Thursday 24 January 2019 9:13 am | Updated: Monday 03 June 2019 3:04 am

Fevertree sales fizz as tonic maker cheers bumper summer

FeverTree’s share price jumped more than eight per cent in early morning trading, after the tonic maker said it was forecasting a sharp uptick in revenues following strong consumer appetite in the UK.

Prolonged summer weather and festive demand drove up sales last year, according to the group, which said today that it expected revenue in 2018 to come in at roughly £236m, marking a 39 rise on the previous year.

Co-founder and boss Tim Warrillow said that FeverTree saw “strong momentum across the business during 2018”, adding that the company was “very well positioned and remain optimistic about the long-term global opportunity ahead.”

Yet despite today’s bump in Fevertree’s share price, the carbonated drinks maker has largely seen the value of its stock come off the boil since hitting an all-time peak of 4120p in September last year, with shares now trading at 2,828p.

Michael Hewson, chief market analyst at CMC Markets UK, said: "The shares have slipped sharply since the record peaks in September, but they are still above where they were a year ago when there was speculation that Unilever might be tempted to look at making a bid. While that didn’t pan out at the time that’s not to say speculation might not return if the revenue picture continues to improve at the same pace that it has in the last three years."

Tom Stevenson, investment director from Fidelity Personal Investing’s share dealing service, said: "With revenues forecast by the company to be 39 per cent higher at £236m for the full year to December, profits growth will continue to please shareholders. But with the shares trading at around 50 times expected earnings and with a dividend yield that’s lower even than the UK’s base rate, it’s a brave investor that would assume that the one-third fall in the share price since September has run its course."

He added: "For that to be the case, Fever-Tree’s apparent early success in continental Europe and America will have to accelerate. From a lower base, sales in the newer regions are still growing more slowly than in the core UK market."

The company also said it is expecting the outcome for the full year will be comfortably ahead of its expectations.

Fevertree's fast-growing rise to prominence has largely been driven by the increasing popularity of gin, with sales of the juniper-flavoured spirit in the UK hitting an all-time high in 2018.

Data out this morning from the Wine and Spirit Trade Association (WSTA) has found that more than 66m bottles of gin were sold in the UK during the course of 2018, marking a 41 per cent rise when compared with the previous year.

The number of UK distilleries has more than doubled in the last five years, as London gin bars and distillery centres grow in popularity.