Disappointing first-half results following its flotation last December have left Britvic with some questions to answer, not least from investors. But category director Andrew Marsden believes the UK soft drinks producer is well placed to capitalise on changing market trends. He discussed the company's track record and future prospects with Dean Best.

Britvic should count itself lucky that category director Andrew Marsden "thrives" on a challenge. The UK soft drinks group has found the going tough since it listed last December and serious questions have been raised about the company's future.

Just two months after flotation, Britvic shocked investors with a profit warning, and the company's share price promptly tumbled 23%. In April, Britvic posted a 9% fall in first-half profits amid a slump in carbonated soft drink (CSD) sales.

The performance puzzled industry watchers. While health concerns have hit demand for full-sugar CSDs with consumers turning to healthier alternatives, Britvic was assumed to be less vulnerable because of its strengths in juices and still drinks.

The problem for Britvic is that its revenues from CSDs remain higher than stills, while it has only made moves into faster-growing segments like bottled water in recent months. It's far too soon to be certain whether products like Britvic's Drench will work.

But Marsden believes Britvic remains well placed to capitalise on the changing trends in the soft drinks category. "We have the most balanced portfolio of soft drinks operators in the UK," Marsden tells just-drinks at Britvic's offices in Chelmsford, east of London. "And we've got a reputation for being pretty innovative - and most of our innovation sticks."

Marsden, who has been with Britvic for nine years, points to a raft of innovations and new products as proof that Britvic is tapping into the more buoyant segments in soft drinks. As well as Drench, a bottled water targeted at young adults, Britvic has relaunched its Pennine Spring mineral water, added two flavours to its Tango Clear stable and in February unveiled Robinsons Fruit Shoot H2O, a bottled water brand aimed exclusively at children.

Marsden says: "Innovation is a key driver of our business and always has been. If you looked at our record in innovation, we've had significantly more successful pieces of innovation than anybody else."

Nevertheless, the question remains whether the almost unprecedented shift in consumer tastes has caught Britvic off balance. The company's woes since flotation suggest it has been slow to adapt to changing consumer needs. Indeed, when the company posted its less than convincing first-half results in April, Britvic was quick to reassure investors that it was looking to beef up its presence in segments like stills and water.

Andrew Marsden

However, Marsden insists the company had always been aware of the move away from CSDs towards what consumers perceive as healthier beverages. "I remember three years ago, probably longer, talking about these sort of trends and talking about the key trend in carbonates being towards no-added sugar," he says. "That's why we spent a long time developing the Pepsi Max profile. We launched lemon & lime, which would be a good example of actually adding value into that particular category. We talked about the trends again two years ago when we launched Tango Clear."

So if Britvic has, as Marsden claims, the "most balanced" portfolio in the industry and has its finger on the pulse of the market, why, as sales of CSDs slump, has the City displayed a notable lack of confidence in the company? Marsden chooses not to answer the question directly.

"I can't really comment on that. We've been expanding our stills business consistently for the last 10 years; we've moved into water. The directions are pretty clear; we're expanding on broad fronts."

Marsden refuses to countenance the idea that the CSD segment has become a lost cause. "The carbonated drinks market is the largest part of the market and will continue to stay very large for the foreseeable future. I think people's consumption will change; what you'll see is a continued move towards no-sugar products. "

Consumers, Marsden contends, are "eminently sensible over a longer period of time" and will become "more rational" in their approach to carbonates. He adds: "People will take a more balanced view that bubbles are bubbles. If there are bubbles in water it's still carbon dioxide; if there are bubbles in a no-sugar soft drink, it's still carbon dioxide."

Marsden also argues that the growing desire among consumers for healthier products has given the industry a shot in the arm, and that Britvic's record in innovation will stand the company in good stead. "With something like the carbonated drinks market, you're turning an oil tanker because it is just so huge. However, the market will normalise. It may well be at a different level but on the other hand what the health and well-being debate has done is to escalate the rate of innovation so I'm very hopeful."

One sector of the market also fuelling hope at Britvic is the on-trade. Demand for soft drinks in pubs, bars and restaurants rose by 5% last year, growing faster than both beer and spirits and overtaking wine in value. Britvic is the largest supplier of soft drinks to the UK on-trade, while J20 has become the top-selling packaged drink in the sector.

Marsden says issues including next summer's smoking ban in England and Wales, longer opening hours and greater awareness of responsible drinking will serve to boost demand for soft drinks in the on-trade. As such, he argues, landlords should devote the same attention to soft drinks as to their alcoholic offerings.

He says: "Our advice to on-premise (retailers) is about delivering a quality product and serving it well. People are much more demanding now of a range of soft drinks. The days when you just have one person in a round drinking soft drinks - I'm sorry they're gone. People aren't drinking soft drinks out of sufferance these days; they're drinking soft drinks by choice."

Meanwhile, Britvic is starting to expand its presence outside the UK. The company has launched Robinsons in Denmark and Sweden and has started to advertise the Robinsons Fruit Shoot brand in the Netherlands. Marsden says that Britvic's international business is still "relatively small" but admits the company is "constantly looking" for the chance to expand abroad.

However, he insists that Britvic's drive to open new markets has not been forced by tougher market conditions at home. "It's not that. You go where the opportunities are as well. There's still plenty of growth in the UK; it's just a case of seeing opportunities where we can use our skills, capabilities and product knowledge to grow new business."

Marsden and Britvic will need those attributes as the company looks to grow in an ever-changing UK soft drinks market. Britvic is looking to refocus on the more buoyant segments of the market but with CSD sales falling, it's clear a lot needs to be done. Marsden seems ready to roll up his sleeves and get down to work.

"It's probably the most competitive environment I've ever worked in - so you either love it and thrive on it, or you can get out, because the dynamics of the market are not going to change," he says, before adding: "All the trends are heading in the right direction. Consumption is going up, the number of occasions on which soft drinks are consumed is going up. There are lot worse markets to be in than soft drinks."