Frucor convinced UK tastebuds ready for V's afternoon fizz

Friday 17th August 2001

By Deborah Hill Cone

The traditional days of "tea and gingernuts" being the standard afternoon snack in the UK are well over, Frucor chief executive Mark Cowsill said.

Brits' teatime choices might sound trivial but are in fact important because the listed soft drink company's profitability depends on sales of its afternoon pick-me-up drink V in the crucial UK market.

This week Frucor announced an $11.7 million after-tax profit for the year to July, down from $13.6 million in 2000.

It made a $10.3 million loss on its operations in the UK, where it has been pushing the V brand.

The company had three months earlier downgraded its profit forecast from $17.5 million to $11.4 million in response to the lower-than- expected sales levels in the UK.

And this week Frucor admitted it would not be able to meet the earlier forecast for this current year either, with the UK operation estimated to make a further loss.

But Mr Cowsill was upbeat about progress being made in the UK.

The British drink 0.6 litres of energy drinks a head in the UK compared with 1.2 litres in Australia and three litres a head in New Zealand - so there is plenty of room for growth.

Frucor has pushed its positioning of V as an afternoon energy drink, in contrast to Red Bull which is offered in nightclubs and bars - and Mr Cowsill said they are convinced the UK market is ready for that.

"Coffee is pretty big in the UK - the days of tea and gingernuts are well and truly over," he said.

Frucor estimates the V brand is stocked in 47% of cold-beverage retailers in the UK on a weighted basis compared to its competitor Red Bull which is stocked in 90% of outlets.

Mr Cowsill said Frucor was pushing ahead with plans to boost its distribution, including using expatriate Kiwis and Australians to cold-call on small retailers to persuade them to stock the product.

"Getting up near 60% would get us into a much more favourable position."

Most other brands in the UK market tended to be Red Bull "knock offs" such as Red Card, Red Alert and Red Devil, Mr Cowsill said.

"Where V is sold it is generally the number two brand," Mr Cowsill said.

While most market focus has been on V in the UK, Frucor has reported a strong performance in its domestic market with operating revenue up 16.3% to $166.2 million.

V continued to grow four years after it was launched and g-force and the launch of Mizone sportswater also had a positive impact.

And in Australia Frucor's operating revenue was up 56.7% to $46.7 million.

That figure would have been $8.5 million higher were it not for an inventory buyback after Frucor bought distributor Spring Valley.

Frucor shares were trading at $1.72 at presstime, up 2c after the announcement.

Comments from our readers

No comments yet