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Irn Bru and Tizer drinks maker AG Barr said its business should ride out any downturn in the economy after seeing a 27% rise in profit.

The company made £20.8 million in the year to 26 January 2008. Taking out one-off items, pre-tax profit nudged ahead to £21.3 million from £19.1 million a year earlier.

AG Barr currently benefits from cheaper tax rates of 19%, compared to 30% standard corporation tax. This is a result of selling properties following a restructuring programme.

The soft drinks market remains a competitive industry, which has prompted AG Barr to wide its product range. This includes entering the sports drink market, which it has down through the acquisition of Taut's drinks business. It paid a nominal sum of £1 for the loss-making operation, but believes it can make the business break even by early 2009.

The past year has seen the soft drinks market grew by 2% in value but decline by 2% in volume, according to research from Neilsen.

AG Barr's biggest brand, Irn Bru, continues to gain market share, having see annual sales growth of 3% in the trading period. The company claims that Irn-Bru's brand is more valuable than Lilt, Sprite and Tango brands combined.

Tizer has been relaunched to include real fruit juice and no artificial colours, flavours or sweeteners. Sales fell 4% during the past year, which AG Barr blamed on a wet summer.

The company is using the St Clement's brand to develop new juice and smoothie products. It has launched new versions of the Rockstar energy drink. Its schools drinks range has also been redesigned.

The loss of can products contract with Marks & Spencer will result in a £1.7 million reduction in sale, but it hopes to offset this negative factor with a new deal with the supermarket. It is now supplying traditional carbonate drinks in glass bottles for M&S, aimed at older persons.

Chief executive Roger White said: 'The business, despite mixed weather and a competitive soft drinks market, performed well over the last financial year. The soft drinks market remains a challenging but rewarding sector although it is changing and its complexities are increasing - it is not as simple as carbonates and stills or full sugar and diet - consumers are becoming more selective, media is fragmenting, demographic profiles are changing.

'We need to take account of all of this in moving the business forward but we must also remember not to lose sight of the basic fundamentals - taste, brand differentiation and product availability.'

Shares in AG Barr jumped 3.5% to £11.95 in early trading on Tuesday.

'It was a tough year for soft drink companies in 2007, with increased competition and a dreadful summer period,' said Investec analyst Nicola Mullard. 'However, Barr was still able to show growth - it reported 4.6% revenue growth overall, with 2.7% on a like for like basis (excluding Strathmore drinks). Underlying this, the volume picture was broadly flat.

'Whilst predicting the UK summer weather is a fool's game, we can hope that it will be no worse than last year,' added Mullard. 'New additions to the portfolio should also assist in driving sales and price inflation could be a factor as higher glass and aluminium prices are passed through.'