Fever-Tree loses fizz as shares dive

FEVER-TREE’S value crashed £629m yesterday as it issued its second warning about sales within three months.

In a blow to investors, the tonic water company said UK sales fell over the Christmas period, triggering a sell-off that sent shares plunging more than 27pc.

The business blamed the lacklustre performance on ‘consumer belt-tightening’ and said it expected conditions to remain challenging in 2020.

There are signs that the gin boom – which Fever-Tree has ridden to huge success – could be losing its fizz as drinkers increasingly turn to spiced rums.

An update from AIM-listed drinks maker Distil said sales of gin had fallen over the festive period while sales of rum had increased.

For several years Fever-Tree was the toast of the City, with the socalled ‘ginnaissance’ helping its premium mixers to grow in popularity and challenge the dominance of rival Schweppes.

Last night boss Tim Warrillow ( pictured left with co- founder Charles Rolls) insisted that his business’s global ambitions had ‘real momentum’ despite the disappointing sales in the UK.

The firm is expanding operations in the US – the largest importer of British gin – in a bid to crack the lucrative market, and expects the country to become a ‘ very significant’ source of sales.

Warrillow, 45, said: ‘While the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond.’

he said that Fever-Tree’s decision to increase investment in other regions, in particular in the US, ‘reflects our belief and excitement in the long-term opportunity ahead for the group’.

But Russ Mould, investment director at broker AJ Bell, said: ‘Management will need to make sure they aren’t taking their eye off the ball with their homeland operations while pursuing the US opportunity.’

Fever-Tree said overall sales in 2019 rose 10pc to £260.5m.

That compared with growth of 40pc in 2018. And it was less than the £266m to £268m predicted when it last cut its forecasts in November. UK sales dipped from £134.1m to £132.6m. US sales rose from £35.8m to £47.6m, while sales in europe rose from £55.5m to £64.4m and sales in the rest of the world rose from £12m to £15.8m.

Shares fell 27.2pc, or 542p, to 1453p.