REG - Fevertree Drinks PLC - US Strategic Partnership with Molson Coors

Fevertree DrinksAnnouncement

30/01/2025 07:15

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RNS Number : 2724V  Fevertree Drinks PLC  30 January 2025

30 January 2025

This announcement contains inside information

 

 

Fevertree Drinks plc

("Fever-Tree" or the "Company")

 

Fever-Tree announces a Strategic Partnership with Molson Coors to drive the
next stage of growth in the US

 

Underpinning the partnership and reflecting its long-term focus and belief in
the opportunity, Molson Coors will acquire an 8.5% shareholding in Fevertree
Drinks plc. The proceeds of the issue will be returned to shareholders via a
share buyback programme of £71.0m, beginning in February 2025.

 

Fever-Tree, the world's leading supplier of premium carbonated mixers and
Molson Coors, one of the world's largest beverage companies, are pleased to
announce that they have entered into a long-term strategic partnership for the
exclusive sales, distribution and production of the Fever-Tree brand in the
US.

 

Since first entering the US market in 2008, Fever-Tree has consistently
delivered very strong growth in the US and has become the number one tonic and
ginger beer brand across America. The market leading position that Fever-Tree
has built, combined with Molson Coors' expertise, scale and total beverage
ambition, provides a transformational platform to drive the brand to the next
level in its largest and most dynamic market.

 

The strategic benefits of the partnership include:

 

·    Strategic Alignment: Fever-Tree and Molson Coors have a shared
vision, belief and commitment to driving the brand's expanding opportunity
across alcohol and non-alcohol occasions.

·    Scale and Platform:  Ability to leverage Molson Coors' national
network of US distributors and customers across the On- and Off-Trade as well
as the scale and strength of their dedicated sales and commercial teams, to
maximise Fever-Tree's momentum, brand strength and ability to grow its total
addressable market.

·    Step Change in Investment: A substantial incremental marketing fund
will be deployed across the initial period of the partnership providing the
firepower to drive further brand and category awareness.

·    Local US production: Partnership will capitalise on Molson Coors'
broad supply chain network, procurement strength and expertise to drive
operational efficiencies, as well as managing the onshoring of US production.

Equity Investment and Buyback

 

Underpinning the partnership and reflecting its long-term focus and belief in
the opportunity, Molson Coors will acquire an 8.5% shareholding in Fevertree
Drinks plc (post-issue) for cash consideration of £71.0m (654.2 pence per
share based on the 10-day VWAP).

 

In addition, Fever-Tree today announces its intention to commence a share
buyback programme of £71.0m, beginning in February 2025. Due to the enhanced
cash generation of the business under the strategic partnership, we remain
mindful of our capital allocation framework and will consider the opportunity
for further shareholder returns beyond this initial buyback programme.

 

 

 

Commenting on the new partnership, Tim Warrillow, co-founder and CEO of
Fever-Tree, said:

 

"Today's announcement marks a transformational step for the Fever-Tree brand
in the US.  Thanks to the superb work of our US team, we have seen Fever-Tree
become the number one brand in both the tonic and ginger beer categories, a
remarkable achievement which has redefined the US mixer category amongst
consumers and customers alike.

But what is so exciting is that as the Fever-Tree brand has grown in the US,
so has the opportunity ahead of us, reflecting the increasing number of
categories and occasions that our products are relevant to.

 

With a national network providing significant scale and muscle, alongside its
proven track record, supply chain expertise and clearly stated strategic
desire to drive the future of their business beyond beer, Molson Coors are the
ideal long-term partner to take the Fever-Tree brand to the next level across
the US. This partnership will be fuelled by a step change in marketing
investment to take advantage of the highly compelling opportunity ahead."

 

Commenting on the new partnership, Gavin Hattersley, Chief Executive Officer
of Molson Coors Beverage Company:

 

"Our strategic partnership with Fever-Tree in the U.S. is a meaningful step in
Molson Coors' journey to becoming a total-beverage company with a winning
portfolio of drinks for a wide variety of consumer occasions. We've made
progress here, and today we are building on that progress in a significant way
with Fever-Tree as the latest and largest non-alc brand to join our portfolio.

