Fever Tree sales decline as bad weather dampens demand for tonics
- The tonic mixer reported sales of £172.9m for the six months ended June
- UK revenue fell 6% to £50.8m after the country was hit by heavy rain
Fevertree Drinks sales stagnated in the first half of 2024 as bad weather hit trade in the UK and Europe.
The tonic mixer reported sales of £172.9m for the six months to June, compared with £175.9m in the same period last year.
UK revenue fell 6 per cent to £50.8m after the country suffered heavy rain in spring and a cooler-than-average start to summer.
On ice: Fevertree Drinks sales stagnated in the first half of 2024 due to bad weather
Domestic trade continued to suffer from weaker sales of gin to on-trade outlets such as bars, pubs and restaurants, although Fevertree remains the UK’s largest mixed drinks brand by market share.
Meanwhile, the company’s European revenues fell 10 percent on a constant currency basis to £60.3 million, with the impact of the bad weather compounded by the timing of some deliveries and lower consumer confidence.
By comparison, sales in the US grew by the same percentage, driven by the growing popularity of the 150ml can among retail customers and new contracts with companies such as Hilton and Marriott Hotels.
Fevertree Drinks Shares fell 9.9 percent to £7.77 after the trading update, taking losses over the past 12 months to around 40 percent.
But while revenues did not grow, the company did enjoy rising profitability, with adjusted pre-tax profits rising 79 per cent to £18.2m and pre-tax profits rising more than ninefold, from £1.4m to £13.2m.
Over the past two years, Fever-Tree’s profits have suffered from higher shipping costs and higher energy prices, which have made glass bottles more expensive to produce.
In response, the company raised prices in key markets, re-tendered for glass bottle supplies in the UK and Europe, and signed contracts for transatlantic freight rates.
Tim Warrillow, CEO and co-founder of Fever-Tree, said the company “performed well despite the difficult market conditions”.
He added that despite recent problems in the UK and Europe, ‘there has been a strong improvement in these regions as summer has arrived late.’
The group therefore expects that turnover will increase by approximately 7 to 10 percent in the second half of 2024, which will lead to turnover growth of approximately 4 to 5 percent for the whole year.
Founded in 2004 by Warrillow and Charles Rolls, Fever-Tree is the world’s largest supplier of premium carbonated mixers, sold in at least 75 countries.
While the company has traditionally sold tonic water, non-tonic products now account for about 40 percent of the company’s revenue, driven by high demand for ginger beer and cocktail mixers like the Margarita and Bloody Mary.
Russ Mould, investment director at AJ Bell, said: ‘The company’s strategy to move outside the tonic categories is paying off as Americans don’t have a huge appetite for gin.
‘More broadly, Fevertree is expanding its soft drinks range to meet the lower alcohol consumption among young people.’
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