FY20 Trading Update
Fever-Tree Drinks plc
FY20 Trading update
Fever-Tree, the world's leading supplier of premium carbonated mixers, announces a trading update for the year ending 31st December 2020, ahead of reporting its Preliminary Results on 18th March 2021.
Financial highlights
|
Revenue, £m |
FY20 |
FY19 |
Change |
|
UK |
103.3 |
132.6 |
(22)% |
|
US |
58.5 |
47.6 |
23% |
|
Europe* |
65.3 |
64.4 |
1% |
|
ROW |
25.0 |
15.8 |
58% |
|
Total |
252.1 |
260.5 |
(3)% |
*FY20 includes £6.4m revenue from GDP's portfolio brands
Fever-Tree delivered a resilient performance in 2020, underpinned by strong sales and strategic progress in the Off-Trade and e-commerce channels across our regions which helped to mitigate the impact of widespread closures of the On-Trade during the year.
Despite the ongoing challenges posed by the pandemic the Group delivered a strong second half performance across our key markets and is expected to deliver revenue for the full year of c.£252 million, which is ahead of the guidance provided at our Interim Results in September.
UK
The Group's performance in the UK in 2020 reflected not only our ability to adapt quickly to the shifts in consumer behaviour posed by COVID-19 but also the underlying strength of our brand with both our customers and consumers.
The Group's Off-Trade sales increased by c. 20% compared to 2019 as we took proactive steps to build on the growing popularity of long mixed drinks as an everyday affordable treat at home. We worked closely with our retail and spirits partners, launched new flavours and formats such as our Premium Soda range and 15x150ml can packs, and upweighted our marketing spend, enabling us to drive greater consumer trial and awareness at home. This resulted in a significant uplift in household penetration and Fever-Tree finished the year as the clear market leader with a value share of 40.1%[1].
As expected, our On-Trade sales were impacted by the periods of lockdown and on-going restrictions during the year, leading to a decline of c. 60% year-on-year. While the On-Trade currently remains closed, we continue to maintain strong relationships with our On-Trade partners and are well placed to benefit from this as the sector begins to reopen in the coming months.
US
2020 saw Fever-Tree build significant momentum in the US delivering a 23% increase in overall revenue. This result was particularly encouraging given the very strong comparators from the second half of 2019 and is testament to the strength of our Off-Trade and e-commerce performance amid widespread On-Trade restrictions during the year.
Our Off-Trade sales have grown very strongly, where the increasing popularity of the Fever-Tree brand is driving category growth, supported by increased spirits consumption, especially in the premium segment. This progress was reflected in the Nielsen data, where continued strong growth in the second half of the year resulted in a full year sales increase of 57%[2] for 2020.
The pandemic led to a sustained shift to at-home consumption in the US, reflecting the growing interest in making long mixed drinks at-home, which alongside the roll out of the price optimisation and continued investment in our marketing spend, attracted more consumers to the brand, driving further trial and adoption opportunities.
In addition, we are delighted to announce that in December 2020 we started to produce Fever-Tree products with a new bottling partner on the West Coast of the US. As we ramp up production at that site it will not only reduce our transport and logistic costs, but it will also significantly reduce lead times, providing greater agility to respond to the growing demand in the US market.
Europe
European revenue for the full year was up 1% to £65.3m, a robust performance given the On-Trade exposure of our Southern European markets which were heavily impacted by the pandemic. The Group made very encouraging progress in the Off-Trade during the year with strong sales and value share gains across our key markets. As expected our sales strengthened during the second half of the year as the impact of importer de-stocking in the first half unwound. The integration of the GDP business in Germany is well progressed and their portfolio brands generated £6.4m of incremental revenue, which contributed to the strong second half performance.
Our European importers are serviced predominately through our network of three bottling sites and one canning site across the region which has enabled us to trade with very little disruption since Brexit on 1st January 2021.
Despite the ongoing impact of COVID-19 on the On-Trade, we are confident that our prevailing brand strength, along with the well-established market trends towards premiumisation across Europe, continues to position us very strongly as we look to the opportunity ahead in the region.
ROW
We have made excellent progress in our two largest markets, Australia and Canada, delivering very strong Off-Trade sales and securing new distribution which contributed to an overall revenue growth for the region of 58% to £25.0m.
In Australia we made significant progress during the year, driving category growth and increasing our position as the clear premium mixer category leader as we increased share across both retail and liquor channels. Canada accelerated strongly in the second half, with Fever-Tree driving more incremental value in the tonic category than any other brand, whilst results were further assisted by an inventory build with our importer.
The progress made in 2020 and the increasing strength of the Fever-Tree brand in both Australia and Canada provides us with a strong platform to drive further category growth in these exciting markets, further underlining the truly global opportunity ahead for the brand.
Financials
Shifts in region and channel mix continued to impact the gross margin during the second half of the year. Our EBITDA margin is in-line with expectations, and while this is down on the prior year, due to the strong revenue performance, earnings are expected to be ahead of expectations.
The Group remains in a strong financial position, with a robust balance sheet, underpinned by Group cash of £143m (12% increase year on year).
FY21 outlook
While uncertainty continues into 2021, our resilient performance over the course of 2020 and the momentum seen in many of our key markets alongside our continued brand strength and supportive trends, gives us confidence in the Group's position as we look ahead.
The Off-Trade continues to see good momentum in many regions with at-home consumption and the growing interest in long mixed drinks becoming increasingly established, supported by retailers and spirits partners alike. We would expect some of the Off-Trade demand to switch to the On-Trade as it begins to re-open during the year, and with our brand strength and the relationships we have with our On-Trade partners we are well placed to benefit.
Whilst On-Trade restrictions and closures resulting from the pandemic will continue to influence channel and territory mix, we remain committed to investing in the future opportunity for the brand across all our regions, enabled by the Group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth.
Tim Warrillow, CEO of Fever-Tree commented:
"I am very proud of how the Fever-Tree team has responded over the course of 2020 and the results that we have delivered. The last twelve months have highlighted the strength of the Fever-Tree brand amongst our consumers and customers as well as the fantastic team and partners we have in place. We made a conscious decision not to furlough any of the team while continuing to invest in the opportunity ahead and this has positioned us well as we look beyond the current uncertainty.
The COVID-19 pandemic has thrown up many challenges but it has also accelerated the trends we have been talking about for a number of years - namely the growing interest in premium spirits and long mixed drinks as at-home mixing has taken hold not only with consumers but retail and spirits partners alike. Our ability to capitalise on and drive this trend has seen Fever-Tree reach more households and become a feature in more fridges worldwide than ever before.
While our performance across the Off-Trade in the UK and Europe has been very encouraging, special mention must be made of our performance in the US, Australia and Canada, where we have seen outstanding growth in the past twelve months underlining the global opportunity still ahead for the brand. I am of course mindful that uncertainty remains especially in terms of the timing of reopening of the On-Trade across many markets but our performance over the last year, combined with our track record against the competition and the supportive global trends gives us confidence in the future growth potential for Fever-Tree."
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
Media queries
Oliver Winters, Director of Communications I oliver.winters@fever-tree.com I +44 (0)770 332 9024
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 +44 (0)20 7597 5970
Financial PR advisers - Finsbury
Faeth Birch +44 (0)7768 943 171; Chris Ryall +44 (0)7342 713 748; Amanda Healy +44 (0)7795 051 635
[1] IRI 13 weeks to 27 December 2020
[2] Nielsen: 52 weeks to 26th Dec 2020
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