 

The U.S. is our biggest global market by revenue, and the same is true for
Fever-Tree, so we believe this partnership provides ample opportunity for our
teams to build on the strong success Fever-Tree has achieved to date. Our
distributors and customers have been asking for a brand just like Fever-Tree
from us, and by leveraging the scale, strong relationships and expertise of
our team at Molson Coors. I'm confident in the road ahead for Fever-Tree as
part of Molson Coors' growing set of non-alc offerings in the U.S."

 

Commenting on the new partnership, Michelle St. Jacques, Chief Commercial
Officer of Molson Coors Beverage Company, Americas:

 

"Fever-Tree is the perfect fit for our growing portfolio of non-alc beverages.
The quality is unmatched, the variety is fantastic, and the brand has achieved
impressive scale in the U.S. and we believe there is more runway ahead.

 

Fever-Tree sits at the intersection of beer and non-alc and is often available
in stores where beer is sold, so it perfectly complements our Beyond Beer and
premiumization strategies, playing in both alcohol occasions and non-alc
occasions. We're excited to welcome Fever-Tree into our portfolio as we work
to reach more consumers and unlock growth in new channels and outlets across
the U.S."

 

 

There will be live audio webcast on Thursday 30th January 2025 at 9:00am GMT.
The webcast can be accessed via:

 

Fever-Tree announce a strategic partnership with Molson Coors in the US
(https://www.investis-live.com/fever-tree/6792292f995564000f84ac5e/dawdas)

 

 

 

 

 

 

 

Key Transaction Details:

 

License Agreement

 

Fever-Tree and Molson Coors have entered into an exclusive license agreement
(the "License Agreement"), effective from 1 February 2025 covering the sales,
distribution and future production of Fever-Tree products in the US.

 

Key terms of the License Agreement are as follows:

 

-     Long-term agreement with option to extend subject to achievement of
certain performance targets.

-     Joint governance committee will manage and oversee key aspects of
the strategic partnership.

-     Profit-sharing arrangement, distributed via royalty payments made
from Molson Coors to Fever-Tree.

-     A proportion of the annual profits attributable to Fever-Tree are
guaranteed for the period from 2026 - 2030 based on an agreed business plan.

-     Both parties agree to substantial marketing investment to be
deployed over the initial period of the partnership.

-     Non-compete terms on both parties.

 

Business Transition

 

The transition of Fever-Tree's business operations will occur during 2025. As
part of this transition, Molson Coors will assume Fever-Tree's existing US
production relationships prior to managing the onshoring of US production,
capitalising on their broad supply chain network, procurement strength and
expertise to drive operational efficiencies.

To enable the transition Molson Coors will acquire Fever-Tree's local US
operating entity, Fevertree USA Inc, for $23.9m in cash. Fever-Tree USA Inc's
profit, net of management charges paid to the Group, represent 2% of total
Group's profit. (FY2023).

Equity Investment & Issue of New Shares

 

Underpinning the partnership and reflecting its long-term focus and belief in
the opportunity, Molson Coors will acquire an 8.5% shareholding in Fevertree
Drinks plc (post-issue) through the issue of 10,856,628 Shares priced at 654.2
pence per share based on the 10-day VWAP on the London Stock Exchange for the
ten trading days prior 29(th) January.

 

In addition, Fever-Tree and Molson Coors have entered into a Relationship
Agreement, which includes customary lock-up and standstill provisions, on
market terms, which last for a period of three years.

 

Application will be made for the 10,856,628 Shares to be admitted to trading
on the AIM Market of the London Stock Exchange which is expected to be on or
around 5 February 2025. These Shares rank pari passu with the existing
ordinary shares of the Company.

 

Buyback

Fever-Tree today announces its intention to commence a share buyback programme
of £71.0m, beginning in February 2025. The strategic partnership with Molson
Coors will allow for improved cash generation as the Company pursues the US
growth opportunity. As such we remain mindful of our capital allocation
framework and will consider the opportunity for further shareholder returns
beyond this initial buyback programme.

