Soft drinks business Britvic (BVIC) is doubling down on the vast Brazilian market, shares in the branded beverages giant frothing up 8p to 575p as investors applaud the proposed R$218m (£54m) acquisition of concentrates and juice business Bela Ischia.

Fruit Shoot, Tango and Robinsons brand owner Britvic reported a welcome return to like-for-like revenue growth in the year to 2 October. However, conditions in all its markets remain testing; there's pressure on input costs from the fall in sterling since the Brexit vote and proposed soft drinks taxes in Britain and Ireland from April 2018 present additional headwinds.

International expansion is a key tenet of CEO Simon Litherland's strategy; in its core markets, Britvic boasts the number one family dilutes brands with Robinsons in the UK, MiWadi in the Republic of Ireland and Teisseire in France.

GROWTH JUICE

Building on September 2015's successful takeover of Brazilian outfit ebba, which brought the Dafruta and Maguary liquid concentrate brands into the fold, Bela Ischia only expands Britvic's presence in the world's largest concentrates market, and will certainly give the growth story some much-needed juice.

Bela Ischia grew sales by double digits to around R$160m (£39.6m) in the past year and generated EBITDA of circa R$18.5m, reflecting a welcome combination of strong volume growth and price increases.

TASTY TRANSACTION

Litherland says the deal strengthens Britvic's brand portfolio and broadens its footprint in the large and growing Brazilian soft drinks market. Furthermore, as today's announcement explains:

'The juice category in Brazil is made up of ready to drink (RTD) juice, liquid concentrates, and powder concentrates; the performance of all three is closely related. Bela Ischia, like ebba, competes in liquid concentrates and RTD juice. The consolidation of liquid concentrates and RTD juice will allow Britvic to strengthen its competitive offer, in particular against the larger powders brands.'

Britvic - JAN 17Litherland adds 'Bela Ischia operates in a category where Britvic has proven capability of generating growth, launching new products and establishing brand leadership and is an excellent complementary fit with our existing business.'

Furthermore, 'our due diligence to date has identified significant cost synergies and potential further revenue benefits arising from a broader brand portfolio and geographical presence. As a result, we are confident that this complementary acquisition should create a fantastic platform to consolidate our strategic position in Brazil and generate additional shareholder value over the coming years.'

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Issue Date: 03 Jan 2017