Home drinking and US expansion help Fever-Tree avoid massive Covid hit

Fizzy drinks maker Fever-Tree’s previously explosive growth was brought to a halt last year by the Covid-19 pandemic, the company said on Thursday, but it managed to avoid a major hit.

Fever-Tree said revenue from tonic water and other drinks dropped by 22% in the UK over the year compared with 2019.

However, the company was saved from a major international revenue hit as it continued to grow in the US and worldwide.

US revenue reached £58.5 million, an increase of 23%, while the rest of the world market, including Australia and Canada, rose by 58% to £25 million.

Globally, revenue fell only 3% to £252.1 million, which may be a shock to a brand which has delivered growth around 10% per year in recent times, but the business still beat the guidance it provided in September.

As a result, shareholders celebrated and the company’s share price rose by 3%.

“The Covid-19 pandemic has thrown up many challenges but it has also accelerated the trends we have been talking about for a number of years – namely the growing interest in premium spirits and long mixed drinks as at-home mixing has taken hold not only with consumers but retail and spirits partners alike,” said chief executive Tim Warrillow.

“Our ability to capitalise on and drive this trend has seen Fever-Tree reach more households and become a feature in more fridges worldwide than ever before.”

While home drinking flourished, it was the Fever-Tree’s on-trade – sales in bars, pubs and restaurants – where the company felt the pinch.

This trade dropped by 60% in the UK as most of the hospitality industry was forced to close for months.

However, Fever-Tree said it was ready to benefit when the sector reopens, hopefully in the months to come.

Mr Warrillow added: “While our performance across the off-trade in the UK and Europe has been very encouraging, special mention must be made of our performance in the US, Australia and Canada, where we have seen outstanding growth in the past 12 months underlining the global opportunity still ahead for the brand.

“I am of course mindful that uncertainty remains, especially in terms of the timing of reopening of the on-trade across many markets, but our performance over the last year, combined with our track record against the competition and the supportive global trends, gives us confidence in the future growth potential for Fever-Tree.”