Frucor's sales stay juicy despite problems in UK

By DITA DE BONI

Sales and profits are healthy, but South Auckland-based drinks manufacturer Frucor says distribution of its star product "V" is proving something of a bugbear in some overseas markets.

At the company's first annual meeting yesterday, executives said growth in Britain had not been achieved as quickly as planned, with "V" distribution reaching only half the levels of most competitors and a quarter of the market leader, Red Bull.

This had cut international revenue by 10 per cent and had not quite been offset by the better-than-expected introduction of "V" in Ireland.

There were also distribution problems in South Africa, but these were being solved by a new distributor, the chairman, Simon Pillar, said.

In Australia, it was just a case of getting more "foot soldiers" to sell the product into smaller outlets, because the company already had the supermarket and large retail distribution channels of Spring Valley, one of Australia's largest juice manufacturers.

Frucor reported 153 per cent higher revenue of $73 million in "new-age beverages" in its year-end results, the bulk of which was sales of "V."

The company said it had also achieved growth with the Pepsi franchise it bought from Lion Nathan last year.

But its fruit juice sales lost ground to the vitamin-enhanced energy drinks.

Sales of Frucor juices, including Fresh Up and Just Juice - dipped slightly in the year to $69.2 million.

Total sales of $180.2 million rose 61 per cent.

Its post-tax earnings of $9.6 million were three times greater than previously.

Mr Pillar said there was no sign of a "plateau' in interest in energy drinks such as Red Bull and "V," even in the UK, where competition was stiff and the market sophisticated.

New Zealand was the most developed energy drink market in the world and after four years "V" still enjoyed double-digit growth.

The entry of Coke into the race meant the arrival of a "formidable" opponent, but the company would expand the segment and "V" would benefit from being ahead of the global drink giant.

Frucor would soon introduce "V" in two other overseas markets.

Mr Pillar did not say which ones, but it is believed North America is one of the company's targets.



But the promises of growth and stronger earnings do not correspond with the company's share price, which has slumped in the past two months.

Frucor listed in June with an issue price of 150c and its shares peaked at 240c during September and August.

They have since dropped by around 55c and yesterday closed at 185c, down 5c on Wednesday's close.

Mr Pillar said Frucor's management had "struggled" with the falling share price, but "no-one can tell you why sharemarkets do what theydo."

"We can't manage the business just looking at the short-term picture, reacting each time the market changes."

He refused to comment when asked if Frucor shares were now undervalued.