Irn Bru and Rubicon fizzy drinks maker AG Barr PLC (LON:BAG) has dipped a toe in the “fast-moving” new market of alcohol-free spirits.
The FTSE 250 group has invested £1mln for a 20% stake in a new business start-up Elegantly Spirited, which will sell so-called zero-proof spirits under the STRYYK brand.
READ: AG Barr loses some fizz as it eyes “more challenging” market in 2019 amid regulation and changing consumer dynamics
Elegantly Spirited was set up by Alex Carlton and Andrew King, original founders of the Funkin cocktail mixers business that was acquired by AG Barr in 2016.
Alongside the investment, Funkin, where King remains in charge, will be the exclusive distributor of Elegantly Spirited products in the UK on a long-term deal.
As its rationale for the deal, AG Barr said it “seeks to capitalise on the growing demand for non-alcoholic adult drinks”.
Chief executive Roger White added: “More and more consumers are seeking a drink that adds positively to their social experience but without the side effects of alcohol. We're very excited to be involved in both investing in and growing the STRYYK brand in this new and fast moving consumer category.”
Low risk, low impact
Analysts at Shore Capital, ‘house’ broker to Barr, said it was a “low risk interesting strategic move with long term upside potential” but would be “immaterial” to Barr’s near term financials.
“It expands Barr’s foot print further into multi beverage categories, adjacent to core soft drinks, but is nicely relevant to the Funkin brand. The non-alcoholic spirits market is consumer on trend. We expect Funkin to distribute the STRYYK range in both the on and off trade at a competitively priced proposition to Diageo’s Seedlip brand.”
Shares in the group were up a penny at 961.01p not far from their recent all-time high.