Cheers to that! Fevertree optimistic about prospects as customers absorb price hikes to enjoy lighter summer drinks
- Upmarket tonic maker Fevertree said it had a “great start” to the year
- The group announced plans to raise prices earlier this year
Fevertree Drinks today reaffirmed its full-year outlook after a ‘good start’ to the year.
In an update ahead of its annual meeting, the maker of the posh tonic said trading was in line with expectations in its FY22 results.
In the UK, the company recorded its highest-ever value share in the on-trade segment during a trading period in the first quarter, about 6 percent higher than its share in the first quarter of 2020.
Cheers: Fevertree Drinks today backed up its full-year expectations after a “great start” to the year
Fevertree said it expects its off-trade sales to gain momentum over the course of the year and is trading in line with expectations in the UK.
It expects total revenue for the year to be in the range of £390m to £405m.
The company’s US business enjoyed strong stardom this year in both on-premises and retail, with good value and volume growth across all categories, and particularly strong growth in flavored sparkling and soft drinks.
Fevertree said it continued to gain value share in Europe in the premium retail mixer category, with encouraging growth in Italy and France. It said customers in this region enjoyed the group’s “lighter summer drinks.”
In the Rest of the World, the group continues to make good sales and operational progress in all regions.
“We are confident that the brand will continue to deliver strong sales growth as we enter our key summer trading period and so we reiterate our sales guidance as set out in March at £390m to £405m,” it said.
The company added: “While inflationary cost pressures remain elevated, the group remains focused on delivering initiatives to reduce these costs and expects to drive margin improvements as we progress through the year, meaning we are on track to deliver EBITDA in line with our £36m to £42m guidance range for 2023.”
Earlier this year, Fevertree revealed plans to increase the price of its products due to high inflationary pressures and production costs.
Today, the group also announced a board change, with Camelot co-chief executive Clare Swindell joining the board. Coline McConville will step down.
Fevertree Shares were down today, falling 0.84 percent or 12.00 p to 1,422.00 p in late morning trading, after falling more than 9 percent in the past year.
Analysts from Liberum said: “Encouraging signs include strong performance in the UK on-trade with value share in 1Q’23 up 6 points from 1Q’20, and a strong start in both on-trade and on-trade in the UK. USA.
“Cost pressures, particularly in glass, will remain high for 2023, but should ease from 2024, with self-help initiatives such as local manufacturing in the US.
“It remains to be seen how low glass and logistics costs will eventually get, which remains key to the pace of margin recovery, but we see a return to historic levels of high 20 percent/low 30 percent EBITDA margin as unlikely .’
Liberum raised its price target on Fevertree from 1,000 pence to 1,500 pence.