Interactive Investor

ii view: Fevertree felled by spiralling costs

26th January 2023 15:35

Keith Bowman from interactive investor

Shareholders in this this premium drinks maker have had little to toast in recent months. But is that about to change? 

Full-year trading update to 31 December

  • Revenue up 11% to £344 million
  • Expects adjusted profit of £39 million

Guidance for 2023:

  • Expects revenue of between £390 million and £405 million
  • Expects adjusted profit of between £36 million and £42 million

Chief executive Tim Warrillow said: 

"2022 has seen the Fever-Tree brand continue to gain traction and prominence across the globe resulting in double digit revenue growth and profits in line with expectations. Furthermore, the brand continues to increase its clear global market leadership position and remains the primary driver of this increasingly prominent international drinks category.”

ii round-up:

Premium soft drinks maker Fevertree Drinks (LSE:FEVR) today blamed ongoing cost pressures, particularly in relation to energy use for its glass bottles, for holding back profit expectations for 2023.  

Adjusted profit (EBITDA) for the full year 2023 is now forecast by management to come in at between £36 million and £42 million, around 15% below City forecasts and potentially below the £39 million expected to be reported for 2022. 

Fevertree shares fell by more than 10% in UK trading, although later recovered slightly. The tonic maker's share price has more than halved over the last year. Fellow soft drinks maker Britvic (LSE:BVIC) is down around a tenth in that time, while premium alcoholic spirits maker Diageo (LSE:DGE) is down around 5%.

Around four-fifths of Fevertree’s sales come in glass bottles, with the direct energy component of glass manufacture alone forecast to add an additional £20 million in costs during 2023 compared to early 2022.

Fevertree sales for 2022 of £344 million rose from 2021’s £311 million with sales for 2023 expected to grow to between £390 million and £405 million, largely fuelled by growth in the USA. 

Accompanying management outlook comments flagged expectation for these temporary additional costs to unwind significantly as the energy price recalibrates. New products and fresh marketing campaigns are also expected to feed into prospects. 

Full year 2022 results are scheduled for 22 March. 

ii view:

Launched in 2005, products for the AIM listed company are now sold in more than 75 countries. Its carbonated drinks, regularly used as mixers with alcoholic spirits, are supplied to customers including hotels, restaurants, bars and cafes or on-trade outlets, as well as supermarkets and off-licenses or off-trade retailers. Customers include Hilton Hotels, Marriott International Inc Class A (NASDAQ:MAR), and The Walt Disney Co (NYSE:DIS). Fevertree drinks include tonics, ginger ales, ginger beer, cola, sodas, and lemonades.

For investors, elevated costs, including those for energy use in the making of its glass bottles, are taking the fizz from profits. A cost-of-living crisis and rising interest rates make for a tough backdrop, while a historic and forecast dividend yield of under 2% contrasts with a yield of over 3.5% for Britvic. 

On the upside, overseas sales for each of its regions grew by double digits in this latest period, with room for further expansion. Group initiatives to aid costs include establishing production overseas to reduce transport costs, while cash held stood at £100 million as of its last interim results. 

For now, and while room for future growth remains, investors may first demand evidence of easing cost headwinds. 


  • Diversified geographical sales
  • Strong brand 


  • Battling cost headwinds
  • Uncertain economic outlook

The average rating of stock market analysts:


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