Irn Bru's fizzy cousins
Dateline: Cumbernauld. It's the end of an era, as Robin Barr retires from the chairmanship of AG Barr.
I've been to interview him, and to get inside the inner sanctum of the Essence House, where he monthly mixes the secret potion that gives Irn Bru its distinctive flavour.
Ten minutes in there, and the intensity of the ingredients hanging in the air had me losing my voice.
The charming 71-year old enjoys the pawky, irreverent humour that has given his products' advertisements their cutting edge.
His understanding of the online social and viral marketing of the product is, let's say, limited.
But he knows it's the future, and understands sufficiently that the secret of its viral success is in letting it happen without a big corporate push.
The Snowman pastiche, made by the Leith Agency and used for the past three Christmases on TV, has been particularly successful on YouTube.
The success of Irn Bru's modern-day marketing and advertising is well known, at least north of the Tweed, where 'brewed in Scotland, from girders' has been recognised as one of the most effective slogans of recent decades.
As 'Scotland's other national drink', it pushed those patriotic credentials in the 1970s and 1980s.
But that's made it more difficult to break into markets outside Scotland and Scots exiles, for whom Irn Bru can be a taste of home, accompanied by a Tunnock's Caramel Wafer.
(It can be a top hangover cure, though it's never worked for me.)
The story goes back to Falkirk in 1830 and a cork-cutting business, branching into soft drinks in 1875 when it was clear there wasn't much of a future in cork-cutting.
Only in 1901 was the 'Iron Brew' recipe settled upon by the great grandfather of Robin Barr.
With a version made by many small producers, AG Barr in 1947 changed the spelling to get round prospective laws (long preceding the European Commission, you'll note) that required labels to be accurate descriptions of food contents.
Although it has small amounts of iron compound, Irn Bru isn't brewed.
Chatting with the outgoing chairman about the state of his market, he pointed out there were around 8000 soft drinks manufacturers in 1945, but the effective war-time nationalisation of the industry - with the Government of the day dictating a limited range of recipes that could be used - contributed to consolidation.
Now, British soft drinks are dominated by Coca-Cola and its bottlers, with Britvic handling the Pepsi range.
To a much smaller extent, GKN, better known in Big Pharma, does Lucozade and Ribena at the premium end of the market, and there are some big bottlers handling supermarket own-label fizzy pops.
AG Barr is the biggest independent survivor in a sector now down to only around 80 soft drinks makers in Britain, and most of them are struggling at the margins of the mineral water market.
Its products are, of course, dominated by Irn Bru. The diet version is outsold by the sugary one by a 7:3 margin, whereas Diet Coke outsells Coke (that alone tells you something about Scotland's sweet tooth).
But there's more to AG Barr than that.
It has Tizer in its portfolio. D'N'B stands for dandelion and burdock, which is a regional tradition that has around 10% of the market across the north of England.
AG Barr's sponsorship of rugby league has been for D'N'B in recent years, but the efforts to push Irn Bru into the English market mean that the lead product is soon to be Irn Bru.
KA is a pineapple drink, with even more sugar than Irn Bru, that appeals to the Afro-Caribbean market in England.
Now with a market capitalisation of nearly £250 million, around quarter of that in family hands, recent years have seen AG Barr buying Strathmore Water, bottled in Forfar, and given the same funky advertising treatment that has built Irn Bru.
Last year, the company bought Rubicon, a fruit drinks business based in Wembley, that specialises in exotic fruit combinations that sell well into the South Asian market in the south-east of England.
The idea is to move into the premium brand market, though the recession has made that tough.
With people trading down, Irn Bru sales have held up well as a cheap treat for financially worrying times. But Rubicon and Strathmore have found it a bit tougher.
The one other country where Irn Bru sells well is Russia, where AG Barr spotted the opportunity to get into the market in 1993, stealing a march on its big American rivals.
But it's a premium soft drink there, and the recession has hit sales hard, down by at least 15%.
According to Robin Barr, the big growth area in soft drinks is in the sugar and caffeine loaded sector to keep its drinkers clubbing, studying, driving and just buzzing through the night... and often into the next day.
Red Bull is market leader there, but its rivals have been growing the market aggressively since last summer, using half litre cans.
Coca-Cola Enterprises has one product of its own, called Relentless. It's also just signed a deal to distribute Monster, the number one 'energy' seller in America.
With much of the battle over the on-sales trade for what marketers like to call "high tempo occasions", AG Barr is in that game as well, with a UK licensing deal for Rock Star.
It suggests that another of those niche products doing well in a recession is something that gives you a whole lot of pep.
Comment number 1.
At 27th May 2009, redrobb wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 2.
At 27th May 2009, redrobb wrote:Well ok Mr Moderator Ill try again! The PR surrounding this product is sprinkled with smoke & mirrors, but Im pretty sure there are a few health experts that view it as being detrimental to thousands of past , present and future consumers. Secret ingredient indeed, I thought under revised product labelling spoof such as this was to become more transparent! Just like its other national drink cousin and as remarked by a fellow colleague hailing from south of the border, its all myth and folklore. And the word gullible does not appear in the dictionary? Or does it!!
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