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Fevertree Drinks PLC - Preliminary Results

RNS Number : 0075A
Fevertree Drinks PLC
21 March 2017

21st March 2017


Fevertree Drinks plc ("Fever-Tree")


Preliminary Results


Fever-Tree, the world's leading supplier of premium carbonated mixers, today announces its Preliminary Results for the year ended for 31 December 2016.


Financial highlights1:


·      Revenue up 73% to £102.2m (2015: £59.3m)

·      Gross profit margin of 55.2% (2015: 52.1%)

·      Adjusted EBITDA up 97% to £35.8m (2015: £18.2m)

·      Robust balance sheet with net cash at year end of £26.9m (2015: £11.6m)

·      Diluted EPS of 23.70 pence (2015: 11.48 pence)

·      Final dividend of 4.71 pence per share recommended to shareholders, bringing total dividend to 6.25 pence per share (2015: 3.08 pence per share)


Operational highlights:


·      Strong sales growth across all regions, channels and flavours, with a particularly notable performance in the UK

·      Continued penetration in the on-trade and off-trade including new listings with Asda in the UK, Target in the USA and Rewe in Germany

·      Expanded distribution of tonic water with British Airways across entire fleet and achieved listing of Naturally Light Tonic Water cans with EasyJet

·      Launch of new bespoke embossed bottles, successfully rolled out internationally in the period

·      Named the no.1 best-selling and no.1 trending tonic water in Drinks International's survey of world's top 250 bars for the third year running


Charles Rolls has today announced his intention to transition from Executive Deputy Chairman to become Non-Executive Deputy Chairman to the Company at the AGM in May 2017.


Tim Warrillow, CEO of Fever-Tree said:


"2016 has been another exceptional year of growth for Fever-Tree, with strong results achieved across all regions, channels and flavours, emphasising the global appeal of the Fever-Tree brand. As the pioneer and market leader of the premium mixer category, in both market share and reputation, our quality, award winning range of products continues to help drive the momentum towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide.

As co-founder of Fever-Tree, Charles' support and advice will continue to be invaluable to the Company. We have an excellent and growing team in place and I personally look forward to continuing to work with Charles as we further build on the success of the brand that we created together 14 years ago.

We have had an encouraging start to 2017 and remain confident that we are increasingly well positioned to deliver further growth across the business."



1 The Preliminary Results refer to adjusted EBITDA. Adjusted EBITDA for the year ended December 31 2016 is operating profit of £34.4m before depreciation of £0.2m, amortisation of £0.7m and share based payment charges of £0.5m.




For further information:


Fevertree Drinks plc

c/o FTI +44 (0)20 3727 1000

Tim Warrillow, Co-founder and CEO

Charles Rolls, Co-founder and Executive Deputy Chairman

Andy Branchflower, Finance Director

FTI Consulting - Financial PR

+44 (0)20 3727 1000

Jonathon Brill

[email protected]

Oliver Winters

Georgina Goodhew

Investec Bank plc - Nominated Adviser and Broker

+44 (0)20 7597 4000

Garry Levin

Alex Wright

Matt Lewis

David Anderson


Updated Imagery:


Updated Company imagery can be accessed here - http://www.fever-tree.com/corporate/image-library. 


Notes to Editors:


Fever-Tree is the world's leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value, with distribution to over 50 countries worldwide. Based in the UK, the brand was launched in 2005 to provide high quality mixers which could cater to the growing demand for premium spirits, in particular gin, but also increasingly for vodka, rum and whisky. The Company now sells a range of carbonated mixers to hotels, restaurants, bars and cafes ("On-Trade") as well as selected retail outlets ("Off-Trade"). Approximately 56 per cent of the Group's sales were derived from outside of the UK in financial year 2016, with key overseas markets in the US and Europe.




