July 20, 2021
Fever-Tree Drinks plc
FY21 Half Year Pre-Close Trading update
Fever-Tree, the world's leading supplier of premium carbonated mixers, announces a trading update for the first six months of FY21 ending 30th June 2021, ahead of reporting its Interim Results on 15th September 2021.
Financial highlights
| Revenue, £m | FY21 H1 | FY20 H1 | Change | Constant Currency Change |
| UK | 50.3 | 48.3 | 4% | 4% |
| US | 36.2 | 27.4 | 32% | 42% |
| Europe like-for-like (excl. GDP) | 36.7 | 20.5 | 79% | 81% |
| Europe total* | 41.3 | 20.5 | 102% | 104% |
| ROW | 14.0 | 8.1 | 73% | 71% |
| Total like-for-like (excl. GDP) | 137.1 | 104.2 | 32% | 34% |
| Total* | 141.8 | 104.2 | 36% | 39% |
*FY21 H1 includes £4.7m revenue from GDP's portfolio brands
Fever-Tree delivered strong sales growth across all its key markets in the first half of FY21 as the On-Trade gradually re-opened during the second quarter and Off-Trade sales remained very encouraging. Revenue growth of 39% on a constant currency basis was ahead of the Board's expectations despite the comparable levels of COVID restrictions present in the first half of FY21 compared to the first half of FY20. However, challenges surrounding global logistics cost pressures have progressively impacted the Group's margins.
UK
Fever-Tree performed well during the first half of the year, growing revenue by 4%, reflecting the strength of the brand which was enhanced during 2020 as we continued to invest despite the challenging market back-drop.
The On-Trade remained closed for the first quarter of the year, with a gradual re-opening throughout the second quarter. There have been clear signs of pent-up demand as bars, restaurants and pubs reopened, albeit slightly tempered by the continuation of social distancing and capacity restrictions. We remain well-positioned as the On-Trade continues to re-open, with the remaining COVID restrictions lifted in the UK on the 19th July enabling larger events to restart, nightclubs to re-open, and the removal of social distancing.
Fever-Tree's Off-Trade sales have remained strong even as the On-Trade re-opened, remaining at similar levels to 2020, and increasing by 17%[1] compared to 2019, demonstrating the growing popularity of enjoying a simple long mixed drink at home and Fever-Tree's role in driving this occasion. We continue to work closely with our retail and spirits partners to drive greater consumer trial and awareness at home, maintaining our market leading position with an increased value share of 38.5%[2]; c.1% higher than the same period last year.
US
Fever-Tree continues to build on its significant momentum in the US during 2020, delivering £36.2 million revenue; a 32% increase year-on-year (42% at constant currency). This result was particularly encouraging given the very strong comparators from the first half of 2020 and is testament to our continued brand strength, our growing presence in the Off-Trade, the success of our new products, as well as the strong growth we have seen as the On-Trade began to open on a State-by-State basis as the period progressed.
Our Off-Trade sales have remained very strong, where the increasing popularity of the Fever-Tree brand is driving category growth, supported by increased premium spirits consumption. This progress was reflected in the Nielsen data, where sales during the first half of the year increased 17%[3], lapping a strong period of growth in the first half of 2020.
Whilst the pandemic has led to a growing interest in making long-mixed drinks at home, we are encouraged by the initial reopening of the On-Trade, having won more new national accounts during 2020 than we did in 2019. Since May On-Trade sales have been outperforming sales from the comparable period in 2019 with clear signs of pent-up demand across the country, giving us further confidence going into the summer months.
Europe
Total European revenue for the first half of the year was up 102%, which was 81% on a like-for-like basis, at constant currency and excluding £4.7 million revenue from GDP's portfolio brands during H1 2021. This is an incredibly strong performance, supported by importers building stock in anticipation of a strong summer of trading. Even when the impact of last years' importer de-stock is taken into account, Fever-Tree's underlying growth was still an impressive c.30%.
The Group continues to make very encouraging progress in the Off-Trade with strong sales and value share gains across our key markets and, as the On-Trade continues to re-open across the region, we are confident that our prevailing brand strength, along with the well-established market trends towards premiumisation across Europe, continues to position us very strongly as we look to the opportunity ahead in the region.
