Soft drinks company Fentimans is targeting growth in the US after a transformational year saw it set up a new subsidiary across the pond.
The Hexham-based firm has posted accounts for 2019, which detail how it has reset its operational base in the US, moving away from a distributor model and setting up a new wholly-owned trading subsidiary.
It said the new US operation in Pittsburgh will provide Fentimans with a clear focus and strategy, giving access to both the on and off trade in the world’s largest consumer market.
The move led to exceptional restructuring costs of £5.14m during the year, ultimately impacting the firm’s bottom line for 2019, converting last year’s overall income for the year of just under £1m to a loss of £4.23m.
Fentimans, which employs 65 people, said 2019 was another year of positive growth with revenues up 2.5% to £41.4m, and an increase in export sales and UK sales, set against a backdrop of challenging conditions driven by Brexit uncertainty, poor weather over the summer months and a full year impact of the soft drinks industry levy.
Export sales were £15.9m, accounting for 38% of sales, a 1.6% increase over the previous year, while UK sales were 3.3% ahead of 2018.
It said that its top line growth helped the group achieve the small underlying operating profit, before the US exceptional item, of £9,000.
In his report accompanying the accounts, Fentimans’ founder Eldon Robson said: “Whilst this period of transition in the US resulted in significant international transition costs as we restructured our US operational model, Fentimans now has a clear focus and strategy in the US market, controlled and managed within the group. It should be noted that despite the above challenges Fentiman grew market share in the UK in 2019, recognising we outperformed our key competitors.
“Fentimans will continue to invest in both consumer awareness and customer satisfaction both in the UK and abroad. Our growth ambitions remain undiminished despite the exceptional external factors and counted in this year.
“We see potential to build our awareness and penetration both in the UK and internationally through our current portfolio as route planned future innovation.”
Fentimans said it continues to invest in new drinks, with 2019 seeing the launch of new products which led to significant penetration in the UK and European grocert retail sector. It also got national recognition, winning two awards for its Valencian Orange tonic water.
Following publication of the accounts the firm added: “While 2020 has brought its own unique challenges with the Covid pandemic, we have continued to manage cash and invest in the team to succeed in the years ahead.
“Despite the closure of hospitality for much of 2020, both in the UK and internationally, we have traded well and this has underpinned overall performance across 2020.
“Looking to the future, with the investment we have made to restructure our US operation, the business is on a solid operational and financial footing to realise and unlock significant future growth.”