The Group delivered strong results in 2016, with revenue of £102.2m reflecting a 73% increase compared to 2015. It was pleasing to note that high rates of growth were again achieved across all regions and across all flavours and formats.  Of particular note is the exceptional performance achieved in the UK, the Group's longest established market, where revenues increased by 118% against strong comparators from 2016. The Group's growth was underpinned by improving margins, which were helped by advantageous foreign exchange movements, with adjusted EBITDA increasing to £35.8m (2015: £18.2m).



The Board is pleased to recommend a final dividend of 4.71 pence per share, bringing the total dividend for 2016 to 6.25 pence per share (2015: 3.08 pence per share).  If approved by the shareholders at the AGM on 15 May 2017, it will be paid on 26 May 2017 to shareholders on the register on 21 April 2017.



It continues to be a great privilege for me to work alongside my fellow Board members and a passionate founder-led executive management team who continue to make the business the success it is today.  Charles' transition to become a non-executive Director is one that is fully supported by the Board and we look forward to him remaining closely involved in the business.   

Fever-Tree is a dynamic business driven by a growing team of talented individuals and on behalf of the Board and all shareholders I would once again like to record our thanks for their fantastic contribution to our continued success.



We have had an encouraging start to 2017 and I look forward to working with my Board colleagues and the wider Fever-Tree team to continue to deliver growth.


Bill Ronald





I am delighted to report on another exceptional year for Fever-Tree.  We achieved revenue of £102.2m, representing growth of 73% on 2015, with strong results achieved across all regions, channels and flavours, emphasising the increasingly global appeal of the Fever-Tree brand.  Our quality, award winning range of products is helping to drive the movement towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide.

The revenue growth achieved in 2016 was underpinned by improving margins, with a gross profit margin of 55.2% and adjusted EBITDA margin of 35.1%, resulting in adjusted EBITDA of £35.8m generated in the year, growth of 97% on 2015.  We ended the year with a robust balance sheet and net cash of £26.9m, an increase of £15.3m on last year.

Regional Review

We consider our global sales across four regions, being the UK, Rest of Europe ("Europe"), USA and Rest of the World ("RoW").  Following a further acceleration of growth in the UK it represented 44% of sales in 2016, with 56% of sales generated overseas.


In our largest and longest established market the Group achieved exceptional sales growth of 118% in 2016, an acceleration of the 84% growth achieved in 2015.  Particularly notable growth of 124% in the second half of the year was capped by an exceptional sales performance over the Christmas period, even when measured against strong comparatives from the prior year.


UK performance was strong across both the On-Trade and Off-Trade channels.  The exceptional performance in the Off-Trade channel was driven by consistently strong growth across our principal retail customers (Waitrose, Tesco and Sainsbury's) alongside incremental sales generated by the listing at Asda in May 2016.  As well as distribution gains, strong underlying organic sales growth was achieved, helped by improved promotional positioning on gondola ends and at the front of stores as our retail partners continue to recognise and reflect the increasing relevance and importance of the brand to the wider mixer category.


The success of the 150ml can format since launch in June 2015 is particularly notable and represented 33% of sales in the Off-Trade channel in 2016.  The 150ml range was extended to include Elderflower Tonic and Mediterranean Tonic in the year, with further extensions to follow in 2017.  Within the travel sector in 2016, a successful listing for the Naturally Light 150ml can on EasyJet was followed by an expansion of the British Airways listing across their entire fleet.


Fever-Tree drove 92% of the value growth in the entire UK mixer category within retail in 2016 and now holds a 24% value share (IRI).  This far exceeds the 16.5% proposed as the target value share at maturity for the premium segment of the mixer category (EY, September 2014) and illustrates the extent to which Fever-Tree is rapidly transforming the UK mixer category. 


Sales in the On-Trade, where 54% of UK revenue is generated, also grew strongly in 2016.  This performance was driven by an increasing distribution footprint, combined with underlying rate of sale growth as the premium gin and tonic movement continues to gather momentum across the UK.  In 2016 we expanded our UK sales team in order to work more closely with both key wholesale and managed group partners and also to focus on a wider geographical area, enabling us to continue to drive our first mover advantage more broadly across the market.

