Bottle return scheme hits sales volumes at Ballygowan owner Britvic

The introduction of the deposit return scheme for drinks containers in February led to a “modest” decline in sales volumes at the Irish arm of Britvic, the UK-listed drinks group said on Wednesday, despite an otherwise “robust” performance at the Ballygowan owner in the first six months of its financial year.

The Pepsi and 7U Distributor said return rates for the scheme “are ahead of where they were for launches in similar-sized European countries”.

Its introduction contributed to a slight 1.3 per cent decline in sales volumes in the six months to the end of March to 187.5 million litres compared with 190 million litres in the same period last year, Britvic revealed in its interim results on Wednesday.

Set up costs associated with the scheme totalled £1.2 million (€1.4m) over the period, it said.

“As expected, the launch [of the deposit return scheme] has had a small impact on volumes, though it is still too early to evaluate the full impact and in other markets this has normalised over time,” the group said.

Despite the small decline in sales volumes, the MiWadi owner’s Irish revenues jumped from £74 million last year to £79 million in the first six months of its current financial year, with pricing and product mixing offsetting the drop in volume.

Overall, the group, which also produces and distributes Lipton Ice Tea in the UK and Ireland, delivered revenue growth of 11.2 per cent over the period to £880.3 million with adjusted earnings before deductions climbing 11.7 per cent to £100.4 million.

Profits after tax at Britvic also jumped by more than 10 per cent to £59.9 million, it said.

Group chief executive Simon Litherland expressed delight at Britvic’s “excellent” first half performance.

“As expected, our market-leading growth comes from the combination of another strong performance from our scale family favourite brands, coupled with accelerated growth in Brazil and across multiple new growth spaces, such as London Essence, Aqua Libra and Plenish. We have increased the investment behind our brands by over 38 per cent in the period,” he said.

The group also announced a £75 million share buyback scheme, its third in recent years, on foot of strong earnings, free cash flow generation and positive outlook.

Mr Litherland said he is confident the group will deliver “a strong full-year performance”.