Premium mixers firm Fever-Tree has announced the acquisition of Global Drinks Partnership (GDP), its sales agent in Germany, which it said represents a 'notable opportunity' for the business.
Fever-Tree and GDP have worked alongside each other for the past seven years, and the acquisition enables the drinks firm to 'accelerate the strength and depth of its presence in Germany much faster than could have been achieved by building the same capabilities from scratch', it said in a statement.
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"The completion of the GDP acquisition is an important step as we execute our growth plans in Germany, providing us with an ideal platform to take advantage of the opportunity within the German market and accelerate our growth," commented Tim Warrilow, Fever-Tree chief executive.
"I have worked closely with Morgan Zuill and his team at GDP since we first entered the German market and have been impressed with their approach and expertise in growing the Fever-Tree brand, so I am delighted that they are joining the Fever-Tree team."
GDP also distributes a portfolio of premium beer and spirits brands, which generated €10 million in sales last year, with Fever-Tree saying that this portfolio approach is 'highly suited' to the size and outlet fragmentation of the German market.
The total consideration for the acquisition comprises €2.6 million in cash, plus a €5 million consolidation of historic balances owed to Fever-Tree by GDP at completion. Fever-Tree has also agreed to refund the repayment of €1.9 million in shareholder and other third-party loans owed by GDP.
Elsewhere, Fever-Tree said that it made a 'solid start to the year' with group trading in the first two months of its financial year in line with expectations.
The group's off-trade sales increased 34% in the 12 weeks to 14 June in its core UK market, while in the US, off-trade sales were up 89% year-on-year in the 12 weeks to 13 June.
In continental Europe, the group said that off-trade sales have been 'robust' across the region, although in Southern Europe, where the business is more reliant on the on-trade, some de-stocking has taken place.
'However, we are confident that our prevailing brand strength will support our growth in the region as countries continue to emerge from lockdown,' the group said.
Looking ahead to the remainder of the financial year, the group said that while the on-trade is reopening across many regions, the group still faces ongoing short-term uncertainty, due to 'cautious consumers, social distancing and therefore lower capacities'.
It said that it remains committed to its planned investments, particularly in marketing, and intends to maintain its budgeted £60 million in operational costs for the full year, as it seeks to deliver long-term sustainable growth.
Commenting on the group's trading update, analyst Nico von Stackelberg of Liberum said, "Fever-Tree’s trading update this morning was light on detail and confirmed our views on the gross margin headwinds, which the market already knew. The country mix and channel shift from the on-trade to off-trade will cause a gross margin headwind this year, which we estimate to be 400 bps. The off-trade in the USA continues to trade well now at +86% for 12 weeks to 13 June, and +34% in the UK.
"Guidance remains pulled as it remains unclear across all the markets how life returns to normality and the rate at which the on-trade recovers, though we note the latest UK on-trade industry data is in line with our estimates."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine