Fever Tree maintains fizz as home sales bubble up
A very strong performance from its off-trade division prevented mixer maker Fever Tree’s revenues going flat this year, the firm said this morning.
With the collapse of its hospitality sales – or “on-trade” – division, which historically accounted for 45 per cent of the firm’s revenues, due to the pandemic, the company may have been fearing the worst.
But with lockdown drinkers rushing to the shops in ever greater numbers, revenue more or less held up, falling just 3.0 per cent year-on-year to £252.1m.
The slip-up in sales, however, saw profit fall 12 per cent to £116.3m, Fever Tree said.
However, investors were not raising a glass to the firm this morning, with shares falling 9.2 per cent so far today.
William Ryder, equity analyst at Hargreaves Lansdown, said: “Fevertree has had a tough year as lockdowns forced bars and restaurants to shut their doors for large chunks of the year.
“Fortunately, Fevertree was able to pivot quickly towards retail sales, which have almost done enough to keep sales steady.
“Lockdowns have coincided, and perhaps contributed to, the growing popularity of cocktail hour at home. As we’ve been unable to go and spend our money in bars we’ve opted for premium mixers and spirits, which suits Fevertree down to the ground.”
In a sign of the firm’s confidence, it proposed full year dividend of 15.68p per share, an increase of 4.0 per cent year-on-year.
It also reintroduced guidance for the coming year, predicting revenue growth of 12-16 per cent in 2021.
While Fever Tree admitted it could lose some of its home sales when restrictions lift, it predicted that the division would for the most part maintain its momentum.
Chief executive Tim Warrillow said: “Although 2020 presented many unforeseen challenges, our resilient performance highlights the strength of the business and the Fever-Tree brand which is testament to the proactive and entrepreneurial way our team and our partners responded.
Our performance in the Off-Trade was especially strong, exceeding our expectations across all our regions. Numerous periods of lockdown during the year encouraged increased consumer interest in premium spirits and stimulated excitement about mixing drinks at home, attracting more households and new consumers to the Fever-Tree brand than ever before.
“Consequently, we have increased our penetration in the UK, driven value share gains in the US, and Europe, and gained real traction in Canada and Australia.”