Across both channels our range of tonics continues to stimulate interest in the premium gin and tonic sector, allowing consumers the opportunity to find their perfect pairings with the expanding range of premium gins available in the UK.  Tonics remain our best-selling and fastest growing products in the UK.  Whilst our original Indian Tonic product, which grew at over 100% in 2016, continues to be the cornerstone of the range, it was notable that the Naturally Light Tonic, which grew at c. 150% and our Mediterranean Tonic and Elderflower Tonic, which each grew at over 200%, have increased their footprint within the sales mix following improved distribution in the Off-Trade channel and the continued success of Fever-Tree led gin and tonic menus in the On-Trade channel.  The launch of pink Aromatic Tonic in 2016 further extended the tonic range and has performed strongly following its initial exclusive launch with certain key partners, and will be more widely distributed in 2017 across both the On and Off-trade.


Continental Europe

Sales growth of 39% was achieved across Continental Europe in 2016, which represented growth of 24% on a constant currency basis, adjusting for the strengthening Euro.  This strong performance was achieved against tough comparators following a number of significant new retail listings secured in 2015.  The Group transitioned to new importers in Spain and Netherlands and begins 2017 well positioned in those markets.  Growth and opportunity in the region continues to be driven by the premium gin and tonic trend extending across Western Europe, as evidenced by the notable growth in certain key Western European countries in 2016 including Italy, Germany and Austria.  This is further backed by the notable retail listings from 2015 which are performing well, alongside a number of new retail listings achieved in the period.



We were pleased to achieve growth of 55% in the USA, which represented growth of 36% on a constant currency basis, adjusting for the strengthening US Dollar.  Market data is increasingly evidencing the brand's impact on the mixer category in the USA.  For instance, Fever-Tree contributed 68% of the value growth in the tonic category at retail from a base of 5% value share (IRI).  This performance is in turn helping to drive further penetration into the Off-Trade channel, with notable distribution increases achieved in 2016 across the Safeway/Albertsons estate, as well as a significant new listing at Target in September 2016.

Ginger is growing in popularity as a flavour as demonstrated by our Ginger Beer sales, which is our best selling flavour profile in the USA.  Encouragingly, our Tonic range is also growing strongly, reflecting the continued rise in popularity of a premium gin and tonic in the region, on which Fever-Tree is well placed to capitalise. 



Growth of 88% was achieved in the RoW region, within which the key territories currently are Australia and Canada, both of which grew by over 100% in 2016.  A further 25 territories are also included within this region, and whilst they provide potential for growth in the future they are not expected to be a significant driver of growth in the short term.

Operational review

The Group operates a largely outsourced business model which allows for scalability and flexibility alongside the ability to benefit from specific, focused expertise and experience in key areas of the supply chain.  This model enables the Group to grow without the requirement for significant capital investment and allows the management to maintain its focus on realising the Group's strategic growth opportunities. 

Manufacturing and distribution is completely outsourced, with the Group responsible for arranging for the delivery of key ingredients, flavours, water, glass, cans and packaging to a manufacturer who then bottles or cans the final product from these component parts.

The Group's primary bottling partner in the UK completed an investment in a new site in 2016 which will double their capacity from 2017 and which further increases production contingency for the Group.  In addition to this, the Group also uses a second UK bottler for contingency purposes, fills its 150ml cans with a Netherlands-based canner and continues to bottle locally in Germany with the reusable glass bottles required in that market.   Therefore, the Group works with four different partners across three different countries to manufacture its products, which underlines the flexibility of the outsourced model and its ability to scale and fulfil the production demands generated by the strong growth that the Group is achieving.  2016 also saw the transition to a new third party logistics partner in the UK which will provide a strong platform for future growth. 

The outsourced model allows the Group to retain relatively low levels of central overhead and headcount.  The addition of an International Marketing Director in 2016, supplementing the addition of an International Director and Supply Chain Director in 2015 has added expertise and experience in key areas, providing further support to the executive management team.

