Lockdowns 'Came At An Opportune Time' For Fever-Tree In US, Says Analyst

By Steve Wynne-Jones
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Lockdowns 'Came At An Opportune Time' For Fever-Tree In US, Says Analyst

Coronavirus-related lockdown measures "came at an opportune time" for premium mixers brand Fever-Tree, as it offered the company a chance to drive consumer trial in the US, a leading analyst has said.

Wayne Brown of Liberum was commenting following the publication of an interim results presentation by the company, in which it said that the 'diversified channel mix' in each of its markets has 'enabled Fever-Tree to capture significant increases in at-home consumption and drive very strong Off-Trade performance and value share gains across multiple territories'.

Mixed Performance

While the company saw a 11% decline in revenue overall in the first half of its financial year, and a 20% decline in the UK, its US business rose by 39%, offering opportunities to set the agenda in what is a relatively untapped market for premium mixers.

The company has issued guidance saying that it expects full-year revenue to come in between 20% and 22% lower this year in the UK, with the US market up 20% to 25%, Europe down 6% to 10% and the Rest of World up 3% to 6%.

"We believe Fever-Tree has been appropriately conservative in its FY’20E guidance given the uncertainty in On-Trade, despite making strong operational gains in 1H’20," Liberum's Brown said in a briefing note. "The Off-Trade success during the lockdowns is a reflection of how well the brand resonates with consumers.


"Particularly pleasing is the 39% yoy growth in the US in 1H’20. The lockdowns have come at an opportune time for Fever-Tree giving US customers much needed consumer trial and awareness.

"Gross margin tailwinds such as US production will be realised from Q4’20, which could be followed by more local new product development and initiatives that will drive greater awareness, and distribution."

Premium Soda

Fever-Tree also recently announced a move into premium sodas in the UK, 'to cater to a broad range of mixing occasions', as well as rolling out a Sparkling Pink Grapefruit variety in the US, for mixing with tequila.

Brown added that these extensions "only serve to further support the long-term trend towards more premium spirits and that long drinks consumption remains a global trend".


The company said that while on-trade sales were down 61% in the UK in the first half of the year, off-trade sales rose by 24%, as consumers 'looked for everyday affordable treats'.

In addition, the brand's strong standing in the marketplace also resonated with shoppers.

'Fever-Tree’s Off-Trade sales have performed consistently strongly since the start of COVID as consumers gravitate to brands they know, like and trust,' it said.

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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