FY24 pre-close trading update for the year ending 31(st) December 2024

Financial highlights
 Revenue, £m                         FY24   FY23   Change  Constant currency
   UK                                110.5  114.8  (4%)
   US                                128.0  117.0  9%      12%
   Europe Fever-Tree brand revenue   92.7   94.6   (2%)    0%
   ROW                               32.2   27.2   19%     22%
 Total Fever-Tree revenue            363.4  353.6  3%      4%

   GDP brand revenue*                4.5    10.8
 Total Group revenue                 367.9  364.4  1%      2%

 

Fever-Tree delivered an improved performance in the second half, ending the
year with global brand growth of 4% year-on-year at constant currency. The
brand once again delivered strong growth in the US, accelerating in the second
half, and has delivered market share growth across key markets, despite the
well-publicised subdued environment.

The Group expects to deliver a strong uplift in Adjusted EBITDA for the full
year, in-line with expectations.

In the US, Fever-Tree delivered revenue growth of 12% at constant currency,
accelerating in the second half of the year as we continue to grow ahead of
all of our competitors. And in the important Off-Trade channel, Fever-Tree
finished the year with 27% and 32% share of the Tonic and Ginger Beer
categories respectively(( 1  (#_ftn1) )), with strong growth of our Club Soda
products and can format also driving sales growth.

In the UK, revenue declined by 4%, reflecting the subdued spirits backdrop,
particularly in the On-Trade. However we saw an improved performance in the
second half, the brand performed well in the Off-Trade, outperforming the
competition and growing share across the year to extend our number one value
share position(( 2  (#_ftn2) )). Our non-Tonic products and new innovations
had another year of strong growth, broadening our appeal across more drinking
occasions in the UK.

In Europe, as expected revenue improved notably in the second half to end the
year flat at constant currency, with sales impacted by the well-publicised
poor weather and subdued consumer backdrop. Fever-Tree continued to execute
well against the tough backdrop, achieving our highest value share across
Europe and extending our position as the number one premium mixer brand across
the region(( 3  (#_ftn3) )).

In our Rest of the World region, Fever-Tree delivered 22% revenue growth at
constant currency, supported by the newly established Fever-Tree Australia
business.

Outlook

The strategic partnership with Molson Coors in the US will drive a step change
in quality of earnings for the group over the medium-term:

 

·    Molson Coors' operational expertise and scale, alongside royalty
guarantees over the initial period of the partnership, significantly de-risks
the US profitability profile for Fever-Tree

·    Fever-Tree's US working capital requirements will materially reduce
over time, improving the Group's cash generation, creating incremental
firepower to drive the global opportunity for the brand, alongside the
potential for further shareholder distributions

 

Over the initial period of the partnership we will be investing for growth, as
we transition our existing US set-up and upweight marketing spend behind the
brand, followed by an acceleration in revenue and profit growth thereafter:

 

·    As we establish the partnership in the US this year, it is prudent to
expect low single digit Group revenue growth for 2025 alongside a short-term
EBITDA impact as we transition the business

·    We are confident of delivering double digit Group revenue and EBITDA
growth in 2026, alongside a significant step-up in US marketing spend

·    We expect a sustained uplift in Group revenue and EBITDA growth in
the medium term as we fully realise the benefit in the US of Molson Coors'
distribution platform, operational scale and expertise, and investments behind
the brand

 

The above guidance reflects our intention to report Group revenue on an
adjusted basis, which incorporates US Fever-Tree brand revenue, and therefore
is on a consistent basis with historic revenue reporting.

