REG - Fevertree Drinks PLC - FY21 Trading Update

Fevertree DrinksAnnouncement

27/01/2022 07:00

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RNS Number : 7608Z  Fevertree Drinks PLC  27 January 2022

Fever-Tree Drinks plc

FY21 Trading update

 

Fever-Tree, the world's leading supplier of premium carbonated mixers,
announces a trading update for the year ending 31(st) December 2021, ahead of
reporting its Preliminary Results on 16(th) March 2022.

Financial highlights
 Revenue, £m                           FY21   FY20   Change
   UK                                  118.3  103.3  15%
   US                                  77.9   58.5   33%
   Europe (Fever-Tree brand revenue)   78.8   59.0   34%
   Europe total revenue*               88.2   65.3   35%
   ROW                                 26.7   25.0   6%
 Total                                 311.1  252.1  23%

*includes GDP portfolio brand revenue

 

Fever-Tree delivered an excellent top line performance in 2021 with strong
growth across all our key markets. We expect to deliver full year revenues of
c.£311 million revenue, an increase of 23% year-on-year (26% at constant
currency) and ahead of the guidance provided at our Interim Results in
September.

This encouraging performance has been driven by continued strength in the
Off-Trade channel, which remains well ahead of 2019 levels, as well as the
return of the On-Trade during the second half of the year in most of our
markets, and was achieved despite the emergence of new COVID variants towards
the end of the year.

A highlight of the year, and a clear indication of the brand's continued
international success, is that we became the number one Ginger Beer brand at
retail in the US, as well as finishing the year as the number one Tonic brand
at retail in the US, overtaking Schweppes for the first time in the four weeks
to 1(st) January 2022 1 .

UK

UK revenue grew by 15% during 2021, ahead of our expectations. This reflects
the robust On-Trade recovery along with the continued strength of the brand in
the Off-Trade, which is benefitting from the Group's persistent investment in
marketing and new product innovation during the pandemic.

Our On-Trade sales increased by c.59%, highlighting the strong performance
during the second half of the year as consumers sought out the brand as they
returned to the On-Trade. Sales were growing back towards 2019 levels by
November before the emergence of the Omicron variant which impacted the
recovery in the final weeks of the year.

Fever-Tree remained the clear brand of choice in the On-Trade, extending our
value share of the mixer category to 50.5% 2 , an increase of 2.4%
year-on-year. This not only reflects the close relationships we maintained
with our customers throughout the pandemic, but also the investments we have
made to keep the brand visible as the On-Trade re-opened, most notably across
staycation hotspots, as well as at popular sporting events such as Royal
Ascot, and at our large pop-up bar in Covent Garden, London.

Our Off-Trade performance remained very strong in 2021 with sales comparable
to 2020 and c.20% ahead of 2019. Consequently, Fever-Tree finished the year as
the clear market leader in the Off-Trade with a value share of 39.8% 3 . We
believe that Off-Trade sales will remain ahead of pre-pandemic levels,
underpinned by the increasing popularity of long mixed drinks and the
well-established premiumisation trends, and we continue to work closely with
our retail and spirits partners to capitalise on this opportunity.

US

Fever-Tree is building significant momentum in the US, delivering c.£77.9
million revenue in 2021, a 33% increase year-on-year (41% at constant
currency). This result is particularly encouraging given the strong
comparators from 2020 and is testament to the way our team has continued to
grow the brand, build relationships with new and existing accounts, launch new
products, and accelerate our On-Trade sales as restrictions eased during the
year.

The pandemic has led to a growing and sustained interest in making long mixed
drinks at home which, along with the continued shift to more premium drinks,
has put Fever-Tree in an excellent position to continue to grow at pace. We
intend to continue to take full advantage of this opportunity through material
marketing and sales investment, focused innovation, and by strengthening our
operations.

Our Off-Trade sales accelerated beyond the levels we saw in 2020 as Fever-Tree
attracted more consumers to the brand, gained more visibility on shelf and
increased our rate-of-sale, driving category growth. This was reflected in our
overall Nielsen performance, with full year 2021 sales +24% vs 2020 and 97%
ahead of 2019(1).

In addition, we are delighted to announce that in December 2021 we began work
with our local production partner to commission our East Coast bottling line;
our second production site in the US. We will be gradually ramping up
production during the first half of 2022, with local bottling in the US
providing increasing mitigation against elevated logistics costs, contributing
to a less carbon intensive supply chain, and significantly reducing lead
times, providing greater agility to respond to the growing demand in the US
market.

Europe

Fever-Tree's performance in Europe was significantly ahead of our
expectations, with total revenue increasing by 35% year-on-year to c.£88.2
million (40% at constant currency). This was driven by continued Off-Trade
progress, the positive opening of the On-Trade from the end of the second
quarter.

Our On-Trade sales re-bounded quickly with a particularly encouraging end to
the summer as many European markets were focused on capturing as much of the
tourist season as possible. Despite the reintroduction of restrictions towards
the end of the year in certain markets, we are confident that vaccine
programmes mean the region is much better placed than this time last year.

