AG Barr has announced that trading across both its business units – Barr Soft Drinks and Funkin – has been strong for the first half of the trading year.

The firm’s trading update said the performance has been “driven by a combination of brand-led initiatives and market factors”, resulting in a short-term boost to operating margin that is not expected to be replicated in the second half.

However, it said the full year operating margin is still anticipated to be slightly ahead of the prior full year.

The company says its soft drinks unit has benefited from recovery in “on-the-go” consumption in the last six months, while “at home” sales have remained strong, as has been the case throughout the Covid-19 pandemic.

Recent new product launches are performing well, it reports, with positive consumer feedback and “encouraging” customer listings.

The energy sub-category in particular is continuing to outperform the total soft drinks market, and AG Barr says a focus on innovation in this area, primarily its Rubicon RAW Energy energy drink, has made “a very positive start”.

For Funkin, the firm’s cocktail range, the company reports a “strong H1 performance” in the on-trade, driven by customer restocking and an increase in cocktail rate of sale. While the pandemic has been challenging for the hospitality sector, it says it is pleased to see positive momentum as consumers return to venues.

The Funkin range capitalised on the increase in demand for cocktails at home during the various lockdown periods, resulting in the range becoming the UK’s number one ready-to-drink cocktail brand.

“At-home” cocktail sales have continued to grow across the first half of the year, supported by a strong rate of sale and an increasing level of brand distribution. AG Barr says it will accelerate its investment in the second half of the trading year in a bid to further develop Funkin as a consumer brand.

In terms of operation, the firm says its operational resilience has been “excellent” across the first half of the year.

However, recent weeks have seen increased challenges with the UK road haulage fleet, which has impacted customer deliveries and inbound materials.

The risks associated with the wider labour pool and the pandemic response are areas that it says it will continue to monitor closely.

The report also stated that the “positive first half performance reflects the underlying strength of the business and the encouraging performance of recent innovation launches as well as a number of non-recurring factors, in particular customer restocking, deferred overheads and marketing investment phasing choices”.

Roger White, chief executive, said: “We are pleased with the performance of the business in the year so far. There is good momentum behind our core brands and we have re-entered the growing big can energy category with our Rubicon RAW Energy range.

“We plan to increase our brand investment in the second half of the year, building on our progress to date.

“While uncertainty remains, we are confident in delivering our plans across the balance of the year and meeting our recently revised full year profit expectations.”