UK looking better for Frucor

Unaudited revenues for they year ended June show a 27% increase to $228.4 million, with New Zealand accounting for half the growth. International revenues grew 67% to $62.2 million.

In the UK market, where the company's V energy drink had a rocky start last year due to distribution problems, Frucor says it is making headway at last.

"The distribution drive carried out over the last quarter has met its targets with a 47% weighted distribution being recorded in mid-June versus 25% in March," says MD Mark Cowsill.

"The use of New Zealand and Australian expats in the London distribution drive has helped lift weighted distribution to 67% in greater London, making V second only to the market leader."

Mr Cowsill says with fourth quarter sales have been encouraging following the improved distribution, and further improvements can be expected in July/August with more initiatives being taken.

The company began advertising V again on television at the end of June, and the drink has also been added to the listings of one of the UK's major service station groups, Esso.

In New Zealand Frucor had sales growth of 16%, which it says is "very satisfactory" given its leadership in the market and the sluggish economic conditions.

V has continued to grow its share of the local energy drink market and the company's water products have also fared well, with flavoured water Mizone gaining 20% of service station sales since its launch last October.

Frucor also owns the Pepsi franchise in New Zealand and says it has lost market share in the carbonated soft drinks category, although the range continues to contribute positively to profits.

In Australia revenues grew 57%, but this would have been 80% if the company had not had to buy back stock when it took over the distribution business of Spring Valley.

V's share of the petrol and convenience channel has fallen from 60% to 48%, although the overall market has grown by 120%. The energy drink was launched into Aussie grocery stores last September and Frucor says recent data shows it has a share of around 40% in that distribution channel.

Elsewhere overseas the company recorded revenue growth in South African and has also launched in Hong Kong and Dubai in recent months.

Mark Cowsill says the outlook for the company is positive, with continuing growth in New Zealand although Australia represents the greatest immediate growth opportunity.

"The energy drink market is still underdeveloped with per capita consumption levels less than half those in New Zealand.

"With market share stabilising after two new entrants, top line growth should be in line with the market. And with the company acquiring its own sales and distribution capability the opportunity to launch new and innovative products to the market is now also possible."

Mr Cowsill says the UK remains a significant opportunity for the company and while the 2001 performance was disappointing, the distribution gains of recent months have positioned V on a footing with its key competitors.

"The media campaign over this summer and the resulting revenues generated will determine Frucor's next moves in this market."

Frucor is due to make its full-year profit announcement and give an update on the company's performance in the middle of next month.

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