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Fevertree Drinks Expects Annual Revenue Growth Below Expectations

Published on Jan 20 2020 9:38 AM in A-Brands tagged: Trending Posts / Christmas / tonic water / Mixers / Fevertree Drinks

Fevertree Drinks Expects Annual Revenue Growth Below Expectations

Premium tonic water maker Fevertree Drinks Plc said on Monday that annual revenue growth of 10% would be below its expectations, hurt by subdued Christmas trading in Britain.

"The wider retail environment in the UK experienced a challenging Christmas with the mixer category not immune from the weak consumer confidence and corresponding slowdown in spending," the company said in a statement.

Strong Performance

Fevertree, a strong competitor to Coca-Cola's Schweppes, the tonic water market leader brand in Britain, has grown rapidly as sales of high-end gin have surged the country. Its shares have chalked up a more than eleven-fold increase since the company listed in 2014.

Fevertree's market valuation to £2.3 billion (€2.69 billion) makes it the sixth-biggest company listed on London's junior market AIM.

However, Fevertree, named after the colloquial term for the cinchona tree, the bark of which produces tonic water ingredient quinine, said it expects challenges in Britain to remain in the first half of 2020, hurt by low consumer confidence.

Shares in the company were seen opening 10% lower on Monday.

Revenue Expectations

Fevertree said revenue was expected to be £260.5 million (€304.7 million) for the year ended Dec. 31, from £237.4 million (€277.7 million) a year earlier, driven by strong demands for mixers in the United States and continental Europe.

Fevertree has also branched out into a other drinks, such as Sicilian lemonade, ginger ale and Madagascan vanilla cola to expand its portfolio.

Sales in the past year were also helped by launches of a range of low-calorie mixers and limited-edition variants of its products, such as clementine tonic and cucumber tonic.

The company has also been targeting growth in the United States - largest importer of British gin - and said it would be investing further in the brand over the course of 2020, conducting a number of trials with customers.

The move is expected to result in a one-off impact on net revenue growth in 2020, Fevertree said, adding it was revising its growth forecasts for the business to low double digit for the year ahead.

Britain sends more gin around the world than it does beef or beer, with gin sales overseas worth 28% more than beer sales in 2018, the Wine and Spirit Trade Association says.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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