Irn-Bru deliveries hit by HGV driver shortage
Irn-Bru maker AG Barr has revealed it is struggling to make deliveries of its drinks due to the HGV and supply chain issues.
The company said it continues to “monitor closely” the situation and is hopeful the issues can be resolved soon.
Updating the stock market, bosses said: “In recent weeks we have seen increased challenges across the UK road haulage fleet, associated in part with the Covid-19 pandemic, impacting customer deliveries and inbound materials.
“In addition, the risks associated with the wider labour pool and the current Covid-19 pandemic response are areas we continue to monitor closely.”
Roger White, chief executive of the company based in Cumbernauld, North Lanarkshire, added supply issues have also resulted in cost inflation.
“There is a tightness with drivers and we have had particular disruption too with materials, particularly aluminium cans,” he said.
“Inflation is all around us at the moment – materials, wages and supply among other things – so we have to be careful how we manage this.
“We have accounted for this and that’s why we recognise that operating margins are likely to be impacted in the second half of the year.”
The warnings came as the company revealed sales remain strong despite the pandemic, with growth returning following the reopening of pubs, bars and restaurants.
Bosses said there had been a heavy shift to at-home drinking of their products but with restrictions easing more customers are buying drinks on-the-go and in the hospitality sector.
Its pre-mixed cocktail brand Funkin saw some of the strongest growth in the six months to August 1 compared with a year ago, they added.
At-home cocktail sales rose 114.3% to £10.2 million and bar sales soared 229.5% following reopenings.
In the six-month period, total sales rose 19.5% to £135.3 million compared with the same period a year ago.
Pre-tax profits were also up nearly four-fold from £5.1 million to £24.4 million – due to a £7 million writedown on its Strathmore water brand recorded in results last year.
Mr White said: “AG Barr is a growth-focused business operating in resilient and growing market categories, with dynamic brands, great people and a strong financial position.
“Our positive first-half performance reflects these fundamentals as well as the encouraging performance of recent innovation launches in both soft drinks and cocktails.”
In an attempt to remedy the UK's lorry driver shortage, transport secretary Grant Schapps has introduced visas for overseas workers by relaxing rules to allow 5,000 more foreign drivers into the country until Christmas Eve.
Mr Shapps said visas were “only one element” of the government’s relief plan, as he admitted efforts to rebuild the domestic freight workforce could take years. The package of measures involves ambitions to train 4,000 more lorry drivers, while the Army have been drafted in to provide extra HGV driving tests to reduce the backlog caused by the coronavirus pandemic lockdowns. Nearly one million letters will also be landing on the doormats of people with HGV licences in the coming days enticing them to return to the job now that wages have risen.