Fever-Tree Drinks plc
FY23 pre-close trading update for the year ending 31st December 2023
Good operational progress has resulted in a doubling of EBITDA in the second half of the year despite a challenging trading environment.
Financial highlights
| Revenue, £m | FY23 | FY22 | Change | Constant currency |
| UK | 114.8 | 116.2 | (1%) | |
| US | 117.0 | 95.6 | 22% | 24% |
| Europe (Fever-Tree brand revenue) | 94.6 | 89.2 | 6% | 4% |
| Europe total revenue* | 105.4 | 101.0 | 4% | 2% |
| ROW | 27.2 | 31.5 | (14%) | (10%) |
| Total | 364.4 | 344.3 | 6% | 6% |
*includes GDP portfolio brand revenue
Fever-Tree delivered Group revenue growth of c.6% year-on-year to c.£364 million. Despite macroeconomic headwinds, the brand continues to make good progress, particularly in the US, and has delivered market share growth across our key markets. The Group expects to deliver Adjusted EBITDA for the full year of c.£30 million, within our guidance range. This means the Group doubled EBITDA in the second half of the year following significant progress in driving operational efficiencies and offsetting material inflationary cost pressures, and will continue to deliver significant margin improvement in 2024.
UK – Continued share gains
· Total UK revenue was ahead of guidance reflecting good trading in Q4, particularly in the On-Trade.
· In the Off-Trade, the brand delivered notable growth in our Gingers, Flavoured Sodas, and Adult Soft range, as well as a strong start for our new cocktail mixers, whilst in the On-Trade, despite the continued pressure on the cost of living, the brand ended the year with its strongest ever value share[1].
· The increasing diversification of the portfolio has ensured the brand remains the clear leader of the total UK mixer category[2] and best placed to capture gains as sentiment continues to improve.
US – Strong volume and revenue growth
· Fever-Tree delivered strong revenue growth of 22% during the year (24% at constant currency) despite the impact of a greater than expected FX headwind and a subdued macroeconomic environment in Q4.
· In the Off-Trade, Nielsen recorded sales increased by 24% year-on-year[3], driven by the strong performance of our new can format across all flavour categories.
· The brand had a very encouraging December and continues to perform ahead of the mixer category, extending our number one value share in both the Tonic and Ginger Beer categories3, with our innovation also performing strongly as we continue to broaden our category opportunity.
Europe – Brand continues to strengthen despite challenging trading backdrop
· Fever-Tree brand revenue grew by 6% (4% at constant currency) during the year. We continue to extend our premium mixer leadership position across Europe[4], but our revenue growth was impacted by subdued consumer sentiment in several markets, most notably in Germany. This meant our total revenue in Europe, including GDP portfolio brands in the German market, increased by 4% (2% at constant currency).
· We strengthened our route-to-market across the region and successfully completed the transition to new distributors in France and Greece during 2023, setting the brand up to take advantage of the significant category growth opportunities in these markets over the coming years.
Rest of the World – Building the platform for long-term growth
· Despite a positive second half performance, Fever-Tree’s revenue declined by 14% for the full year (-10% at constant currency). Our revenue across the Rest of the World region excluding Australia was in growth, however, the transition to a new subsidiary set-up in Australia, which included a one-off inventory buy-back in the first half of the year, impacted revenue delivery for the total region.
· We remain the number one premium mixer in Australia[5] due to good underlying momentum of the brand and look forward to 2024 with optimism having set ourselves up to take advantage of this attractive market going forward.
· Fever-Tree also continues to make progress across our other Rest of the World markets, with exciting plans in Japan as we build on our relationship with Asahi Breweries.
FY24 outlook and guidance
· We expect to deliver good growth in 2024 and reiterate our guidance of 10% revenue growth for the Fever-Tree brand. We are refocusing our portfolio of non-Fever-Tree brands in Germany and, as such, expect c.£7 million reduction in portfolio brand revenue in 2024. As a result of this, we expect total Group revenue to grow by 8%.
· Importantly, we remain confident of delivering a significant improvement in gross margin in 2024, underpinned by new glass contracts with fully hedged energy pricing, lower Trans-Atlantic freight rates, a continuation of cost-saving initiatives, alongside our long-term approach to sustainable price increases across our markets. Therefore, we are also reiterating our guidance of c.15% Adjusted EBITDA margin for 2024.
Tim Warrillow, CEO of Fever-Tree commented:
“The Fever-Tree brand has performed well in 2023, growing our market share in all of our key markets, despite a challenging macroeconomic environment. The US ended the year as our largest region, where we have extended our leadership position in both the Tonic and Ginger Beer categories. The brand enjoyed a strong Christmas trading period in the UK, especially in the On-Trade, whilst at home, our new Espresso Martini mixer clearly became a festive drink of choice. Despite recession in Germany impacting our European performance and the one-off effect of the transition to our new subsidiary in Australia, we remain confident of driving good growth in those regions in 2024.
Importantly, we have driven a significant increase in our EBITDA margin in the second half of the year and are confident that the operational efficiencies we have implemented, alongside a reduction in inflationary cost pressures, will drive a doubling of EBITDA in 2024 and provide a strong platform for profitable growth going forward.”
Fever-Tree will announce its Preliminary Results for the year ending 31st December 2023 on 26th March 2024.
For more information please contact:
Investor queries
Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com I +44 (0)20 4516 8106
Media queries
Oliver Winters, Director of Communications I 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
Corporate Broker – Morgan Stanley & Co. International plc
Andrew Foster I Jessica Pauley I +44 (0)20 7425 8000
Financial PR advisers – FGS Global
Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0)7826 534 233