Fever-Tree Christmas sales fail to sparkle

(qlmbusinessnews.com via news.sky.com– Mon, 20th Jan 2020) London, Uk – –

The company, which has seen stellar growth over recent years, said it had not been immune from recent weak consumer confidence.

Mixer-maker Fever-Tree has warned of lower than expected revenues after a “challenging” Christmas in the UK as consumers tightened their belts.

Shares fell 20% after the company said it was “not immune” from weak consumer confidence and a slowdown in spending, adding that its full-year profits for the year were also expected to fall compared to 2018.

It said sales for 2019 in the UK – its biggest market – were 1% lower and that conditions were expected to remain tough for the first half of 2020.

The figures add to evidence that consumers reined in spending over the Christmas period despite hopes for a post-election bounce in confidence.

Fever-Tree said overall 2019 revenues were still 10% higher overall at £260.5m thanks to strong growth overseas but that was short of the board's expectations.

The group said that investment in new markets meant profit margins had been squeezed and earnings were expected to decline by 5% when compared to 2018.

Fever-Tree has enjoyed stellar growth and a surging stock price since its flotation in 2014, buoyed by the success of its premium tonic water, a popular mixer for upmarket gin.

But it had a tougher time last year and in November blamed a consumer spending slowdown as it cut its full-year revenue forecast to £266m-£268m – and will now miss this reduced target.

Fever-Tree said: “The expected improvement in trading during this important period did not materialise with the macroeconomic uncertainty leading to a subdued end to the year.”

Chief executive Tim Warrillow said: “Whilst the UK has clearly not been immune from the consumer belt tightening seen in recent months, we remain the key category leader and have a strong platform to return to growth during 2020 and beyond.”

Fever-Tree said sales in its US market were up 33% though initiatives designed to try and unlock long-term stateside expansion are expected to hold back growth in 2020.

Revenue growth of 16% in Europe was “slightly behind expectations”, the company added.

By John-Paul Ford Rojas