Daily Express

Fevertree handed a tonic from overseas


THE perfect gin and tonic. It’s something many of us are very well versed in.

But last week’s results demonstrat­ed that crossing internatio­nal waters is the key to Fevertree’s future growth.

The UK is still the group’s biggest market, but Fevertree has outgrown its home. What’s more, economic and political uncertaint­y has seen shoppers spending less on groceries – alcohol and tonic included.

Full year sales in the UK are expected to grow just 2 per cent, as lower supermarke­t sales offset growth in bars and restaurant­s.

It was a different story across the Atlantic. A strong second half means US sales are now expected to grow by 34 per cent this year.

Sparkling numbers are welcome news for investors, especially as Europe and the rest of the world also boasted impressive growth.

But gin isn’t for everyone, particular­ly overseas.

Take America, for example, where preference changes by state. Kentucky Mule, anyone?

This puts the focus on Fevertree’s other mixers, sch as ginger beer or cola, although that’s already a crowded marketplac­e, and taking on Coca-Cola on its home turf won’t be easy. Drinkers order a “rum and Coke” not a “rum and cola”, after all.

The good news is that, despite being born and bred in Britain, Fevertree is built for internatio­nal expansion. It out-sources most of its operations, like bottling and distributi­on, which gives the group flexibilit­y and makes expansion cheaper.

There’s no arguing that Fevertree’s growth story has been a remarkable one. But as the UK market matures and it looks beyond our shores for growth, challenges lie ahead.

Fevertree now trades at 32.3 times future earnings. This is less than half of what it was in 2018, but it still doesn’t leave much room for error.

“This article is designed for investors who make their own decisions without advice. If unsure whether an investment is right for you, you should seek advice. Shares can rise and fall in value so you could get back less than you invest.”

 ??  ?? EMILIE STEVENS EQUITY ANALYST Hargreaves Lansdown www.hl.co.uk
EMILIE STEVENS EQUITY ANALYST Hargreaves Lansdown www.hl.co.uk

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