Nichols, the UK-based soft-drinks business behind the Vimto brand, today (31 July) reported rising first-half revenue and underlying profits, even as the cost of investment in ERP weighed a touch on reported earnings.
For 2025 as a whole, the company said it still expects its closely-watched adjusted pre-tax profits to be line with the City’s expectations, with projections they will hit £33.5m ($44.3m) this year, up from £31.4m in 2024.
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After the numbers were published, Just Drinks discussed Nichols’ latest figures, its performance in the UK and its core overseas markets of the Middle East and Africa with CEO Andrew Milne.
Dean Best (DB): The top-line growth many food and drinks companies have achieved in recent quarters has been boosted by pricing but Nichols saw volume growth from its UK Packaged division – its largest by sales – in the first half, which must have been satisfying.
Andrew Milne (AM): Absolutely. I think what’s encouraging is in our core business, so some of our mainstay products, we’ve grown the business through new distribution wins across our key customers, particularly in our squash business and then also supplemented with innovation. We’ve launched a new sub-brand in squash called Wonderfuel, some double-concentrate squash SKUs across two flavours with a number of customers and then, on our 500ml energy proposition, this year we’ve launched a price-marked pack, which means it’s opened up more opportunities in the independent retail trade that are serviced via wholesalers. It’s pleasing and it’s a combination.
DB: There appears to have been quite deep promotions on Vimto SKUs in some UK multiples in recent quarters. Has Nichols stepped up investment recently?
AM: Yes, we have in the first half. We’ve been doing some more promotions. Our strategy is absolutely to accelerate our Packaged business, both in the UK and internationally. In the first half, we wanted to make sure we drove our market share, so we’ve been doing different types of promotions and some deeper, some more frequent, across a range of customers.
DB: Do you expect that level of investment to continue during the second half? Is it a structural step-up in investment, or more tactical?
AM: I think it will be a similar programme in the second half. It’s two-fold really. It’s both promotional investment but it’s also in broader marketing investment. In July, August and September, we kick off our big above-the-line and below-the-line marketing campaign called Love the taste or your money back. This is year two of that campaign and we’ve extended the reach this year; the promotion didn’t run on our energy products last year. It will this year. We’ve also got a heavyweight marketing campaign on our Wonderfuel proposition and that’s going to be centred around back to school because that product is more targeted to younger consumers at the breakfast occasion.
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DB: The UK energy category is growing but becoming increasingly competitive. How do you see Vimto Energy playing in that?
AM: I’ve been in soft drinks now 25 years, so I remember when the energy category started and I just think it’s incredible at the moment. It’s now the second largest sub-category [in the UK] after cola. If it keeps going in a few years, I think it’ll overtake it. There are three or four big, dominant players who were there from the start – we all know who they are – but what we’ve seen over the last five to ten years is that real evolvement of more natural energy propositions, different pack sizes, fortification coming in.
If energy keeps going in a few years, I think it’ll overtake cola
What we’ve tried to do is find a point difference. We’ve got the great taste of flavour of Vimto coming through, we’ve got vitamins in the products to fortify it and we also have two variants – an original Vimto and a no-added sugar. Both are below the sugar levies and the HFSS guidelines in the UK as well. We’re trying to give ourselves a point of difference there.
DB: Switching to Nichols’ International Packaged division, H1 sales declined. It sounds as though that was expected.
AM: We are really pleased in the first half we’ve grown our Africa business by 17% and that is as we’ve switched from importing products into Africa to moving our production closer to the point of consumption. We’ve moved to Senegal, so that means our speed to market is much quicker and our distributors over there are not having all that cash tied up in tariffs, so we’re able to buy more product to sell.
In the Middle East, obviously Ramadan changes and moves forward ten days, if you will, which meant our partner bought more of the product last year. It’s a phasing issue. Half one this year versus half one last year was down, whereas in half two, we will do similar business to what we did last year. What you have to do with our Middle East business is look at the business over a two-year cycle because of that shift of phasing. If you look at our business over ‘24 and ‘25 then we will be in that kind of 2% or 3% growth [range], which is what we expect in the Middle East, as it’s a more mature market. Africa is where we see the acceleration over the next few years.
DB: I know you probably can’t get into specific numbers but does Nichols expect the Middle East business to return to growth in 2026? It sounds as though you may do if you’re looking at it over a two-year cycle.
AM: Yes, I think in ‘26 we are broadly predicting that we’ll be in probably two to three percentage [points] growth.
DB: What’s the status of the changes to your supply-chain model in Africa?
