AG Barr’s outgoing chairman Robin Barr isn’t worried that the recession will dent sales of the company’s iconic drink
Robin Barr, the outgoing chairman of Cumbernauld-based soft drinks group AG Barr, appears to be in love with his job.
Even though the 71-year-old stepped down as chairman on Wednesday after nearly 50 years with the company, he could not resist going back into the office on both Thursday and Friday.
“I was in the office on both days,” he said. “One to come up to scratch with an arrangement to present a 25-year award to one our employees at Cumbernauld and another long-standing arrangement to take some visitors around the factory.”
Robin Barr, the great-grandson of the company’s founder, was last week succeeded as chairman by Ronnie Hanna, the former chief executive of housebuilder Bett Brothers. However, Barr will remain on board as a non-executive director and keeper of the secret recipe for Irn-Bru, Scotland’s other national drink.
Robin Barr said stepping down was a big moment for him and the company, but added in a self-deprecating way: “It didn’t amount to much more than passing the mythical baton along the table to the gentleman who was sitting next door.”
During the credit bubble years, AG Barr was criticised for holding £25m in cash on its balance sheet. Robin Barr said: “In the go-go years, we were plagued with comments that that was ridiculous, that we had an inefficient balance sheet. It was absolutely dreadful. Analysts and commentators were saying that.
“Now we’re finding that old-fashioned Scottish conservative attitudes have something to be said for them.” He believes the banks such as RBS and HBOS lost sight of these values. “We’d all be a damn sight better off if they had continued to be cautious and Scottish.
“It’s always easy to be wise with hindsight, but the position Fred Goodwin [former chief executive of RBS] and Andy Hornby [former chief executive of HBOS] reached in terms of the conduct of their banks’ affairs is nothing short of lamentable. It’s been tragic for Scotland.
“We as a company have always felt comfortable with a dollop of cash on our balance sheet.”
Robin Barr said that AG Barr, which has a market value of £245m, is today focusing most of its energies on Irn-Bru, plus Diet Irn-Bru, as consumers stick to known values in the recession. These two “core” brands saw their sales rise by 8% last year, and Barr is confident that something similar can be achieved in 2009.
He said the more esoteric and expensive brands in the market — epitomised by fruit smoothies — are struggling in the current environment, with sales off by 20% year on year.
But how easy is it to keep a brand that is more than 100 years old fresh and relevant to successive generations of youngsters?
Branding experts suggest the company has achieved this by building an iconic status for Irn-Bru through advertising.
In the mix is a sort of comedic Scottishness, grit and humour, all wrapped up in state-of-the-art commercials created by the Leith Agency.
Robin Barr said AG Barr, one-quarter of whose shares are still owned by himself and his immediate family, has been using this agency and the slogan “made in Scotland from girders” for so long, he’s forgotten when it even began.
He said that compared with Coke and Pepsi, Irn-Bru is a Johnny-come-lately in the world of soft drinks. “We didn’t get started until 1901. We’re just a youngster.”
Given this tardiness, it is impressive that Irn-Bru still outsells both of these global giants on its home turf — and indeed Scotland is the only country in Europe where Coca-Cola is not the top-selling soft drink brand.
Robin Barr adds: “It doesn’t matter if your brand is old or young — it’s about having the right marketing and advertising support behind the brand as the years roll on. As long as this resonates with the public, you will continue to have a successful brand.”
The latest Leith agency creation is Irn-Bru Musical, which some inside sources describe as “a piss-take” of the Disney film with a similar name.
“I don’t know whether they [Disney] like it or not,” said Robin Barr. “There’s no danger of them being able to take any action — it’s simply a variation on a theme.”
What about health concerns? Isn’t Robin Barr concerned that sales may suffer as consumers migrate towards drinks that are perceived to be better for them — such as water?
He is truculent on the issue. “The current attitude of the Food Standards Agency in trying to impose the nanny state on every UK resident is ludicrous and a nonsense. The whole point about the soft drinks industry that is subject to this health attack is that consumers are always given a choice… with many other product categories the choice is not available.”
He is referring to the sugary and artificially-sweetened versions of most soft drink products.
He does not believe the product category, particularly the standard products, will be hit by recession.
“We’re selling cheap treats. You don’t have to buy soft drinks to stay alive, you can remain perfectly well hydrated by turning on the tap and getting water. If you haven’t spent £1,500 on your Sony television or your £15,000 new car and don’t feel comfortable about making big purchases, you’ve got money in your pocket to treat your kids to an Irn-Bru.”
Robin Barr added that the fact his extended family controls half of the company’s equity “affords you a degree of comfort most boards of directors don’t have”.
What about that secret recipe? What happens when he steps down as a non-executive director at some stage in the next few years? Irn-Bru lovers have nothing to fear. Robin Barr said he intends to pass the secret recipe on to his daughter Julie, AG Barr’s current company secretary.
This article was published in the business section of Sunday Times Scotland on May 31st 2009