There can be no doubting that Fevertree Drinks (FEVR) is a very good business. Its premium mixer drinks have gone down a treat with consumers who have been adding more of them to their gins and cocktails over the past few years.
Fevertree has ridden the gin boom extremely well. It has convinced a growing number of consumers to pay very high prices for its products and has leveraged this on its very profitable business model.
Fevertree is essentially an ingredients and marketing company. The heavy lifting of making and distributing its drinks has been outsourced to third parties. This means that its business is very asset-light and that it has minimal capital investment requirements. It does, however, have to invest in working capital by building up stocks of finished goods to meet future demand while offering its customers credit to drive sales.