Market developments

The Group remains the pioneer and market leader of the premium mixer category, in both market share and reputation.  For the third year running Drinks International's survey of the world's top 250 bars has stated that the Fever-Tree brand is the no.1 best-selling and no.1 trending tonic water.  

We strongly believe that the established trend towards spirits premiumisation and the increasing focus on simple long drink mixability will continue, and that this will provide mutual support and opportunity for both premium spirits producers and Fever-Tree's range of products across regions, channels and customers.  

The Group has a strong new product development pipeline, with 2016 new product launches of our pink Aromatic Tonic Water in the UK and a market-specific Clementine Tonic Water in Belgium, developed in collaboration with the local chef Sergio Herman.  The success of Indian Tonic and Naturally Light Tonic in the 150ml can format prompted extensions in the range to Mediterranean Tonic and Elderflower Tonic 150ml cans with further variants to follow in 2017.  Alongside this, a new bespoke embossed glass bottle was introduced in the second half of 2016 which represents a significant investment and further underpins the brand's premium credentials.

The Group's sales mix, particularly in the UK and Continental Europe, is currently skewed towards Indian Tonic and other Tonic flavour variants, as the quality and awareness of these products, alongside the reinvigorated gin category continues to drive growth in the popularity of a premium gin and tonic.  However, it is notable that gin only accounts for 6% of the global premium spirits category.  The dark spirits category, on the other hand, accounts for 60% of global premium spirits, ten times the size.  Within the dark spirits category the same trends of premiumisation and mixabilty that are driving the rise of premium gin and tonic consumption are also emerging, with major premium dark spirits brands actively promoting simple long serves.  New Fever-Tree products will be launched in 2017 to complement our existing dark spirit mixing range, reintroducing quality and choice to the trade and consumers of dark spirits.  We believe that an exciting opportunity exists to work alongside the premium spirits brands to reinvigorate the dark spirits category, in much the same way we approached the gin category over ten years ago.

Therefore, we believe that as the premium spirits market further develops both in the Group's core markets as well as new territories, demand for premium mixers will continue to grow and as such we remain confident about the future opportunities for the Group.


We have had an encouraging start to 2017 and remain confident that we are increasingly well positioned to deliver further growth across the business.

Tim Warrillow

Chief Executive




Revenue grew by 73% from £59.3m to £102.2m, underpinned by growth across all regions, flavours and channels as outlined in the Chief Executive's report.


In 2016, gross margin improved to 55.2% (2015: 52.1%), driven by the significant strengthening of the US dollar and Euro during the year alongside certain underlying production and logistics efficiencies.

Underlying operating expenses as a proportion of revenue reduced to 20.1% (2015: 21.4%).  This decrease in spend relative to revenue is a factor of the gearing effect of strong sales growth in the latter stages of the year and occurred in spite of increased investment in people and systems, the move to a new head office, a 53% increase in marketing spend and increased expense relating to the Group's foreign currency hedging policy.  Emphasis remains on ensuring the Group is appropriately resourced to drive and support strong revenue growth and therefore it is not expected that the lower relative level of underlying operating expenditure achieved in 2016 will be used as a benchmark to budget for future years.

The 3.1% improvement in gross profit margin combined with the 1.3% reduction in underlying operating expenses as a proportion of revenue resulted in an improved adjusted EBITDA margin of 35.1% (2015: 30.7%) and adjusted EBITDA growth of 97% to £35.8m (2015: £18.2m).


The effective tax rate in 2016 was 19.84% (2015: 20.46%).


The basic earnings per share for the year are 23.86 pence (2015: 11.57 pence) and the diluted earnings per share for the year are 23.70 pence (2015: 11.48 pence).

In order to compare earnings per share year on year, earnings have been adjusted to exclude amortisation and the statutory tax rates have been applied (disregarding other tax adjusting items).  On this basis, normalised earnings per share were 24.31 pence per share for 2016 and were 12.10 pence per share for 2015, an increase of 101%.

