FeverTree (FEVR) has warned that its rapid growth in the UK has slowed significantly amid the “dampening effect” of poor weather and strong comparatives.

The premium drinks mixer producer posted overall sales growth of 13% to £117.3m in the first six months of its financial year, though UK sales growth slowed to just 5% (to £60.7m) compared to growth of 73% in the same period in 2018.

FeverTree said that the period had seen “moderation in both Fever-Tree’s and the wider UK mixer category’s underlying growth rates” after “several years of exceptional growth”.

It added: “As has been widely reported across many sectors, the poor weather in the past quarter has had a dampening effect on growth rates in the short term as we lap what was an incredibly strong period of trading in summer 2018.”

It said despite these tough comparators over the remainder of the summer, it anticipates full year performance will remain in line with expectations.

However, its shares fell 9.7% on Tuesday to 2,077p – setting a year-long low of 1,985p in the process and less than half of the 4,120p it reached in September 2018.

CEO Tim Warrillow said that despite the impact of unseasonably poor weather in the UK, it had further strengthened its market leadership position in the UK and had seen positive momentum in Europe and the rest of the world, reflecting the business’s increasingly global footprint.

“The move to long mixed drinks is gathering momentum and starting to win share from beer and wine. Our broad range of high-quality mixers, relationships with spirits companies, brand strength and our growing international distribution network provide us with confidence in the significant global opportunity that lies ahead for the group.

“Whilst we remain mindful of the tough comparators over the remainder of the summer in the UK, the board anticipates that the outcome for the full year will be in line with its expectations,” Warrillow said.

The company highlighted “very encouraging momentum” in the US with notable national distribution gains in the first half.

It said it achieved significant off-trade distribution wins in key European markets and accelerated growth in Australia and Canada.

US revenues of £19.8m represented 31% growth versus the first half of 2018, which is growth of 24% on a constant currency basis.

European sales were up 13%, or 14% on a constant currency basis, and remains the group’s second largest market.

Hargreaves Lansdown analyst Sophie Lund-Yates commented: “Today’s disappointment stems from the group’s admission it’s simply become too big a fish in the relatively small UK pond, and sales growth is duly tempering in response.

Future growth potential lies in the US, and the size of the potential market is certainly an exciting prospect. The problem is it’s not clear if the same level of demand for premium mixers can be drummed up in our American cousins as we’ve seen in the UK. To satisfy expectations, Fevertree needs to see a taste for tonic take off stateside, and there’s no guarantee that will happen.”

 

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