Fever-Tree doubles earnings as US market overtakes UK for first time

Drinks-maker Fever-Tree said it has weathered economic headwinds in recent months and hopes new contracts with its glass suppliers and lower shipping costs can help it grow its margins this year.

The tonic waters and mixers company – named after the trees that quinine is extracted from – said it doubled adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half of its financial year.

It helped take overall earnings to around £30 million for the period, in line with what Fever-Tree had told shareholders to expect.

The company said that, despite cost-of-living pressures on its customers, it still managed to grow its market share, based on the value of the products it sold.

It said the on-trade business – sales in pubs and restaurants rather than in shops – was especially strong in the UK over Christmas, and singled out its new Espresso Martini mixer as a strong performer.

Chief executive Tim Warrillow said: “The Fever-Tree brand has performed well in 2023, growing our market share in all of our key markets, despite a challenging macroeconomic environment.”

Revenue in the UK was down £1% to £114.8 million, allowing US revenues, which rose 22% to £117 million, to form the company’s biggest market for the first time.

“The US ended the year as our largest region, where we have extended our leadership position in both the tonic and ginger beer categories,” Mr Warrillow said.

“The brand enjoyed a strong Christmas trading period in the UK, especially in the on-trade, whilst at home our new Espresso Martini mixer clearly became a festive drink of choice.

“Despite recession in Germany impacting our European performance and the one-off effect of the transition to our new subsidiary in Australia, we remain confident of driving good growth in those regions in 2024.”

The business expects revenue for the Fever-Tree brand to rise 10% this year, and total group revenue will grow 8%.

It said new glass contracts, where energy prices have been fully factored in and hedged, will help improve gross margins this year, as will lower transatlantic freight rates and some of the company’s cost savings.

It expects adjusted EBITDA margin to hit 15% this year.

Separately on Thursday, fellow drinks maker Britvic reported an 8.1% rise in revenue to £443.5 million in the three months to the end of December.

The company saw its Brazilian revenues rise 21.0% thanks to a recent acquisition in the country.

Changes in the ranges and prices in France offset a decline in the amount of product the Pepsi maker sold there, with revenue up 1.1%.

In the British market revenue was up 6.9%.