A G Barr Plc - A Case Study

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A G Barr plc — a case study

Background information

A G Barr plc manufactures, distributes and markets drinks, primarily carbonated soft drinks. Based in Glasgow, it has been manufacturing soft drinks in Scotland since 1875. Its most famous product, Irn-Bru, was first produced in 1901. Barr’s became a public limited company in 1965. The business has always been associated with the Barr family and members of it own the majority of shares in the company. However, Robin Barr, the chairman, is the only member of the Barr family still directly employed in the business. Barr’s has a deliberate policy of focusing on the drinks market. It does not produce any other type of product and has no interests in any other fields of business activity. It describes itself as an ‘independent, consumer led and profitable public company, engaged in the manufacture, distribution and marketing of branded soft drinks’.

In the last 40 years, the number of soft drinks manufacturers in Scotland has fallen from around 200 to about six. Barr’s is by far the biggest of those which survive. Over the years, Barr’s has acquired a number of other companies. These include other soft drinks firms, particularly ones in England, such as Tizer Limited in 1972 and Mandora St Clements of Mansfield in 1988. In 2001, Findlays Limited of Edinburgh, which produces Findlays Spring Mineral Water, became a wholly owned subsidiary of A G Barr plc.

Appendix 1 gives details of the organisation of Barr’s.

The soft drinks market and Barr’s product portfolio

Barr’s competes against internationally known brands owned by large multinational companies, like Coca-Cola and Pepsi-Cola. It does so by a combination of brands which it owns itself and brands belonging to other companies which it manages in the UK.

Branding is highly significant in the soft drinks market. It means that companies must have funds available to spend on marketing their products. At the same time, they have to be able to produce in sufficient quantities to gain economies of scale in production.

Traditionally, Barr’s strength is in Scotland where Irn-Bru is the leading grocery brand name. The company has a long-standing aim to increase sales south of the border. Sales there have been rising but they remain small compared to sales in Scotland. Nonetheless, Irn-Bru is now one of the top 100 grocery brands in the UK. It is the third biggest soft drink in the UK and the top non-cola brand. In most developed countries Coca-Cola is comfortably the market leader but, in Scotland, this is not the case. In 2003, sales of Irn-Bru in Scotland exceeded those of Coke.

Although brand names such as Coke, Pepsi and Sprite are known all over the world, the actual drinks are often produced and distributed by locally based companies. In some cases, these companies are subsidiaries of the big multinationals. In other cases, separate companies, like Barr’s, produce and market the drinks under licence from the brand owner. These partnership arrangements, known as franchise agreements, normally last for a specified period of time such as five years. Barr’s has the UK franchise for Orangina and for Lipton Ice Tea.

These operations do not always run smoothly. Barr’s originally agreed a deal for Orangina with the French company, Pernod Ricard, for the period 1995–2001. In late 1999, the French government vetoed a proposed take-over by Coca-Cola of Pernod Ricard. A year later, rumours that the brand was to be sold to Cadbury Schweppes, another soft drinks manufacturer, did not materialise. These events caused considerable uncertainty for Barr’s. However, in the event, Pernod Ricard retained ownership of the brand and Barr’s was able to extend its franchise deal.

Appendix 2 summarises the main brands that Barr’s owns and manages.

Building brand awareness

Barr’s has a policy of developing its own brand identities. It...
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