AM: We have 11 markets in west Africa where we have historically imported red cans that are produced in Spain. Those markets stretch from places like Senegal, Mauritania right through to places like Niger and Sierra Leone. We don’t do our own manufacturing but with a partner we’re working closely with – Millennium – they’ve built a factory in Senegal and they’re going to service six of the markets for us. We’re hoping to have all of those complete by the end of this year, early next year.
They’re currently building another factory in the Ivory Coast, which is progressing very well and, when that is up and running, which we expect to be early next year, then there’ll be five more markets that will be serviced out of the Ivory Coast during ‘26 and probably the first half of ‘27.
DB: Where are Nichols’ largest markets in Africa?
AM: Our biggest markets are Senegal, Mali and Cameroon, very much in the heartland of that west African territory.
DB: Looking over the next two to three years, do you expect those to continue to be your strongest markets in Africa?
AM: I do. They’ve been established for a number of years but we still have headroom there. This switch to putting our production close to the point of consumption, supported by marketing investment we’re making in the region is driving distribution and execution in the marketplace and then driving the visibility. Longer term, we would like to develop our business in east Africa and southern Africa but that’s more of a long-term play.
DB: Are there still plans to enter South Africa by the end of this year?
AM: I don’t think it’ll be the end of this year. We are talking to a number of partners. I think it will be over the next couple of years. The absolute key to being successful in a country is the right partner. My thoughts would always be I would rather wait to get the right partner for the long term than do a short-term partnership that doesn’t pay back.
DB: What consumer trends are driving Nichols’ business in Africa? It’s hard to be general about a group of a dozen markets but are there any you could pick out?
AM: Well, I think it’s a very young population over in Africa but actually they’re very digitally-savvy over there. We see when we’re over there, people will literally carry two or three phones. Social media and digital marketing is quite advanced. From a marketing point of view, what consumers want, that’s the way we reach them. Also, they want brands that are well known. They want brands that do marketing on the ground as well. It’s those bigger, well-known brands that are more western brands that at times they’re really focused on and see as very aspirational.
DB: Over the medium term, will your international strategy largely focus on the Middle East and Africa, or will you start to try to nurture some other markets outside of those two regions?
AM: That’s a great question. We’re very thoughtful about where we go; to enter a new country where your brand’s not known takes a lot of investment to build the brand and can be risky. However, we’ve spent two or three years researching and the country we’ve just launched in is Malaysia.
If we can crack Malaysia, that gives us a gateway then to other parts of South East Asia
Now, Malaysia is about 35 million people. It’s a Muslim country. Really importantly, they understand red fruits and there’s a squash and cordial market there. In some countries like the USA, there isn’t a squash or cordial category. If we can crack Malaysia, that gives us a gateway then to other parts of South East Asia. We launched our one-litre squash proposition in Malaysia at the back end of last year. We’ve got good distribution. We launched exclusively with the biggest retailer in Malaysia called 99 Speedmart. They’ve got about 2,500 stores. We’ve now got distribution in about 3,000 stores and our marketing campaign is kicking off.
We’re actually going on TV, which is quite a big move for us. Now, TV in Malaysia was a lot cheaper than the UK but it’s still a big move for us that we’re going on TV in the first year of an NPD launch. It hopefully shows how serious we are about trying to make other markets work. There’ll always probably be a three-to-five year play to establish yourself there.
DB: On the UK, over the medium term, what do you expect to be the factors that grow Nichols’ domestic Packaged business? Are you eyeing new categories in the next couple of years? Would you look at more licensing deals? At M&A?
AM: A combination. First and foremost, we have to make sure we ruthlessly focus on our core business. It’s dangerous to take your eye off driving your core business. We are focused on innovation and our innovation will only focus off the Vimto brand, so things like Vimto Energy. We are doing more in licensing. We’ve signed up a couple of partnerships where we’ve launched in categories we call ‘beyond the bottle’. We’ve launched tablets, we’ve launched gels, so a brand licensing partnership that’s taken us into more healthy spaces for giving good visibility for the brand.
Our other focus, which we have talked about before publicly, is we have a healthy balance sheet and we are interested in M&A. That would be very much focused in UK Packaged and looking at spaces where Vimto can’t play but we think are going to grow over the long term. We are doing work there to try and find the right type of businesses that we can acquire, which will expand our portfolio in the UK, which gives us great strength with our customers.
DB: In areas like health and wellness?
AM: Health and wellness, fortification, absolutely. And premium areas where you know you can make a margin.
