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Premium tonic maker Fever-Tree has cautioned that its previously stellar rate of sales growth is fizzling out, while early summer wet weather in the UK has “had a dampening effect” on trading.
The group, which is the UK’s market leader in selling mixers and has benefited strongly from drinkers increasingly opting for premium gins instead of beer or wine, said its revenues rose 13 per cent to £117m in the half-year to June, compared with the same period in 2018. That missed analysts’ expectations, although Fever-Tree insisted it would meet management forecasts for the full year.
Pre-tax profits rose to £35m, from £33m a year ago.
Fever-Tree has found it increasingly difficult to build on its popularity with publicans and supermarket shoppers in the UK as the number of potential new customers for its tonics, lemonades and ginger ales has naturally fallen over time. The group’s shares fell about 5 per cent to £22 on Tuesday, pushing them further from the £39 level they hit last September.
Fever-Tree’s UK revenues rose by a modest 5 per cent to £61m in the half-year to June, compared with the same period last year.
The company’s US sales jumped 31 per cent over the period to £19.8m. The figure was, however, flattered by a sharp rise in the dollar against the UK pound.
At constant currencies, revenues in Fever-Tree’s US business rose 24 per cent — up 1 percentage point from the same period in 2018.
Emma Letheren, analyst at RBC, said this showed its American unit had “not accelerated” in the first part of this year as investors had hoped. However, Nicola Mallard at Investec disagreed, saying it had shown “good progress”.
Tim Warrillow, chief executive, said: “We have not been immune to the impact of the unseasonably poor weather in the UK.” He also reminded the group’s shareholders that because Fever-Tree had achieved very strong sales growth in previous summers it was now facing “tough” annual growth “comparators over the remainder of the summer in the UK”.
Overall, Fever-Tree’s first-half results were “a broad-based miss”, Ms Letheren wrote. This was even though the group’s management team had said in the past that previous levels of revenue growth may not be repeated.
“Given that sellside sales expectations have been lowered in recent months, a 4 per cent miss on the top line is disappointing in our view,” Ms Letheren wrote.
Fever-Tree’s gross margin has also moderated slightly to 51.9 per cent, from 53.2 per cent a year ago.
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