Castlefield Stock Story - Britvic

In this engagement case study, Castlefield's David Gorman details how soft drinks producer Britvic is embracing sustainability and addressing some of the challenges faced, while seeking to make their product range healthier for consumers.

Over the last few years, we have engaged with the management team at Britvic on several positive developments, mainly relating to its Healthier People, Healthier Planet initiative.[1]

Based in Hemel Hempstead, Britvic traces its roots back to the mid-19th century. These days, Britvic is the UK’s largest supplier of branded still soft drinks and the number two supplier of branded carbonated soft drinks and it now has more than 35 household name drinks brands selling in over 100 countries.[2],[3] We hold a position in Britvic within our CFP Castlefield Sustainable UK Opportunities Fund.

The Healthier People, Healthier Planet strategy is in keeping with our own involvement in Share Action’s Healthy Markets Initiative, which seeks to improve access to affordable and healthy food and drinks. We have spoken to Britvic on this topic both individually and as part of the collaborative engagement initiative. The company told us that they have set new health-related objectives to be achieved by 2025, including a target to have less than 30 calories per 250ml drinks serving across their entire range of brands.

We are impressed at the way Britvic has embraced sustainability while providing consumers with a wide range of soft drinks. The main sustainability priorities for the company are plastic packaging and sugar reduction, with other areas such as water use, responsible supply chains and carbon reduction also part of their thinking.[4] In packaging, the aim is to move ‘beyond plastic’ and the company is trying to increase the recycled plastic (rPET) content in its bottles. To help make this happen, Britvic provided £5m of investment support for the construction of new rPET manufacturing facilities at a plant in Yorkshire, to secure a long-term supply of UK-sourced recycled plastic.[5]

Soft drinks producers have faced several challenges in the past few years. On top of macro factors such as the pandemic and the conflict in Ukraine, there was new legislation, such as the Soft Drinks Industry Levy, or ‘Sugar Tax’, which was introduced in 2018 and which led to the reformulation of many drinks, although most Britvic products were unaffected by the rules.

Britvic believe there will always be customers who prefer full sugar drinks, but they acknowledge that obesity is on this rise in the developed world and that excessive consumption of sugary drinks contributes to the problem. In October 2022, new HFSS (High Fat, Sugar, Salt) regulations came into effect. To ensure compliance with this new legislation, Britvic told us they have reformulated their core range of Rockstar Energy drinks.[6]

Overall, Britvic appear to be on the front foot in making their product range healthier and addressing other key sustainability challenges in the industry. Crucially for us, their plans are well resourced and ambitious, and we look forward to following the company’s progress.

[1] Sustainability | Britvic plc (LSE: BVIC)
[2] https://www.beveragedaily.com/Article/2018/07/24/Britvic-fights-sugar-tax-and-CO2-challenges
[3] https://www.britvic.com/about-us/who-we-are/our-history/
[4] https://www.britvic.com/sustainability/our-approach-to-sustainability/materiality/
[5] https://www.britvic.com/sustainability/our-approach-to-sustainability/materiality/
[6] https://www.thegrocer.co.uk/soft-drinks/rockstar-energy-drink-core-range-reformulated-to-meet-hfss-regulations/664907.article 

Information is accurate as at 03.04.23. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.