Vimto seeking to end sales drought

Nichols, the family-controlled group behind Vimto, is planning to return to its roots and relaunch the fruit-flavoured drink with a major marketing push.

John Nichols, the executive chairman and founder's grandson, said the company would seek to revive Vimto's waning popularity in the South of England, where few retailers stock the drink. Nichols will fund the Vimto drive with money saved from restructuring its operations, he added.

"Our main ambition is to educate more people in the South about Vimto. The brand is doing okay but there is a North-South divide. There is a huge opportunity to push the brand and bring more consumers into it," Mr Nichols said.

The Merseyside-based company, which started selling Vimto in 1908, instigated a back-to-basics approach earlier this year after three years of falling profits. In a strategic U-turn, Nichols closed two of its three manufacturing sites and outsourced the production of its soft drinks, which include Sunkist.

The cost of the restructuring plunged the company into the red in the first half of its financial year, after it took a £4m cash charge to cover redundancy payouts to 190 staff. It reported a pre-tax loss of £2.2m against a profit of £1.7m a year earlier, although underlying profits before tax were 10 per cent stronger at £1.8m.

Mr Nichols said the company hoped to save at least £2m a year from the restructuring, with most of the benefits coming through from next year. "Some of the savings being made out of outsourcing will go to the marketing of the Vimto brand". Analysts backed Nichols' plans to focus more closely on Vimto, which appeals mainly to children. Roger Jones, at WH Ireland, said: "This is the last chance this management has got."

Mr Nichols was sceptical that Vimto could attract more adult fans because "it's such a sweet product, it doesn't make a good mixer". He said sales of the drink had soared by 15 to 20 per cent in July, boosted by the hot weather, although annual sales were expected to rise by a more modest 3 to 4 per cent.

The brand sells as well overseas as in the UK, particularly in the Middle East and Africa, he added.

The company, which also owns vending, food ingredients and packaging businesses, said its results were dragged down by poor trading at its Balmoral hot beverage arm.

This knocked Nichols' shares, which fell 8p to 134.5p yesterday after recovering from a near five-year low in May. The company plans to integrate Balmoral more closely with its Cabana draught soft drinks business, Mr Nichols said.