Fevertree Drinks Plc - Trading Update
Fevertree Drinks plc
("Fever-Tree" or the "Group")
Fever-Tree, the world's leading supplier of premium carbonated mixers, announces a trading update ahead of the year ending 31 December 2019.
- Continued growth across all four regions
- Acceleration in key growth markets of the US and Europe in the second half
- UK On-Trade has continued to perform well despite exceptionally strong comparators in 2018
- UK Off-Trade performance has been behind expectations, reflecting the wider slowdown in consumer retail spending
- Fever-Tree retains its significant market leadership position with a 38% value share at UK Off-Trade
- RoW performance remains very encouraging
- First US bottling partner signed, production on the West Coast to commence in 2020
In the year when the Group has lapped exceptional comparators from summer 2018 and more recently seen a wider slowdown in consumer spending, the Group expects to deliver c.2% growth in its most mature market.
In the UK Off-Trade, our performance has been behind our expectations in the second half as we continued to lap very tough comparators in July and August and more recently seen a slowdown in consumer spending, as reflected in the wider retail data.
Despite these short-term headwinds, Fever-Tree remains in a very strong position in the UK Off-Trade, maintaining our leadership position with 38% value share with little impact from the increasing number of premium competitors who collectively remain at under 5% value share.
Our On-Trade business, which accounts for half of the Group's UK revenue, has continued to perform well in the second half. We have won new accounts, further strengthened our leadership position, and seen good growth across our major national on-trade accounts. Whilst our tonic range still remains the key focus, we are seeing increasing opportunities and interest from our customers and consumers in our broader range of mixers as we look ahead to 2020.
Sales have accelerated in the second half reflecting both the significant distribution expansion across our key Off-Trade accounts seen in Q2 as well as further distribution gains in our On-Trade channel where our partnership with Southern Glazers Wines & Spirits continues to perform well.
We are building an increasingly strong platform and the recent signing of a US bottling partner to commence bottling on the West Coast in 2020 is a further significant milestone.
The premium mixer category continues to experience strong growth in the United States, with Fever-Tree at the forefront of this dynamic category. As a result, we are well placed to build on our leadership position in this significant market.
Given the considerable progress seen in the second half, we now expect to deliver growth of c.34% which is ahead of our previous expectations.
As expected, the Group has seen an acceleration of growth in the second half in Europe and expects to deliver growth for the full year of c.19%. Fever-Tree has already established a market leadership position in Belgium and Denmark, with value share building in a number of other key markets. The long term opportunity in Europe is significant, growing and well diversified across countries, channels and flavours.
The premium mixed drinks trend continues to spread around the world with Fever-Tree's global market leadership position growing alongside it. As a result, we expect to deliver growth of c.35% for the full year.
Fever-Tree is driving category growth and increasing its value share across a number of markets around the world, including Australia and Canada, which are growing in significance. In addition, we continue to seed the brand across a large number of markets with considerable future potential, underpinning our optimism in the long-term opportunity for the brand across our RoW region.
Full Year Outlook
The Group remains on track to deliver growth across all its regions with the US performing ahead of our expectations in the second half.
However, given the short-term headwinds at UK Off-Trade, the Board now expects the Group to report revenue for the full year ending 31 December 2019 of between £266m-£268m, representing year-on-year growth of 12-13%, with margin expectations unchanged.
Tim Warrillow, CEO, commented:
"We continue to see growth across all four regions. Indeed, sales accelerated in our key growth markets of the US and Europe. Fever-Tree's progress in the US is particularly encouraging and the signing of a US bottling partner is a further step in building our operations in this exciting market.
Despite challenging comparators, our performance in the UK On-Trade underlines the strength of the brand and while the mixer category in the Off-Trade is moderating alongside the recent slowdown seen across the wider grocery channel, we continue to maintain our clear UK market leadership position."