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Fever-Tree UK growth rate dampened by poor weather
Despite a 13% rise in total revenue to £117.3 million in the first half of this year, mixer brand Fever-Tree has blamed poor weather for a sharp fall in UK growth, with sales rising only 5% compared to 73% in the same period in 2018.
The UK-headquartered company announced its interim results on 23 July for the six months to 30 June 2019.
CEO Tim Warrillow called the results “encouraging” and stressed that the company had made “significant distribution gains and operational progress” in the US in particular.
Fever-Tree also reported a 10% rise in gross profit to reach £60.8m with an adjusted EBITDA of £36.7 million.
In the US it registered a 31% rise in sales to £19.8 million, compared to £15.1 million recorded in the same period last year. Sales in Europe also continued to grow at a similar rate, rising 13% to reach £29m, compared to £25.8m the previous year.
In the UK however, by far its biggest market, sales rose by just 5% to £60.7m, compared to an impressive 73% increase to £58m in the first half of 2018.
Fever-Tree blamed the performance on the “poor weather in the past quarter” which particularly affected its sales in the off-trade in which it has over 62,000 distribution points.
Across the rest of the world, the company reported sales growth of 49% to reach £7.8 million, with strong results achieved in both Australia and Canada. The company has recently hired senior managers in both markets as well as bringing in a regional director for Asia.
Warrillow commented: “It has been an encouraging first half for the group with growth across all our four regions, most notably in the US. While we have not been immune to the impact of the unseasonably poor weather in the UK, we have further strengthened our market leadership position within the UK and have seen positive momentum in Europe and the rest of the world reflecting our increasingly global footprint.
“The move to long mixed drinks is gathering momentum and starting to win share from beer and wine. Our broad range of high-quality mixers, relationships with spirits companies, brand strength and our growing international distribution network provide us with confidence in the significant global opportunity that lies ahead for the group.
“Whilst we remain mindful of the tough comparators over the remainder of the summer in the UK, the board anticipates that the outcome for the full year will be in line with its expectations.”
The first half of 2019 has seen Fever-Tree launch its first bottled gin and tonics, teaming up with Thames Distillers’ Charles Maxwell.
Consisting of three expressions: Premium Indian Gin & Tonic, Refreshingly Light Gin & Tonic, and Elderflower Gin & Tonic packaged in 275ml glass bottles, the range is available in Tesco stores in the UK priced at £2.75.
Poor weather?! It often staggers me to hear the excuses megacompanies use to explain poor performance. My take is that Fever-Tree have introduced non-related products that have resulted in their cachet being compromised. The tonics were once seen as being of being top quality and individual, made from unique ingredients that were always sourced from perfect locations. This simply does not sit alongside Cola and RTDs.