Fever-Tree Updates 2023 Profit Forecast

Fever-Tree warned its 2023 profit would fall short of market expectations as the British tonic maker struggles with rising costs of glass bottles, ingredients and packaging, sending its shares down as much as 11% in early trading on Thursday 26 January.

Details

The company, which sells most of its drink mixers in glass bottles, said on Thursday 26 January higher energy prices because of the Russia-Ukraine war were expected to lift glass production costs by an extra £20 million this year.

Soaring inflation in Britain, its largest market, has also led to lower living standards for many as well as rail strikes over wages, disrupting travel and hitting sales at pubs and restaurants.

Fever-Tree said it saw a notable impact from the strikes in the run-up to the traditionally busy Christmas trading period.

Its shares were down 5.6% at 1053 GMT on Thursday 26 January, after earlier hitting their lowest levels in almost three months.

Demand from UK pubs and restaurants rose about 28% year-on-year in 2022 thanks to the first Christmas period free from pandemic restrictions, but sales to supermarkets were weaker, dragging overall UK revenue down 2%.

The London-based company expects cost pressures to continue in 2023 with further double-digit percentage hikes across its key inputs, including filling fees, ingredients and packaging.

“These temporary additional costs will unwind significantly as the energy price recalibrates,” CEO Tim Warrillow said.

Fever-Tree said its US business saw headwinds from industry-wide port congestion and logistics disruption, after its revenue there of £77.9 million last year fell short of analysts’ expectations of 99.2 million pounds.

“We are most disappointed by the US performance where we thought market share gains might offset a deteriorating macroeconomic environment,” RBC Capital Markets analysts said in a note.

Fevertree forecast adjusted core profit for 2023 of 36-42 million pounds, compared with around 39 million in 2022.

Diageo

The results came as Diageo, the world’s largest spirits maker, signaled on Thursday 26 January that robust demand for its drinks as people made pricey cocktails at home during COVID-19 lockdowns may be slowing in some parts of the world, particularly North America

Read more: Guinness Maker Diageo’s US Sales Lose Fizz, Shares fall

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.