Investors toasted Fevertree Drinks (FEVR:AIM) after the carbonated mixers company boosted FY25 guidance, sending shares up 5% to 939p. There was also relief as Fevertree maintained its FY26 outlook and confirmed that a previously announced, additional £30 million share buyback will begin in February, building on last year’s £100 million return of capital.
| Share price: 939p (+5%) | PE: 34x |
| Market cap: £1bn | Yield: 1.9% |
The guidance upgrade follows a strong performance from the brand in the second half of last year, with Fevertree generating further market share gains, notably in the US, its largest market.
The posh tonic water-to-cocktail mixers supplier now expects FY25 sales and adjusted EBITDA to be ‘marginally ahead’ of consensus estimates of £372.4 million and £44.4 million respectively.
Palate-pleasing progress
The beverages group called out ‘good momentum in the second half which has resulted in Fever-Tree brand revenue increasing by 5% in H2, and full year growth of 4% (both at constant currency).’
In FY25, US revenue bubbled up 6% as the integration of the company’s brands into Molson Coors’ national network of distributors progressed through the year, while the brand enjoyed particularly strong growth in Australia, New Zealand and Canada.
And while UK sales were down 2% in FY25, second half trading picked up thanks to robust sales through the retail channel with ‘increasing momentum’ across the portfolio beyond tonic, particularly in soft drinks.
Building momentum
CEO Tim Warrillow said Fevertree’s partnership with Molson Coors in the US was ‘progressing well, and the momentum behind the brand is especially encouraging, giving us confidence in the growing opportunity in our largest market as execution moves beyond the transition phase.’
Warrillow added: ‘Across all our markets, we are continuing to build momentum as we broaden Fever-Tree beyond tonic, positioning the brand as not only the premium mixer but also premium soft drink of choice. We are uniquely positioned to unlock the growth opportunities afforded by the consumer trends towards moderation, premiumisation and longer, lighter serves.’
Fevertree remains ‘comfortable’ with FY26 consensus pointing to a 10% rise in sales to £409.4 million and adjusted EBITDA growth of around 12.5% to £49.9 million.
Considering the difficulties facing the hospitality and retail sectors and subdued demand for spirits, this was a refreshingly upbeat update from Fevertree.
The premium mixer marvel’s tie-up with Molson Coors looks to be paying off and should deliver additional share gains in the US, which remains the big prize for the company.
Read the press release here: https://investors.fever-tree.com/regulatory-news/500
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