Higher U.S. sales help British tonic water seller shield itself from U.K. slump

By Louis Goss

Fevertree Drinks on Thursday said a push to capture the leading position in the market for ginger beer and tonic water in the U.S. helped it offset slumping sales of its upmarket soft drinks and mixers in the U.K. and Europe.

The London-listed drinks seller, which first entered the U.S. market in 2007, said its sales in America were boosted by the launch of its new 150 milliliter cans and partnerships with upmarket venues including Marriott, Soho House and Hilton Hotels.

The British company, which sells tonic water, ginger beer and lemonade that are often used as mixers, previously saw the U.S. become its largest market last year following a surge in sales in America and stagnant sales of its small bottles of premium soft drinks in the U.K.

Fevertree has now seen its American segment secure an even greater lead over its British and European divisions following a 7% surge in its U.S. sales, to GBP60.3 million ($78.6 million), a 6% drop in its U.K. sales to GBP50.9 million, and a 12% drop in its Europe sales to GBP44.5.

Shares in Fevertree Drinks (UK:FEVR) (FQVTF) fell 10% on Thursday having lost 40% of their value over the previous 12 months on the back of a slump in its profits after higher energy prices increased the cost of producing its trademark glass bottles.

The Hammersmith headquartered soft drink maker, which was first started in 2004, blamed wet weather at the start of the summer in the U.K. and Europe for the slumping sales in the first six months of the year ending on Jun. 30.

Fevertree said it had already started to see its U.K. and European sales pick up in the second half of summer on the back of an improvement in the weather. "We have seen a strong improvement in these regions as the summer belatedly arrived," CEO Tim Warillow said.

In the U.S., Fevertree said it had extended its lead in the ginger beer and tonic water categories, as the company said its newly launched Margarita, Light Margarita, and Bloody Mary cocktails were also performing well in the country.

Fevertree, which was started by spirits industry entrepreneur Charles Roll and former advertising executive Tim Warrillow, said it is aiming to further boost its U.S. sales through new advertising campaigns including its partnership with the PGA Tour.

The company said it had also increased its margins by lowering its glass production overheads and reducing its trans-Atlantic shipping costs while also increasing prices across its key markets.

This increase in the drinks sellers margins helped boost Fevertree's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 79% year-on-year to GBP18.2 million.

-Louis Goss

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09-12-24 0504ET

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