EUROPE: Britvic can find franchise success in Spain - analyst

Britvic's expanding Fruit Shoot franchise model may next hit Spain, where it can benefit from the country's recovering economy, an analyst has said.

Wayne Brown, analyst at Canaccord Genuity, said Britvic is “testing the waters” with moves to distribute Fruit Shoot in Spain, announced today (23 January). This could lead to a franchise system similar to Britvic's US operations, where juice concentrate is sold to bottlers, he told just-drinks.

“If Fruit Shoot can get adequate appetite in Spain, then that could move to a franchise model in time,” Brown said, adding that Fruit Shoot has “universal appeal”.

“Despite the backdrop in Spain, there are some strong signs of a decent economy there,” he said. “If they can ride the back of that it would be a good fill-up for them."

Brown's comments came after Britvic, which is in the process of merging with AG Barr, reported among its Q1 results today that it is upping its franchise footprint in the US from nine to 30 states.

Brown said the expansion will not affect Britvic's results in the short term, but will help build a lucrative global platform. “Franchising in the US is a high-margin business, he said. “If you build your distribution over a period of time you can build a very strong model.”

Brown said today's results, which saw group sales increase by 4.8%, were "definitely a step in the right direction". But he warned: "I think it'll be a choppy ride throughout the year.”

Fruit Shoot was involved in a costly recall last year after its caps were found to be a potential choking hazard.