Molson Coors has bought an 8.5% stake in Fever-Tree for £71m as part of a strategic partnership to produce, distribute, and sell the carbonated drinks brand across the US.
The US is Fever-Tree’s biggest market, with sales topping £128m in 2024 after 9% growth on the year before.
Under the new partnership starting in February, Molson Coors will have exclusive rights to sell Fever-Tree in the US and will manage the onshoring of production in the country.
Fever-Tree will receive a share of the profits of the US operations as a royalty.
Fever-Tree said it would drive a “step change in quality of earnings” over the medium-term, while a cut in capital requirements will improve cash generation and create “incremental firepower” to expand globally.
Its share price immediately rose 17% when markets opened this morning.
Tim Warrillow, co-founder and CEO, called it a “transformational step” that would “take the Fever-Tree brand to the next level across the US”.
“What is so exciting is that as the Fever-Tree brand has grown in the US, so has the opportunity ahead of us, reflecting the increasing number of categories and occasions that our products are relevant to.”
Gavin Hattersley, Molson Coors CEO, said the partnership was a “meaningful step in Molson Coors’ journey to becoming a total-beverage company”.
“Our distributors and customers have been asking for a brand just like Fever-Tree from us, and by leveraging the scale, strong relationships and expertise of our team at Molson Coors, I’m confident in the road ahead for Fever-Tree as part of Molson Coors’ growing set of non-alc offerings in the US.”
The proceeds of the sale will be returned to shareholders via a share buyback programme of £71m, beginning in February 2025.
To enable the transition, Molson Coors will acquire Fever-Tree’s local US operating entity, Fever-Tree USA, for $23.9m in cash.
The long-term agreement starts on 1 February and will be subject to the achievement of certain performance targets. A joint governance committee will manage and oversee key aspects of the strategic partnership.
A proportion of the annual profits are guaranteed to Fever-Tree from 2026 to 2030 based on an agreed business plan.
Both parties have agreed to a “substantial” marketing investment to be deployed over the initial period of the partnership.
Fever-Tree’s UK sales fell 4% to £110.5m for the year ending 31 December, reflecting the subdued spirits backdrop, particularly in the on-trade.
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