Fevertree Drinks plc
FY23 Preliminary Results to 31 December 2023
Good sales and operational progress resulted in a doubling of EBITDA in the second half of 2023.
Financial Highlights
· Good underlying sales momentum resulted in revenue growth of 6% despite macroeconomic headwinds.
· The US has grown to become our largest revenue-generating region, with strong growth of 22%.
· Gross margin of 32%, in-line with expectations, with a 280bps improvement delivered in the second half of the year compared to the first half, and further improvements to come in 2024.
· The Group has started 2024 in-line with expectations and remain on track to double EBITDA in FY24.
| £m | FY23 | FY22 | Change |
| Revenue | |||
| UK | 114.8 | 116.2 | (1)% |
| US | 117.0 | 95.6 | 22% |
| Europe (Fever-Tree brand revenue) | 94.6 | 89.2 | 6% |
| Europe total revenue* | 105.4 | 101.0 | 4% |
| ROW | 27.2 | 31.5 | (14)% |
| Total | 364.4 | 344.3 | 6% |
| Gross profit | 117.0 | 118.8 | (2)% |
| Gross margin | 32.1% | 34.5% | (240)bps |
| Adjusted EBITDA[1] | 30.5 | 39.7 | (23)% |
| Adjusted EBITDA margin | 8.4% | 11.6% | (320)bps |
| Diluted EPS (pence per share) | 13.18 | 21.32 | (38)% |
| Ordinary Dividend (pence per share) | 16.64 | 16.31 | 2% |
| Net cash | 59.9 | 95.3 | (37)% |
*includes revenue from GDP’s portfolio brands
Strategic highlights
· The brand continued to strengthen its position globally, with market share gains in all our key markets.
o We remain the clear market leader in the UK, with c.45% value share of the total mixer market[2].
o In the US, Fever-Tree has extended its leadership position in the Ginger Beer and Tonic Water categories.
o In Europe, the brand is the clear leader of the premium mixer category, growing its value share during 2023.
o In the RoW, Fever-Tree remains the number one premium mixer brand in Australia and has just become the number one Ginger Beer in Canada by value[3].
· Innovation remains an important part of our growth.
o Non-Tonic products comprised c.40% of our global sales during 2023, up from c.25% in 2019.
o Our Gingers and Flavoured Soda products are growing at pace in the UK, US and Europe.
o Outside our core mixers, our new Adult Soft Drinks grew by over 30% in the UK Off-Trade and our Cocktail Mixers have started well in the UK and the US, with more launches planned in 2024.
FY24 outlook and guidance
The Group remains comfortable with consensus expectations of c.10% growth for the Fever-Tree brand in the year ahead, with a continuation of strong double-digit growth in the US and a return to growth in the UK and Rest of the World, where we expect to realise the benefit of our new subsidiary set-up in Australia.
As highlighted in January, we are reiterating guidance of a c.600bps gross margin improvement during 2024. This is underpinned by improved glass pricing, with fully hedged energy costs, materially lower trans-Atlantic freight costs, and the continuation of our programme of optimisation and procurement initiatives to deliver further operational efficiencies.
We expect operating expenses to be c.23% of revenue and, as a result, the Group expects to deliver Adjusted EBITDA margin in line with previous guidance of c.15%.
Tim Warrillow, Co-Founder and CEO of Fever-Tree, commented:
“2023 was a year when the Fever-Tree brand once again grew in breadth and depth, with market share gains across the globe. Perhaps the most significant milestone was establishing the US as our largest region, and with it, extending our market leadership position in both the US Tonic Water and Ginger Beer categories.
The G&T of course remains an integral growth driver for the Group but 2023 was a year where we saw a step change in our non-Tonic portfolio. Not only have our Gingers and Sodas continued to see strong growth but the last 12 months have seen the launch of our range of Cocktail Mixers alongside the roll out of our Adult Soft Drink range in the UK.
Taken alongside softening inflationary pressures, the operational efficiencies we are delivering means I am confident that we are entering 2024 in a very strong position from an operational perspective and have an excellent platform for strong profitable growth going forward.”
There will be a live audio webcast on Tuesday 26th March 2024 at 10:00am GMT which can be accessed below:
Fever-Tree FY23 Results webcast
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 GlobalFGS Global | FeverTree-LON@fgsglobal.com
FY23 Group Performance
Fever-Tree delivered revenue of £364.4 million, representing an increase of 6% year-on-year. As we reflect on our financial and operational performance over the last 12 months, it’s in the context of the inflationary cost pressures the business has faced, the adverse weather, and the subdued consumer sentiment, especially across Europe. Despite this, the brand is stronger than ever, and we continue to extend our position as the number one premium mixer brand globally, outperforming our competitors in all our key markets.
We were voted “Number One Top Selling Mixer” and “Number One Top Trending Mixer” for the tenth year running by Drinks International. Another demonstration of the brand leading the global premium mixer category.
The Group delivered gross margin in-line with expectations, at 32.1%, which was a 240bps decline compared to the previous year, reflecting the extremely challenging inflationary environment. Fever-Tree has of course not been the only business facing an extremely challenging inflationary environment but our global footprint, growth profile and determination to continue to take advantage of the opportunity ahead of us meant we were perhaps more exposed than many, especially in relation to trans-Atlantic freight rates and elevated energy costs linked to glass production. Whilst our ability to influence the wider macro-economic environment is limited, we recognised the need to drive operational change and efficiencies and with it an improvement in margins as the year progressed. However, we were also conscious of remaining resolutely focused on delivering top line growth and strengthening our market share across the globe.
There is undeniably a fine balance to strike between the two and our team has responded and delivered on both fronts as the year progressed. We saw a marked improvement during the second half of the year as pressures started to subside and we began to see the benefits of our proactive steps to drive operational efficiencies, such as signing a long-term agreement with a new primary glass supplier in the UK and Europe as well as taking a measured and consistent approach to our pricing across our markets. Consequently, the Group doubled EBITDA in H2 versus H1 and is well-set to continue its margin and profit improvement into 2024 and beyond.
The business has remained focused on the substantial long-term global opportunity for the brand. Fever-Tree has increased its distribution and brand awareness in many of our largest markets, including the US, Italy, France, and Australia, setting the brand up for further growth. But perhaps the most significant milestone has been the US becoming our largest market by revenue. This is testament to the strength of the brand in the US where we have extended our number one position in both the Ginger Beer and Tonic categories, as well as broadening our range into new flavours, formats, and Cocktail Mixers.
The Gin & Tonic serve remains an integral growth driver for the Group with plenty of white space and growth opportunities for our Tonic range across our markets but 2023 saw a step change in our non-Tonic portfolio especially in our more mature markets such as the UK. Not only have our Gingers and Sodas continued to see strong growth but the last 12 months has seen the launch of our range of Cocktail Mixers alongside the roll out of our Adult Soft Drink range. The team has always been passionate about our innovation whether it be going out to find new ingredients or talking to our bartenders or spirits partners to help develop new ideas and our new Cocktail Mixer range is no different. Not only do they taste fantastic, but they are providing consumers with an easy way into a category that is becoming more popular, ensuring the brand is catering to an increasingly broad range of consumer preferences and drinking occasions.