This value investor breaking his rule and going for growth


”If 3/4 of your Gin & Tonic is the tonic, make sure you use the best”


“Proudly served in 7 of the 10 top restaurants in the world”


I’m a bit late to the Fever Tree party but I think there is still a great deal more to come from this British growth company that is priced at a “mis-leading” [(in my view), I will come back to this a little later] multiple of 53 x 2017 EPS forecast.


The company describes itself as following.....


“Fever-Tree is the world's leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, with distribution to over 50 countries internationally.
Based in the UK, the brand was launched in 2005 by Charles Rolls and Tim Warrillow to provide high quality, natural mixers which could accompany the growing demand for premium spirits.
The Group now sells a range of 12 differentiated flavours to hotels, restaurants, bars and cafes ("On Trade") as well as supermarkets and off-licenses for retail purchase ("Off Trade"). Approximately 65 per cent. of the Group's sales were derived from outside of the UK in FY15 with the key overseas markets being the US, Spain, and Belgium.
The Group's mixers are designed to be accompaniments for alcoholic spirits or used in cocktails, although they can also be consumed on their own. Since 2005, the Company has launched at least one new product a year, which includes 4 variants of tonic water, 2 variants of ginger beer, 3 variants of lemonade, and one variant each of ginger ale, soda water and cola.


Our vision – “To be the world’s leading supplier of premium carbonated mixers.”


To give an idea of how much a premium drink their Tonic water is, a google search result show Tesco selling Fevertree tonic at 38p/100ml while selling Schweppes at 22p per 100ml


Growth has been outstanding with the following revenue since 2014...


2014 – £34.7m (+49%)


2015 - £59.3m (+71%)


2016* - £102.2m (+73%)
*trading update on 24th Jan 2017


The trading update on 24th Jan commented....

Sales in the UK performed exceptionally well in the second half of 2016 and full year revenue is expected to be circa 118% ahead of 2015. Sales performance has been strong in both the On-Trade and Off-Trade channels, with particularly notable growth achieved over the Christmas period against…

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