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Foreign growth lags for Frucor

By Phil Boeyen, ShareChat Business News Editor

Thursday 2nd November 2000

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Beverage company Frucor expects to achieve its forecast profit of $20 million for the current financial year despite an under-budget performance from UK sales of its V energy drink.

Frucor now sells V in several overseas markets including the UK where it launched earlier this year and has had an advertising push running there for the past three months.

MD Mark Cowsill told the company's AGM today that distribution growth of V in the UK has not been achieved as quickly as planned.

He says Nielsen results show distribution of the energy drink is around half of most competitors and only a quarter of the market leader, Red Bull. However where V is sold it has grabbed the number two brand position showing very strong customer acceptance.

"The Nielsen results are well supported by a number of individual customer sales analysis which also indicates "V" No 2 position "where sold". A multi-faceted plan to drive distribution to double its current level is in hand for Q2 and Q3."

Mr Cowsill says reports show the current distribution of V is around 20%, which leaves plenty of upside for growth. He says the additional costs associated with the distribution drive will be offset by the higher than expected margins for the product due to exchange rates.

In other overseas markets V sales for the first quarter are above budget in Ireland, where it was launched in August. In Australia the energy drink is performing to plan following its entry to the grocery market in September, and while sales in South Africa had a slow start there has been good improvement in recent weeks.

Mr Cowsill says overall the company has achieved 98% of budgeted sales in the first quarter at nearly $54 million, and the bottom line is basically on target. The figure is up 75% on the same quarter last year, but at that time the company did not have the Pepsi franchise on board.

The New Zealand market remains the most significant for Frucor, and the company says all categories here exceeded budget, with particularly strong growth in new age beverages.

However the company continues to keep its eye on overseas growth.

"We continue to pursue additional international markets with an objective of launching in two new markets before year end, 30 June 2001," says Mr Cowsill.

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