This seems perverse given that even though frequent changes in pressure and unsettled weather are typical of the UK, we’re not prone to tornadoes, waterspouts and tropical cyclones, nor drought and firestorms. And the influence of the Atlantic ‘conveyer belt’ system ensures that although we are located further north than the northernmost part of the contiguous USA, we enjoy an average annual temperature of about 10ºC, with the summer average around 15ºC and the winter average being around 5ºC (night and day).
Yet it seems that UK consumer spending is still at the mercy of the weather gods. The licensed trade, high-street retailers and holiday companies routinely resort to a meteorological angle when assessing performance – but they don’t always arrive at the same conclusion.
Although pub chain Young & Co (YNGA) said that the “amazing weather throughout the summer of 2018 and England's World Cup success sets a high benchmark for the coming months”, travel operator Thomas Cook (TCG) maintained that warm weather at home had stopped people booking holidays abroad. It’s perhaps understandable why bosses at Young & Co might want to dampen expectations, thereby partially abrogating responsibility for any future underperformance. But the claim by Thomas Cook seems disingenuous, not because the scenario was necessarily at odds with, say, the experience of industry rival TUI AG (TUI), but because the latter company still delivered double-digit earnings growth (the Thomas Cook stance also seems to imply a degree of clairvoyance on the part of UK holidaymakers).
All this came to mind when shares in soft drink producer AG Barr (BAG) tanked following the release of a pre-close update that revealed that profits will be down by around a fifth compared with last year. The Lanarkshire-based company, maker of Scotland’s alternative national beverage Irn-Bru, pointed to “some specific brand challenges”, but it also laid the blame on “disappointing spring and early summer weather, most notably in Scotland and the north of England”. In fairness, neither locale is synonymous with beach umbrellas, bikinis or factor-50 sun lotion, so the claim needs to be taken with a pinch of salt.
That’s salt, as opposed to sugar. For even though AG Barr proactively reduced the sugar content within its brand portfolio ahead of the introduction of the government’s sugar levy, the suspicion lingers that these kinds of products are targeting a diminishing pool of consumers, as more people make the link between dietary choices and health concerns. Short of a hangover cure, who in their right mind would seek to quench their thirst with a drink containing the following ingredients?
Carbonated Water, Sugar, Acid (Citric Acid), Flavourings (Including Caffeine, Ammonium Ferric Citrate & Quinine), Sweeteners (Aspartame, Acesulfame K), Preservative (E211), Colours (Sunset Yellow FCF, Ponceau 4R)
God only knows what Acesulfame K would do to your digestive tract, but it could be that management will have to have another rethink about the products on offer. Admittedly, there is a sugar-free version of the flagship brand, although Irn-Bru also comes in other variants, including an energy drink that my cardiologist would whip out of my hands if he saw me taking a sip.
The sugar levy seems to have done the trick. Earlier this year, research commissioned by The Grocer magazine showed that in the eight months following the introduction of the levy, volume sales of diet carbonated drinks increased by 13.8 per cent to 1.7bn litres, whereas sales of conventional soft drinks fell 8.8 per cent to 824m litres.
