TIDMFEVR
RNS Number : 8793S
Fevertree Drinks PLC
14 July 2020
July 14, 2020
Fever-Tree Drinks plc
Trading update & acquisition of Global Drinks Partnership in
Germany
Fever-Tree, the world's leading supplier of premium carbonated
mixers, announces a trading update ahead of reporting its Interim
Results on 8(th) September 2020.
We had a solid start to the year with Group trading in the first
two months in-line with expectations. From March onwards, trading
across our regions has been dominated by the impacts of COVID-19,
leading to widespread closure of the On-Trade alongside a
consistently strong performance through our Off-Trade channels.
In the UK, positive momentum in both the spirits and mixer
categories in the Off-Trade during lockdown has continued, with
Fever-Tree's Off-Trade sales for the last 12 weeks to 14(th) June
increasing 34%(1) year-on-year as the popularity of long mixed
drinks as an everyday affordable treat continues to resonate with
consumers.
The Group's Off-Trade sales have grown very strongly in the US,
where the increasing popularity of the Fever-Tree brand is driving
category growth. Nielsen data, which covers just under half of
Fever-Tree's US Off-Trade sales, has reported 89%(2) year-on-year
sales increases for the last 12 weeks to 13(th) June, reflecting
the increased at-home consumption during lockdown, as well as the
benefit of incremental distribution that was secured over the
course of 2019. We have also been encouraged by the successful
implementation of the pricing and format optimisation, gradually
introduced on-shelf between March and June 2020.
In Continental Europe, while Off-Trade sales have been robust
across the region, the impacts of COVID-19 have been more
significant in the South which is more reliant on the On-Trade
relative to Northern Europe. The increased uncertainty during the
last few months has led some of our importers to de-stock, which
has impacted our European sales over the first half of the year.
However, we are confident that our prevailing brand strength will
support our growth in the region as countries continue to emerge
from lockdown.
In the ROW region, we continue to deliver strong Off-Trade sales
and secure new distribution, particularly in Australia and Canada,
with our focus turning to the On-Trade as it begins to re-open.
FY20 outlook
The On-Trade is gradually re-opening across many of our regions,
although the easing of restrictions and the extent to which outlets
are re-opening has varied, with ongoing short-term uncertainty.
While the Off-Trade continues to see good momentum in many regions,
we expect some of the Off-Trade demand to switch to the On-Trade as
it begins to re-open. However, the pace and quantum at which this
will occur is likely to be gradual as the On-Trade still has to
contend with cautious consumers, social distancing and therefore
lower capacities.
As previously highlighted, the changes in channel and territory
mix resulting from COVID-19 are expected to lead to gross margin
headwinds during this financial year. However, we remain committed
to our planned investments, particularly in marketing, and
therefore intend to maintain our budgeted c.GBP60m of operational
costs for the full year, enabled by the Group's strong balance
sheet and conviction in our ability to deliver long-term
sustainable growth.
Acquisition of Global Drinks Partnership in Germany to optimise
route-to-market
Fever-Tree is pleased to announce the acquisition of Global
Drinks Partnership "GDP", the Group's sales agent in Germany.
GDP is a well-established sales agent and importer of premium
drinks, with a strong track record of growing premium brands in a
complex, fragmented market. The acquisition consolidates the strong
partnership that Fever-Tree and GDP have developed over the last
seven years in Germany, during which GDP has enabled Fever-Tree to
establish a growing brand presence in the On-Trade and a strong
footprint across national and regional retailers in the
Off-Trade.
The German market represents a notable opportunity for the
Group. It is one of the largest mixer markets in Europe and is
underpinned by emerging premiumisation trends evident in both the
mixer and spirits categories. The acquisition of GDP, with
established management, distribution relationships and sales
channels already in place allows the Group to accelerate the
strength and depth of its presence in Germany much faster than
could have been achieved by building the same capabilities from
scratch.
Alongside Fever-Tree, GDP also distributes a portfolio of
complementary premium beer and spirits brands, which generated
EUR10 million of sales in 2019. This portfolio approach is highly
suited to the size and outlet fragmentation of the German market,
and the Group looks forward to continuing to work with these brands
in the future.
The total consideration for the acquisition comprises EUR2.6
million cash, plus a c.EUR5 million consolidation of historic
balances owed to Fever-Tree by GDP at completion. Alongside this,
Fever-Tree has agreed to fund the repayment of EUR1.9m of
shareholder and other third-party loans owed by GDP.
Tim Warrillow, CEO of Fever-Tree commented; "The completion of
the GDP acquisition is an important step as we execute our growth
plans in Germany, providing us with an ideal platform to take
advantage of the opportunity within the German market and
accelerate our growth. I have worked closely with Morgan Zuill and
his team at GDP since we first entered the German market and have
been impressed with their approach and expertise in growing the
Fever-Tree brand, so I am delighted that they are joining the
Fever-Tree team."
For more information please contact:
Investor queries
Ann Hyams, Director of Investor Relations I
ann.hyams@fever-tree.com I +44 (0)7435 828 138
Nominated Advisor and Joint Broker - Numis Securities
Garry Levin I Matt Lewis I Hugo Rubinstein I +44 (0)20 7260
1000
Joint Broker - Investec Bank plc
David Flin I Alex Wright I David Anderson I +44 (0)20 7597
5970
Media queries
Oliver Winters, Director of Communications I
oliver.winters@fever-tree.com I +44 (0)770 332 9024
Brunswick Group I fevertree@brunswickgroup.com I +44 (0) 207 404
5959
(1) UK Nielsen 12 weeks ending 14(th) June 2020; (2) Nielsen 12
weeks ending 13(th) June 2020
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END
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