin expanding its operations. In 1967, the company, which previously had marketed its soft drinks only in bottles, added canning capacity with the purchase of Stotherts Ltd, based in Atherton. The company later became the first in the United Kingdom to adopt the new stay-on-can flip-top type can pull rings. Barr also released a low-calorie version of Irn Bru at the end of the decade.

Expanding Brands for
the Late 20th Century and Beyond

Barr began adding to its brand portfolio in the 1970s, including launching a short-lived fruit juice soda, Jusoda. A more lasting addition to the company came with its acquisition of another long-lived British soft drink brand, Tizer, acquired with the £2.5 million purchase of Tizer Limited, based in Manchester, in 1972.

Tizer originated from a soft drinks business set up by brothers Fred and Thomas Pickup in Portsmouth starting in 1906. The brothers moved onto Bristol the following year, then split up, with Fred Pickup settling in Yorkshire. He began producing carbonated beverages in 1919 and eventually established plants at Bradford and Leeds as well. Thomas moved back to his home-town of Manchester in 1922, and two years later he launched a new soft drink, taking its name from the word "appetizer."

Tizer grew into one of the most popular brands in the region, and Thomas Pickup opened a number of new facilities to support the rising demand. By the 1930s, he operated factories throughout northern England and into Scotland as well. In the years following the World War II, Pickup revived the Tizer brand, which became the company's sole product, and then the company's name itself. After Thomas Pickup died in the early 1970s, the company was acquired by Armour Trust, which then sold it on to AG Barr.

Company Perspectives:

We are an independent, consumer led and profitable public company, engaged in the manufacture, distribution and marketing of branded carbonated soft drinks. We provide a high standard of service to both UK and overseas customers.

Tizer added a new brand pillar to Barr's portfolio. The company became determined to restore Tizer to its original prewar recipe, a process hampered by the fact that the manufacturer of a primary ingredient had gone out of business. The success of the revitalized Tizer brand helped boost Barr's sales, which topped £12 million at the beginning of the 1980s. During the 1970s, also, the company began moving into the export market, selling the Irn Bru brand to popular British tourist destinations, such as the coast of Spain.

Barr made two more acquisitions in the 1980s, buying Edinburgh's Globe Soft Drinks in 1983 and Masnfield-based Mandora St. Clements in 1988. For the most part, however, the company stayed out of the massive global drinks consolidation which was gaining momentum at that time and which resulted in the creation of a small number of truly giant drinks conglomerates. Barr itself remained protected from takeover by the Barr family's controlling stake in the company.

Under new family leader Robin Barr, the company contented itself with protecting its position as Scotland's bestselling soft drink, a status that made Scotland an anomaly in a world where the Coca Cola Company had succeeded in dominating every other market. Into the late 1990s, however, Coca Cola's gaining popularity, particularly among Scottish youth, brought Barr under pressure. At one point, Coca Cola even claimed to have taken away the number one spot in Scotland, a falsehood that the U.S. company was later forced to retract.

Barr in the meantime had begun its own, if limited, export program, shipping Irn Bru to quench the thirst of the Scottish expatriate communities in Australia, Hong Kong, and Canada, among other places. The company also began promoting Irn Bru in Spain beyond its coastal tourist base. Coca Cola's difficulties in entering the Russian market also inspired Barr to enter that country as well, striking a bottling franchise agreement in the mid-1990s. That agreement, while promoting the Irn Bru brand name in Russia, fizzled out soon after, however. Instead, Irn Bru reached a new licensing agreement with the Pepsi Cola Bottling Company, which took over the bottling and distribution of the Irn Bru brand in Russia. By the 2000s, Irn Bru had grown into one of the top three Russian soft drink brands, boosted in part by its role as a popular vodka mixer.

Back at home, Barr itself had joined the licensing sector after being awarded the license to produce and distribute the Orangina brand family in Great Britain. Supporting that license, as well as increasing sales of the group's own brands, was the construction of a new state-of-the-art bottling facility in Cumbernauld in 1996. The new facility provided 122,000 square feet of production space. The additional bottling capacity encouraged Barr to add a new brand family, and in 1996 the company acquired a 40 percent stake in Findlays Spring Natural Mineral Water. AG Barr gained full control of Findlays in 2001.

Barr celebrated the end of an era when Robin Barr stepped down from the company's chief executive spot, naming in his stead Roger White, the first time someone from outside of the Barr family had been appointed to lead the company. White promised to expand the group's range of products—in particular by adding juice-based products and other bottled water products—while retaining and expanding its traditional carbonated beverage core. The first step in that expansion came in 2004 with the launch of a new range of fruit-flavored Tizer-branded soft drinks. After more than 100 years, AG Barr remained a mainstay in the U.K. soft drinks market.

Principal Subsidiaries

Findlays Spring Natural Mineral Water.

Principal Competitors

Procter and Gamble Company; PepsiCo Inc.; Coca-Cola Company; Sara Lee Corporation; Groupe Danone; Cadbury Schweppes plc; Interbrew SA-NV; SABMiller plc; Mitchell and Butlers plc.

Key Dates:

1830:
Robert Barr founds a cork cutting business in Falkirk, Scotland.: 1875:
Barr's son, Robert, founds a company selling bottled "aerated" water in Falkirk.: 1887:
Robert Fulton Barr, son of the second Robert Barr, founds his own soft drink company in Glasgow and later turns over the business to his younger brother Andrew Greig Barr.: 1901:
The Barr companies introduce their own Iron-Brew formula.: 1904:
Glasgow Barr company becomes AG Barr & Co. after Andrew Barr's death.: 1940:
Production of Iron-Brew is suspended after the nationalization of the British soft drinks industry during World War II.: 1946:
Barr adopts a new trade name for its Iron-Brew brand, using the phonetic spelling Irn Bru.: 1954:
Barr acquires Hollows, based in Bradford, England.: 1959:
AG Barr acquires Robert Barr of Falkirk.: 1965:
AG Barr goes public on London Stock Exchange.: 1967:
The company acquires Stotherts Ltd.: 1972:
AG Barr acquires Manchester-based Tizer Ltd, and its Tizer soft drink brand.: 1983:
Globe Soft Drinks in Edinburgh is acquired.: 1988:
Mandora St. Clements in Mansfield is acquired.: 1995:
AG Barr is awarded the Orangina licensing franchise for Great Britain.: 1996:
The company opens a new plant in Cumbernauld.: 1998:
The company reaches a bottling and distribution agreement with PepsiCo to sell Irn Bru in Russia.: 2004:
Roger White becomes the first non-Barr family member to head the company.