 

 

 Ends

 

 

For further information:

 

Fever-Tree

Investor queries

Ann Morris-Gibbons, Director of Investor Relations I ann.hyams@fever-tree.com
(mailto:ann.hyams@fever-tree.com) I +44 (0)7435 828 138

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 Broker - Investec Bank plc

David Flin I +44 (0)20 7597 5970

Financial Adviser & Corporate Broker - Morgan Stanley & Co.
International plc

Henry Stewart I Andrew Foster I Jessica Pauley I +44 (0)20 7425 8000

Corporate Broker - Jefferies International Limited

Ed Matthews I Richard Taylor I +44 (0)20 7029 8000

Financial PR advisers - FGS Global

Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0) 7826 534 233

 

Molson Coors Beverage Company

Investor queries

Traci Mangini, Vice President, Investor Relations I
traci.mangini@molsoncoors.com (mailto:traci.mangini@molsoncoors.com)

Media queries

Rachel Gellman Johnson, Senior Director, Corporate Reputation I
rachel.gellmanjohnson@molsoncoors.com
(mailto:rachel.gellmanjohnson@molsoncoors.com)

 

 

About Fever-Tree:

Fever-Tree is the world's leading supplier of premium carbonated mixers for
alcoholic spirits by retail sales value, with distribution to over 90
countries worldwide. Based in the UK, the brand was launched in 2005 to
provide high quality mixers which could cater to the growing demand for
premium spirits, in particular gin, but also increasingly for vodka, rum and
whisky. The Company sells a range of carbonated mixers to hotels, restaurants,
bars and cafes ("On Trade") as well as selected retail outlets ("Off Trade").

About Molson Coors Beverage Company:

For more than two centuries, Molson Coors has brewed beverages that unite
people for all life's moments. From Coors Light, Miller Lite, Molson Canadian,
Carling, Madrí Excepcional and Staropramen to Coors Banquet, Blue Moon,
Simply Spiked, ZOA Energy, Creemore Springs and more, Molson Coors produces
some of the most beloved and iconic brands ever made. While the company's
history is rooted in beer, Molson Coors offers a modern portfolio that expands
beyond the beer aisle with energy drinks, bottled spirits, cider and more. To
learn more about Molson Coors Beverage Company, visit molsoncoors.com
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Furldefense.proofpoint.com%2Fv2%2Furl%3Fu%3Dhttp-3A__molsoncoors.com%26d%3DDwMFaQ%26c%3DeuGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM%26r%3Do5moU4DjH6FHUYiOO9w5CCYzuSrMX2-6jV__ewGnd8E%26m%3DJ7-wl7psHYUonHCsebOClefkXSWASd3_npeZnvwVm8dBFftAuh3wKNDA4UxnWXtQ%26s%3DdXOL1VRq0zC2-PIpjoFqDfWXheHubOsnHBEnlJskaPQ%26e%3D&data=05%7C01%7Crachel.dickens%40molsoncoors.com%7Ca38c18e97a1d49059dd408dbb24af9d1%7C9d22fedaa32c4757aa1db6208426fd0e%7C0%7C0%7C638299807323348706%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=kjsTjzk%2F9AuUxC1LzkCXzW6wm0yhlwVSl2g4qj%2FJGlE%3D&reserved=0)
.

 

This announcement contains inside information. The person responsible for
arranging the release of this announcement on behalf of the Company is Andy
Branchflower, CFO

 

Forward-looking statements

This Announcement may contain certain statements about the future outlook for
Fever-Tree.  Although the directors believe their expectations are based on
reasonable assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be materially
different.

Additional information

This Announcement is made for information purposes only and does not
constitute an offer to sell or issue or solicitation to buy, subscribe for or
otherwise acquire shares in Fevertree Drinks plc in any jurisdiction in which
any such offer or solicitation would be unlawful.

The securities discussed herein are not and will not be registered under the
US Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United States, unless registered under the Securities
Act, or pursuant to an exemption from, or in a transaction not subject to,
registration under the Securities Act. No public offering of the securities
discussed herein is being made in the United States and the information
contained herein does not constitute an offering of securities for sale in the
United States and the Company does not currently intend to register any
securities under the Securities Act.

 1  2024 Nielsen

 2  IRI 2024

 3  2024 Nielsen top 12 EU markets (BE, NL, FR, SP, IT, AT, CH, DK, ROI, NO,
SE, DE)

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