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FeverTree loses UK sparkle

Weak domestic consumer spending has led the group to downgrade its full year revenue outlook
November 20, 2019

FeverTree (FEVR) has warned that full-year revenue will come in at £266m-£286m, falling short of consensus expectations of £275m, due to a slowdown in its UK business. With margin expectations unchanged, analysts at Jefferies forecast that this will translate to a 3-4 per cent decline in cash profits (Ebitda) to £86m.

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In the UK, the off-trade segment (grocery and retail) has been dampened by weak consumer spending, and also came up against a tough comparator – the summer of 2018, which was dominated by the men’s Football World Cup. As such, the group expects domestic sales growth of around 2 per cent, falling short of the 7 per cent forecast by analysts. Despite these conditions, off-trade has maintained its 38 per cent market share, staving off a rising number of premium competitors.

The premium mixer drinks specialist has been expanding abroad in search of further momentum, and revenue growth outside of the domestic market has accelerated in the second half. In the US, sales ramped up thanks to wider distribution, aided by its partnership with Southern Glazers Wines and Spirits in the on-trade (bars and restaurants) channel. The group expects US revenue to increase by around 34 per cent, ahead of previous expectations.