Fevertree Drinks (FEVR) reported a 1 per cent fall in UK sales following a less than festive Christmas trading season. It was not so much the magnitude of the reversal – which was offset by a rise in sales of around a third in the US and 'rest of the world' segments – that precipitated a sell-off in the shares, but the mere possibility that sales in the UK may have already passed their high water mark.
You would have been hard pressed to make that claim this time last year, but signs are emerging that gin sales in the UK have peaked, chief among them a client note from Bernstein that highlighted a negative reading for the spirit’s three-month rolling price mix growth – the first time this has happened in years.
Indeed, figures indicate that sales of traditional gin plateaued at the tail end of 2018, with overall volume growth through the year largely attributable to the increased clamour for flavoured gins – hardly a positive trend for Fevertree.
There has been a marked proliferation in premium gin brands over the past decade, raising the possibility of a shake-out in the market. It would be analogous to the market for prosecco sparkling wine in the UK. Volumes sold in the UK have fallen away appreciably after a decade of growth in which consumers were faced with a dizzying expansion in the number of brands coming to market. Could premium gin follow suit?
Consumer tastes do change, particularly those attached to what might be termed aspirational brands. Regardless of any subjective opinions as to the relative merits of the Fevertree mixers, part of their sales success was linked to brand cache, specifically the signal that they give out about the consumer. No one purchases Louis Vuitton luggage because of its practicality; its exclusivity is the reason why punters pay through the nose – and the same can apply to the licensed trade. The trouble is that Fevertree may be suffering from a form of brand dilution due to the sheer ubiquity of product lines.
