UK: US franchise moves could transform Britvic - analyst
Britvic is expanding distribution in the US
Britvic's efforts to franchise its Fruit Shoot brand in the US could boost earnings by GBP43m (US$67.2m) and "fundamentally re-base the value of the company", an analyst has said.
The UK-based soft drinks firm is upping its US distribution through agreements with PepsiCo bottlers and has launched moves to produce Fruit Shoot concentrate locally, analysts Investec said in a report today (26 June). If successful, it would be “transformational for the group”, Investec said.
“Britvic stands to gain GBP43m of incremental EBIT in the medium-term,” it said.
In the past 12 months, Britvic has increased the distribution of Fruit Shoot from one to eight US states, and a recent agreement with PepsiCo bottler PepsiCo American Beverages gives Britvic the opportunity of pan-American coverage, Investec said.
Last month Britvic started producing concentrate at a franchisee in Carolina, a strategy Investec said would offer higher margin revenue if rolled-out nationally.
The analyst said Britvic's franchise model could be implemented globally if successful in the US.
The report also highlights the success of Britvic's double-concentrate products in the UK. It said that the double-concentrate market grew by 64% in 2011, on a year-on-year basis.
Investec raised the status of Britvic stock from “not rated” to “buy”.
To view Investec's report, click here.
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