Alongside our success in the On-Trade as it re-opened during the year, the
Off-Trade continued to perform well, with strong sales and value share gains
across all our key European markets. Fever-Tree remains the largest premium
mixer brand in Europe and we continue to drive the category's growth(1). This
has been supported by increasing interest in the mixer category from both
retailers and spirit partners, who are more positive than ever about the
exciting trends surrounding long mixed drinks and premiumisation.

ROW

We have made good progress in our ROW region, with revenue growth of 6% to
c.£26.7 million, which was slightly behind our guidance as we lapped a stock
build by our importers in the second half of 2020. However, underlying sales
growth in our key markets remained encouraging, at c.20% year-on-year, against
very strong comparators from 2020.

Our two largest markets in the region are Australia and Canada, where we
continued to drive category growth and increase our value share. In Canada,
Fever-Tree delivered more incremental value in the Off-Trade Tonic category
than any other brand to become the largest Tonic brand at retail(1), as well
as growing across all mixer categories, with new launches in the Soda &
Sparkling segment driving premiumisation of the mixer category.

Australia benefitted from much more favourable conditions in the On-Trade
during the first half of the year, enabling us to activate the brand through
this important channel. And while restrictions were re-introduced during H2,
we were able to focus on the Off-Trade and extend our position as the premium
mixer category leader 4 , increasing our share across both retail and liquor
channels.

During 2021 the Group continued to extend its brand presence across the Rest
of the World, entering three new countries and developing new and existing
relationships with international and local hotel chains, retailers and spirit
companies alike. This gives us a good platform to drive growth across a broad
set of mixing occasions in an ever-increasing number of markets.

Financials

The Group performed well during 2021 against a backdrop of unprecedented macro
uncertainty and supply chain disruption. Our EBITDA margin continued to be
impacted in the second half as a result of these macro headwinds, but due to
the strong revenue performance, absolute EBITDA and Earnings are expected to
be in line with expectations.

The Group remains in a strong financial position, with a robust balance sheet
and cash increasing by 16% to £166 million.

FY22 outlook

The momentum the Group has built in our key markets, our continued brand
strength and the increasingly supportive consumer trends we are seeing, gives
us confidence in the Group's position as we look ahead, despite the challenges
that remain in the market.

The Off-Trade continues to perform well across our regions as at-home
consumption and interest in premium long mixed drinks becomes increasingly
established, supported by both retailers and spirits companies. We expect
Off-Trade demand to remain at higher levels than pre-pandemic and are well
placed to benefit from this sustained shift in consumer behaviour. We also
remain confident that the On-Trade will continue to recover as we progress
through the year. Consequently, we estimate that we will grow revenue to
between £355 million and £365 million in FY22.

The Group retains its resolute focus on the long-term opportunity and is
investing behind this, enabled by our strong balance sheet and conviction in
our ability to deliver long-term sustainable growth. However, it is now clear
that cost headwinds in 2022 will be more significant than we anticipated, and
whilst we are employing a range of mitigating actions, margins are expected to
remain broadly flat in 2022, resulting in an EBITDA range of between £69
million and £72 million.

Tim Warrillow, CEO of Fever-Tree commented:

"I am very pleased with the performance of the brand this year. Our fantastic
team have worked incredibly hard through another year of uncertainty and
disruption to produce an outstanding set of results, taking the brand's
strength and breadth around the world to new heights. Most notably we finished
the year as the No.1 Tonic Water brand by value at US retail, which is a
significant achievement, matching an accolade that we have held in the UK for
a number of years. In addition, the continued resilience of the On-Trade and
our close relationships with our customers has enabled this channel to recover
strongly across all of our key markets.

Over the last two years we have seen an acceleration in supportive consumer
trends, such as the growing interest in long mixed drinks, especially at home,
as well as the premiumisation of both the spirit and mixer categories.
Retailers, spirits brands and consumers are all getting behind these trends
and Fever-Tree, as the World's "Number one best-selling mixer" 5 , "Number one
top trending mixer"(5) and the largest premium mixer brand, is incredibly
well-placed to continue to take advantage of this significant and long-term
trend.

The Group continues to deliver impressive growth in every one of our key
markets, however, I am of course mindful that short-term logistics challenges
and cost pressures remain, along with On-Trade restrictions, albeit at a much
lower level than this time last year. Despite this, Fever-Tree's strong growth
and track record against the competition, alongside supportive global trends,
gives us confidence in our ability to capitalise on the substantial global
opportunity."

For more information please contact:

Investor queries

Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com
(mailto:ann.hyams@fever-tree.com)  I +44 (0)20 4516 8106

Media queries

Oliver Winters, Director of Communications I oliver.winters@fever-tree.com
(mailto:oliver.winters@fever-tree.com)  I +44 (0)770 332 9024

 

Nominated Advisor and Joint Broker - Numis Securities

Garry Levin I Matt Lewis I Hugo Rubinstein I +44 (0)20 7260 1000

Joint Broker - Investec Bank plc

David Flin I Alex Wright I +44 (0)20 7597 5970

Financial PR advisers - Finsbury

Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0)7826 534 233;
Amanda Healy +44 (0)7795 051 635

 

 1  Nielsen

 2  CGA 12 weeks to 9 Oct 2021

 3  IRI 13 weeks to 26 December 2021

 4  Woolworths & Coles scan data

 5  Drinks International 2022

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