SOFT Drinks group AG Barr has hailed the success of its latest sugar-free offering, Irn-Bru Xtra, as it reported an eight per cent lift in first half sales.

The Cumbernauld-based group, which is preparing for next April’s sugar tax implementation, said revenue for the 26 weeks ended 29 July is expected to be £136m, up from £125.6m in the corresponding period last year.

The increase in sales is ahead of the soft drinks market overall, which grew 3.5 per cent in value from January 29 to June 18, according to IRI market data.

Chief executive Roger White said the group began the financial year with momentum from its core brands, supported by the successful launches of Irn-Bru Xtra and Rubicon Spring.

“That momentum has continued into the first half,” he said.

Mr White also said a “reasonable period of weather” in the south had helped growth.

“In Scotland it hasn’t been an amazing summer, but overall the market has had a bit of help from the weather,” he said.

A slightly later than anticipated phasing of price increases and generally higher operating costs, including the effect of weaker sterling on input costs, had a moderate impact on margins during the period.

Barr has taken cost out the business, including £3m a year following 100 jobs being cut last year. When asked if there was further room for cost cutting, Mr White said:“We had a fairly big structured overhead reduction programme last year. I don’t see that sort of programme in the short-term being appropriate given the steps we took last year, but certainly we’re still looking for efficiencies.”

The group has not published details on how much it has invested in its reformulation project ahead of the controversial sugar tax, but Mr White said it was: “obviously a big part of our programme this year”.

The standard version of the group’s flagship Irn-Bru brand contains 10.3 grammes of sugar per 100ml and would be subject to the higher rate of what is officially called the soft drinks industry levy.

This higher rate is 24p per litre. For drinks with between five and eight grams of sugar per 100ml, the levy is 8p per litre.

Barr has committed to reduce the level of sugar in Irn-Bru to five grammes per 100ml, in line with the company’s target of having 90 per cent of products below the threshold for the levy. Mr White said: “what drives our business is consumers, not regulators.”

He added: “the moves that we are making within our portfolio are fundamentally there to give consumers what they are telling us they want. There is obviously the regulatory change coming up which we’re very cognisant of, but it’s a consumer change rather than anything else.

“What consumers have told us is that they love our drinks but they’d like to consume a bit less sugar,” he said. “I remain unconvinced [the levy] will change the health of the nation.”

When asked if the changes to formulation and launch of Irn-Bru Xtra would lead to a reduction in sales of standard Irn-Bru, Mr White said: “Our expectation is that the Irn-Bru brand in total will consistently grow as we move forward and the mix within that, whether it is sugar-free, Xtra or standard, will change according to consumer consumption. I wouldn’t like to put an absolute figure on which ones are going to be successful in absolute terms in the short or medium term, but we do think the brand is in a good place.”

Mr White said there was a pipeline in innovation at the company, while it was also continuing to push distribution of its recently launched products. He also said the company remained acquisitive. “We’ve got a strong balance sheet, we’ve got an appetite to grow and develop the business and it’s finding the right opportunities and crystallising those from a practical point of view.”

Mr White said a long-term ambition of the group was to grow the proportion of its international business. “Our expectation is that that it will grow at a disproportionate rate to our domestic business,” he said.