Britvic counts the £25m cost of Fruit Shoot drink recall

Britvic recalled all bottles of the children’s drink and spin-off Fruit Shoot Hydro featuring the new design earlier this month as a precautionary measure.

Britvic yesterday admitted it failed to speedily resolve the problem and it will take six weeks to resume production with a new type of cap, while it will take up to six months to fully satisfy previous levels of demand.

As a result, it predicts the episode will wipe between £15m and £25m from profits over this financial year and next, in a dramatic increase of its previous estimate of up to £5m in the year to October.

The problems struck after Britvic introduced an easy to open sports cap but found a small number may become fully or partially detached.

It has decided to use an alternative sports cap, which is already in use on the market, in the short term.

Britvic’s website claims Fruit Shoot is the number one selling “children’s fast-moving consumer goods brand”, worth £96m.

Fruit Shoot Hydro, a fruit-flavoured mineral water that is free of sugar and artificial colours and flavourings aimed at children aimed seven to 11, was launched last year in a £2.5m marketing campaign.

The recall does not apply to the Fruit Shoot My-5 and other Robinsons products were not affected.

The Chelmsford-based company, which employs 3,500 staff worldwide, said its poor run of trading continued in recent weeks as weak consumer sentiment and the dire weather hits sales.

The group, which also makes Tango and J20 and owns the licence to make Pepsi and 7Up, warned that its results for the current financial year would be at the bottom end of City expectations, even before the impact of Fruit Shoot recall.

Wayne Brown, an analyst at Canaccord Genuity, cut his forecast for underlying earnings for the current year to £150.9m from £182m. That would represent a 19 per cent fall on the previous year.

He also thinks the firm will reduce dividend payments to shareholders.

“The news is not going to be beneficial to Britvic management’s credibility and has escalated considerably compared to just eight days ago,” Numis Securities’ analyst Charles Pick said in a note.

“It’s certainly a lot worse than what we were initially led to believe,” said Panmure Gordon analyst Damian McNeela. The brokerage downgraded the stock to ‘sell’ from ‘hold’ and cut its price target on it to 250p from 350p.

“The bigger fear is the extent to which relationships with the retailers will be damaged from this... and how quickly they’ll be able to retake market share.”

The company said: “We will start to re-supply customers in six weeks, with a gradual increase to enable us to meet historic levels of demand within six months.”

The UK accounts for about 79 per cent of Britvic’s sales.

Shares in the company, which also sells its drinks in Ireland and France, were down nearly 16 per cent at one stage.