How Fever-Tree mixers are creating a fizz
Reuters - Jan 26th 2018, 11:16
With Britain’s thirst for gin showing no sign of letting up, upmarket tonic and mixers maker Fever-Tree says its 2017 results will beat the expectations of analysts.
The company also soothed investor worries about a pick-up in competition from bigger rival Schweppes, which has recently increased its presence in premium products.
Fever-Tree said it had gained "significant market share". The firm’s shares, up about 15-fold since their 2014 listing, jumped more than 10% in early trade on Wednesday, before retreating to stand up 2.7% at £25.
"With gin sales soaring, 2017 was the year of the juniper. However, it shouldn’t be forgotten what a good job Fever-tree has done in capitalising on this tailwind," said George Salmon, equity analyst at Hargreaves Lansdown.
UK gin sales leapt more than 100% in the first half of 2017, helped by demand for premium brands. Fever-Tree expected its 2017 revenues to rise 66% to around £169m.
"Reflecting the continued strong performance through to the end of the year, the board expects that the outcome for the full year will be comfortably ahead of market expectations,"
Investec analyst Nicola Mallard said the company overtook Schweppes to become the No 1 mixer brand by value in the UK retail sector. A move by Coca-Cola’s Schweppes to compete in premium drinks caused some weakness in Fever-Tree stock late in 2017.
Fever-Tree, named after the colloquial term for the cinchona tree, the bark of which produces quinine — a key ingredient in tonic water — is one of the largest companies on London’s junior AIM market, with a market value of about £2.8bn.
Its shares were boosted last week by speculation consumer goods giant Unilever might be looking to buy the company.
Fever-Tree said UK revenue rose about 96% in 2017, helped by a strong performance over Christmas, while US revenue was up about 39%.Reuters
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