The Board is recommending a final dividend of 4.71 pence per share in respect of 2016 (2015: 2.30 pence per share), which brings the total dividend for 2016 to 6.25 pence per share (2015: 3.08 pence per share).  If approved by the shareholders at the AGM on 15 May 2017, it will be paid on 26 May 2017 to shareholders on the register on 21 April 2017.


The Group had net cash of £26.9m at year end, with £33.0m of cash at the bank offset by £6.1m of bank loans (2015: net cash of £11.6m). The Group has access to a £10m 3 year revolving credit facility provided by Lloyds Bank plc, of which £6.1m is drawn.


Working capital increased by £10.2m, which is a 74% increase compared to revenue growth of 73%.  The level of working capital held at year end included elevated levels of trade receivables (91% increase on 2015), which is largely due to the very strong trading performance in December in the UK.  Despite the build in trade receivables at year end, operating cash flow remains strong at 72% of adjusted EBITDA, with significant cash balances to be collected in 2017.


Due to the Group's outsourced business model, capital expenditure requirements remain low. The main area of capital expenditure in 2016 continued to be investment in crates used to transport reusable bottles within Germany of £0.6m (2015: £0.4m), reflecting the on-going strong growth in that territory.


The Group monitors its performance through a number of key indicators. These are formulated at Board meetings and reviewed at both operational and Board level.


Revenue growth %

Group revenue growth was 72.5% in 2016 which was ahead of Board expectations (2015: 70.8%).

Gross margin %

The Group achieved a gross margin of 55.2% in 2016 which was ahead of Board expectations (2015: 52.1%).

Adjusted EBITDA margin%

The Group achieved an adjusted EBITDA margin of 35.1% which was ahead of Board expectations (2015: 30.7%).


Andrew Branchflower

Finance Director


Consolidated statement of comprehensive income

For the year ended 31 December 2016









Cost of sales



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Adjusted EBITDA*









Share based payment charges



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Earnings per share for profit attributable to the owners of the parent during the year

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* Adjusted EBITDA is earnings before interest tax, depreciation, amortisation, share based payment charges and finance costs.


Consolidated statement of financial position

At 31 December 2016






Non-current assets

Property, plant and equipment



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For the year ended 31 December 2016





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Depreciation of property, plant and equipment



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(Increase) in trade and other receivables



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Cash and cash equivalents at beginning of period



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1.   Basis of preparation


The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRC Interpretations issued by the International Accounting Standards Board as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under IFRS.


The financial information set out above does not constitute the company's statutory accounts for 2016 or 2015. Statutory accounts for the years ended 31 December 2016 and 31 December 2015 have been reported on by the Independent Auditors.  The Independent Auditors' Report on the Annual Report and Financial Statements for 2016 and 2015 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.


Statutory accounts for the year ended 31 December 2015 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2016 will be delivered to the Registrar in due course.



2.   Revenue


An analysis of turnover by geographical market is given below:





United Kingdom



United States of America






Rest of the World






3.   Dividends


The final dividend of 4.71p, bringing the total dividend for 2016 to 6.25p, will be paid on 26 May 2017 to shareholders on the register on 21 April 2017.




4.   Earnings per share

Basic earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the financial year of 115,240,896 (2015: 115,240,896 Diluted earnings per ordinary share are calculated with reference to 116,034,569 (2015: 116,094,588) ordinary shares. The effect of the exercise of options on the weighted average number of ordinary shares in issue is 793,673 (2015: 853,692).






Profit used in calculating basic and diluted EPS



Number of shares

Weighted average number of shares for the purpose of

basic earnings per share



Weighted average number of employee share options outstanding



Weighted average number of shares for the purpose of

diluted earnings per share



Basic earnings per share (pence)



Diluted earnings per share (pence)




This information is provided by RNS
The company news service from the London Stock Exchange

Quick facts: Fevertree Drinks

Price: 2005

Market: AIM
Market Cap: £2.33 billion

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