ROW
We have made excellent progress in our Rest of the World region, with £14 million revenue, representing strong growth of 73% year-on-year, benefiting from some phasing year-on-year, with strong underlying growth of c.40% across the region.
We continue to drive category growth and strengthen the brand in both Australia and Canada, and whilst our comparators for the second half of the year will be tough, we expect to continue to extend our market leading position in both markets and remain excited about our long-term potential to expand further in both the Off-Trade and On-Trade.
Margins
Gross margin in the first half of the year has been impacted by significantly elevated costs resulting from the disruption currently impacting global logistics. As a result, we anticipate H1 gross margins for the Fever-Tree brand of c.45%, and c.44% inclusive of revenue from GDP's portfolio brands.
We remain focused on driving growth, as our first half revenue performance demonstrates, with overhead spend in-line with expectations and, as a result, an EBITDA margin of c.20.5% for the first half
FY21 outlook
Fever-Tree remains committed to investing in the substantial future opportunity for the brand across all our regions, enabled by the Group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth.
The investments we made in the business during 2020 have started to pay dividend as our markets continue to reopen. Over the last year we have strengthened our brand and gained market share across our regions which, along with supportive industry trends and the clear signs of pent-up demand in the On-Trade, gives us confidence in the Group's position as we look ahead.
The On-Trade restrictions and closures resulting from the pandemic are now subsiding and we are seeing the benefits of maintaining our strong relationships with our partners in that channel. As the On-Trade has reopened we have continued to see good momentum in the Off-Trade driven by increased adoption of long mixed drinking at home and increased support from retailer and spirit partners. Consequently, we continue to strengthen our market share across our regions.
As a result of the strong start to the year, we are increasing our revenue guidance to £295m - £304m for the full year. However, as is being seen in other sectors, growing challenges from COVID-related logistics disruption and associated costs is putting pressure on the Group's margins. Consequently, we anticipate gross margins of c.44% for FY21, or 43% inclusive of revenue from GDP's portfolio brands, delivering an EBITDA margin of c.20%. Whilst we anticipate some margin improvement next year, we believe logistic cost headwinds will continue alongside input cost increases on raw materials and product costs. However, we remain very confident of continued strong sales momentum across our regions and continue to invest in the business to capitalise on the longer-term structural growth opportunity ahead of us.
Tim Warrillow, CEO of Fever-Tree commented:
"Fever-Tree has made significant progress in the first half of 2021, delivering a strong revenue performance. The last 18 months have highlighted the strength of the Fever-Tree brand amongst our consumers and customers as well as the fantastic team and partners we have in place. We continued to invest in the opportunity during the pandemic and have already started to see the benefits of our long-term outlook as the world has started to reopen.
Our performance in the On-Trade as it has reopened has been encouraging in all our markets and our performance in the Off-Trade has also remained strong, with sales far exceeding pre-COVID levels in the UK, US, across Europe, and the Rest of the World.
Our margins have been notably impacted by global logistics disruption. Despite this, we remain confident as ever in the strength of our business model and the opportunity to improve margins as we cycle out of the current period of COVID disruption.
Our long-term opportunity continues to be enhanced by the structural trends we are seeing, including the growing interest in premium spirits and the popularity of long mixed drinks. This momentum is being supported by our retail and spirit partners, and Fever-Tree's ability to capitalize and drive this opportunity is unmatched by any other premium mixer brand, giving us confidence in the future growth potential for Fever-Tree."
For more information please contact:
Investor queries
Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com I +44 (0)7435 828 138
Media queries
Oliver Winters, Director of Communications I oliver.winters@fever-tree.com I +44 (0)770 332 9024
Nominated Advisor and Joint Broker - Numis Securities
Garry Levin I Matt Lewis I Hugo Rubinstein I +44 (0)20 7260 1000
Joint Broker - Investec Bank plc
David Flin I Alex Wright I +44 (0)20 7597 5970
Financial PR advisers - Finsbury
Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0)7826 534 233; Amanda Healy +44 (0)7795 051 635
[1] IRI 26 weeks to 13 June 2021
[2] IRI 13 weeks to 13 June 2021
[3] Nielsen: 24 weeks to 19th June 2021
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
