French business drags down Britvic profits

Drinks maker blames profit slump on ‘challenging year’ in France

                                

British drinks maker Britvic saw profits slump for the year to the end of September, partly blaming a new French law for slashing margins in one of its key markets.

Profits before tax were just over £110m ($141m, €129m), a fall of 24.3 per cent over the previous year. Revenues climbed 2.8 per cent.

The maker of Tango, J20 and Fruit Shoot blamed “a challenging year” in France, where the new EGalim law aims to rebalance the relationship between smaller suppliers and retailers, and forces larger companies to improve payments to suppliers.

“It has been a challenging year in France, with performance particularly disappointing in the second half of the year, as both the private label and branded business performed below expectations,” Britvic said in a statement.

The company announced this month that it is in talks to sell its French private-label juice business, and has written down the value of the division by £31.2m.

Nevertheless, the firm posted a 4.4 per cent year-on-year increase in adjusted operating profit, driven by sales of low sugar and juice-based brands. Both the Britvic and PepsiCo brands also grew revenues in the UK.

Analysts believe future growth will increasingly rely on the success of low-sugar drinks and healthier alternatives, as legislators mull sugar taxes in a bid to curb obesity. The UK enacted a sugar tax in 2018.

Britvic CEO Simon Litherland said: “I am confident that Britvic is well placed to capitalise on the future growth opportunities in the years ahead. While we anticipate conditions to remain challenging, we fully expect that we will make further progress in 2020.”

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