Diageo PLC (LSE:DGE) and Fevertree Drinks (AIM:FEVR) PLC are facing some headwinds this year, while European brands such as Campari continue to grow, according to UBS.
Fevertree, a producer of mixer for spirits, had previously stated in a trading update in January that it was set to bolster its top-line growth, especially in the US.
However, new research from NielsenIQ found that the British company is facing a lack of progression in its tonic water products and UBS believe this could damage earnings this year.
The price gap between Fevertree’s premium products and long-time player Schweppes has reduced over the last year and the Swiss bank is cautious that if the British company raise prices, it could dampen progress later this year.
The London-based company’s sparkling grapefruit product, which accounted for 8% of Fevertree sales over the last six months, could also cause some trouble later in the year if spirits sales slow, UBS added.
Cîroc and Don Julio owner Diageo is struggling in areas, too ,as it’s currently underperforming in the premium sector with the company having lost market share for most months in 2022.
The British company’s volumes, apart from Tequila, remained in line with the wider marker last month- a drop in performance since January- the investment bank said.
Meanwhile, in Italy, Campari continues to strengthen its hold in the market with its share price up more than 11% in the year-to-date.
This boost is led by a strong performance from its Aperol product which has grown more than 20% in the last year and UBS believe its “not showing any signs of a slowdown”.
Diageo’s shares are currently down almost 2% in 2023, with the stock opening at £35.29 this morning.
Fevertree shares have fared slightly better this year, rising by 2.5% and are currently hovering around the £10.80 mark.