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Sales rise in 2019 for Nichols but new Middle East soft drinks tax threatens 2020

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An expected low-single-digit lift in sales this year will serve as a precursor to a tough 2020, Nichols has warned.

Nichols has expressed concern about how 2020 will treat its flagship Vimto brand

Nichols has expressed concern about how 2020 will treat its flagship Vimto brand

In a trading update for 2019, announced earlier today, the UK-headquartered soft drinks group says it expects full-year sales to come in around 4% higher than the previous year. The 12-month performance would represent a marked slowing of sales growth in the second half, however, after the company reported a 10.2% top-line jump in the first six months.

Nichols flagship Vimto brand has enjoyed a strong year, with increased share in the company's domestic market being complemented by international success. Vimto, which is especially popular with consumers in the Middle East over the Ramadan period, boasted one of its most successful campaigns in the region during the Islamic holy month this year.

Looking to next year, however, the recent implementation of a 50% excise tax on non-carbonated sweetened drinks in Saudi Arabia and the United Arab Emirates has raised cause for concern.

"Unlike the UK soft drinks levy, product reformulation is not an option," Nichols said today. "Whilst it is difficult to estimate the future effect on sales volumes of the Vimto brand in these regions, at this point in time, we have to assume the increased retail price will have a negative impact from 2020."

The impact of the tax rise will be better understood after next year's Ramadan, the company added. "Whilst there is a broad range of possible outcomes, we believe the impact of the tax could be material to the group and may result in profit before tax for 2020 being materially below current expectations," Nichols concluded.

Earlier this year, the company lined up David Rattigan as its next CFO, with incumbent Tim Croston stepping down in February.

The soft drinks category in 2019 - just-drinks' Review of the Year


Sectors: Company results, Soft drinks, Water

Companies: Nichols

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