Fevertree Plc – Year End Trading Update

Fevertree Drinks plc

(“Fever-Tree” or the “Group”)

Year End Trading Update

Fever-Tree, the world's leading supplier of premium carbonated mixers, announces its trading update for the year ended 31^st December 2019, ahead of reporting its Preliminary Results on 24^th March 2020.

Group revenue is expected to be £260.5 million representing growth of c.10%, reflecting the significant progress made during 2019 across many of our regions. However, this performance is below the Board's expectations, primarily reflecting subdued Christmas trading in the UK.

Our key growth markets delivered a strong performance with sales accelerating in the second half in the US and Europe as well as a notable end to the year in Australia and Canada.  As we enter 2020, the Group is seeing this good momentum continue across multiple regions. While the UK has performed below expectations, it has been a year when we have lapped exceptional comparators and despite that we have retained our clear category leadership position and are very well placed to return to growth as we proceed through 2020.

UK

As reported, the wider retail environment in the UK experienced a challenging Christmas with the mixer category not immune from the weak consumer confidence and corresponding slowdown in spending. Whilst Fever-Tree remained the clear market leader, the expected improvement in trading during this important period did not materialise with the macroeconomic uncertainty leading to a subdued end to the year across both the On and Off-Trade.

Whilst we expect conditions for the category to remain challenging in the first half of 2020 reflecting the current level of consumer confidence, our brand strength, operational improvements, distribution opportunities, and our innovation pipeline, alongside softer comparatives in the second half, provides us with confidence in returning to growth during the year.

US

The US delivered a particularly encouraging performance in 2019. We saw significant progress in widening and deepening our distribution footprint and the Group continued to drive category growth. We have established a very strong platform over the last 18 months which provides us with increasing confidence in the opportunity ahead.

Given this progress, we will be investing further in the brand over the course of 2020. The Group has already conducted a number of successful trials with key customers, providing both parties with compelling evidence of our ability to unlock the wider potential of this very significant market over the medium and longer term. However, implementing these initiatives is expected to result in a one-off impact on net revenue growth in 2020 and as a result, we are revising our growth forecasts for the US business to low double digit for the year ahead before returning to previously expected growth rates thereafter.

We are confident that this investment will drive significant long-term volume and profit growth in what is expected, over time, to become a very significant region. We look forward to providing further details of these initiatives at the Full Year Results in March.

Europe

While the end to the year was slightly behind expectations, sales in Europe accelerated in the second half with a good performance across our key territories. The premiumisation trend is gaining momentum in many countries across the region and Fever-Tree is outperforming its premium competitors and driving the growth of the category.

Europe remains a key region for the Group with multiple growth drivers. There remain opportunities to drive further distribution through current customers as well as gaining new accounts in both the On and Off-Trade and expectations for the year ahead remain unchanged.

ROW

The progress and momentum in territories such as Australia and Canada continues to be exciting, with our outperformance against the mainstream incumbent in both markets especially notable. We are continuing to explore opportunities to invest for further growth in these markets and expectations for the year ahead remain unchanged.

Financials

Despite the softer trading than expected in the final months of the year, we have continued to invest behind the brand for the longer term, most notably in our growth regions. As a result, margins have ended the year behind our expectations and we expect earnings to decline by c.5% when compared to 2018.

As outlined above we plan to continue to invest in our growth regions in the year ahead and resulting in gross and EBITDA margins adjusting to c.49% and c.28% for 2020 respectively.

The Group's balance sheet remains strong with the year-end cash position anticipated to be £128m.