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Fever-Tree fizzes higher on upbeat full-year outlook
Fever-Tree fizzed higher on Wednesday as the posh tonic maker said the outcome for the full-year will be "comfortably ahead" of market expectations on the back of "very strong" growth.
In a trading update for the year to the end of December, the company said it expects full-year revenue to be up around 66% on 2016 at £169m, with sales in the second half expected to be up 58%.
In the UK, the performance was "exceptionally strong" again, with Fever-Tree gaining market share and ending the year as the number one mixer brand by value in the UK off-trade channel. Full-year revenue in the UK is expected to be up around 96% on 2016 following a particularly strong trading performance over the Christmas period. Fever-Tree said the growth of the mixer category continues to accelerate, driven by its "unwavering focus" on quality and supported by the ongoing premiumisation of the wider spirits sector.
In Continental Europe, sales performed well in the second half of 2017, with full-year revenue expected to be up 42%, while revenue in the USA is set to rise around 39% from last year. Fever-Tree said the establishment of a North American office and the appointment of Charles Gibb as its CEO were "significant" milestones.
Sales growth in Rest of World accelerated in the second half and full year revenue is expected to be up 57%.
The company said that in light of its "very strong" sales performance in the final two months of the year, it has brought forward planned operational expenditure in the US to invest ahead of growth. The year-end net cash position is expected to be in line with board expectations with significant cash balances still to collect given the strength of trading over the Christmas period.
Co-founder and chief executive officer Tim Warrilow said: "Our pioneering approach and commitment to providing consumers with the highest quality range of mixers continues to capture peoples' imagination and is transforming the wider UK mixer category which as a result is now the fastest growing category across the soft drinks sector.
"While we have seen strong growth across all regions, our performance in the UK over the Christmas period was once again exceptional. Our growing range of mixers and formats are appealing not only to our loyal customers but also bringing consumers back to the category and importantly attracting a new younger audience.
"There is clear evidence that the same trends of premiumisation and mixability that we've previously highlighted are accelerating and we are increasingly excited by the global opportunity this presents particularly as we transition to our own operations in the US."
Neil Wilson, senior market strategist at ETX Capital, said: "There is no stopping the momentum behind the Fever-Tee brand - yet another upgrade. I'm losing count of how many times management has raised its profit expectations but my estimates this was the sixth upgrade in little over a year - exceptional performance by a brand that has simply got everything right so far. We're running out of superlatives."
George Salmon, equity analyst at Hargreaves Lansdown, said: ""With gin sales soaring, 2017 was the year of the juniper. However, it shouldn't be forgotten what a good job Fever-Tree has done in capitalising on this tailwind. With UK sales nigh-on doubling, its tonic is now among the most popular mixers in the country. Not bad for a brand that's only been around since 2005.
"The next chapter in the growth story is set to be written away from these shores. Fever-Tree has its sights on the US and Europe, and sales momentum in both these markets looks strong. Encouraging signs, but we can't help but wonder what happens as and when the gin bubble bursts."
At 0945 GMT, the shares were up 3.9% to 2,531p.