During the cocktails’ boom years, Fever Tree could do no wrong. The mixer company’s mercurial rise seemed to embody the rise of the sector as a whole. However, now the sector is in trouble and the tonic darling is waving the yellow flag. In an investor statement, Fever Tree warned of a drop-off in annual revenues and a slow bounceback.
The company told investors (assuming there are no additional lockdowns) that annual revenues are projected to clock in between £235 and £243m, a drop from last year’s £260.5m. (Yes, they trade in England.)
For the six months ended June 30, pre-tax profit plummeted 37.9% to £21.7m. Revenue dropped 11% to £104.2m on-year.
“The on-trade, which typically represents approximately 45% of group revenue, has been severely impacted as lockdowns have led to closures in most of our territories since March, with only limited re-openings prior to the end of the period,” Fever Tree explained in notes accompanying the statement.
Like much of the industry, one bright spot for the group was off-premises. Supermarket sales were up 24%. Alas, off-premise sales yield a lower profit margin. So, the company cautioned that time is required to transform home consumers into an antidote to the bar-sales drop.
“People’s interest and excitement about mixing drinks at home has really taken hold over the lockdown period, attracting more households to the Fever-Tree brand than ever before,” stated Fever Tree’s charismatic CEO Tim Warrillow. “Consequently, we have increased our penetration in the UK, consolidated our number one position, and driven value share gains in the US, Europe, and as far afield as Canada and Australia.”