Fevertree Drinks Plc - AGM Trading Update
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Fever-Tree Drinks plc
Fever-Tree, the world's leading supplier of premium carbonated mixers, announces a trading update ahead of its Annual General Meeting ("AGM"), which is being held today at 11.30am BST.
Our Off-Trade performance has remained strong in the first four months of the year. While we would expect some of this demand to switch to the On-Trade as restrictions ease further, it is clear that at-home consumption of long mixed drinks is becoming increasingly established, supported by both the retailers and spirit companies. While the pace of the On-Trade reopening is going to vary between markets, our brand strength and the relationships we have with our On-Trade partners makes us well placed to benefit from its return over the rest of the year.
The phased reopening of the On-Trade has given the hospitality industry renewed optimism for the second half of 2021. On-Trade outdoor spaces in England reopened on 12th April, where we estimate that about a third of venues were able to re-open at reduced capacities, followed by the return of indoor space three days ago on 17th May. Whilst it remains too early to predict the pace of On-Trade recovery this year, Fever-Tree's brand strength, distribution footprint and strong relationships with our customers means we are well positioned to take advantage of the return of this important channel, which represented about 50% of UK revenue pre-COVID.
Fever-Tree's Off-Trade performance has been strong since the start of the year. Sales in the 13 weeks ending 18 April were up 10.1% year-on-year, this is despite lapping the effects of stockpiling seen at the beginning of the first lockdown in March 2020. This performance was ahead of the total mixer category, indicating the strength of the brand, the success of the new flavours and formats which we launched last year, and the marketing campaigns we have continued to invest in.
The On-Trade has been re-opening on a State-by-State basis in the US, with domestic tourism slowly returning but international tourism and larger events likely to take longer to return. Despite the closure of this channel for most of 2020, Fever-Tree managed to secure a number of new national accounts, positioning us well within this channel as it continues to reopen during 2021 and beyond.
Fever-Tree's Off-Trade sales have continued to perform strongly at the start of 2021, increasing by 38.2% year-on-year in the 12 weeks to 27th March which was ahead of the wider mixer category, and includes approximately 3-4 weeks where we started to lap the large stockpiling effect from last year. Fever-Tree's strong performance not only reflects increased at-home consumption, but also the uplift in trial and repeat purchase we have secured as a result of the pricing optimisation undertaken in 2020.
We have made good progress with our innovation and marketing in the first few months of the year, successfully launching our Lime and Yuzu Soda, which has received strong initial trade interest, as well as securing our first listing on a US airline, with our Indian Tonic and Club Soda 150ml cans now available on all Delta domestic and international flights.
The On-Trade remains materially impacted in many markets, but confidence is improving as it's anticipated that restrictions will ease over the coming months. Recovery in Europe is likely to lag the UK and US, however, Fever-Tree's prevailing brand strength, increasing local presence, and the market trends towards premiumisation continue to position us very strongly as we look to the long-term opportunity ahead in the region.
The Group has continued its encouraging progress in the Off-Trade, building on the strong sales and value share gains during 2020 across our key markets. Retailers are looking to benefit from the category's value growth and the acceleration of premium serves, working with Fever-Tree and spirit brands to create promotional displays in store to drive these trends further.
Fever-Tree has continued to build on the strong progress made in the region during 2020, with our position as the clear premium mixer category leader in our two key markets, Australia and Canada, growing during the first part of 2021.
In Australia, where the On-Trade has now been open for a few months, we have seen a good recovery in suburban areas, with city centre demand taking longer to return. Fever-Tree's progress in the Off-Trade remains strong as we drive the premium mixer category in both grocery and liquor channels.
We remain committed to investing in the future opportunity for the brand across all our regions, enabled by the Group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth. The continuation of restrictions relating to the pandemic, along with increasing logistics cost pressures have affected us, alongside the whole industry for the first four months of the year. Despite these sustained impacts, we have delivered a strong sales performance and are trading in line with the Board's expectations for the full year to 31 December 2021, assuming levels of uncertainty surrounding the pandemic continue to subside.