Just the tonic: Gin gives Fever-Tree profits a boost

Just the tonic: Gin gives Fever-Tree profits a boost

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The UK’s taste for premium gin has helped full-year earnings at Fever-Tree soar by 64% to £56.4m – well ahead of analysts’ expectations.

Despite revenue also climbing by 66% to £170.2m, a share drop of 4% took the fizz out of the drinks maker’s results, amid a subdued outlook for 2018.

Fever-Tree’s tonic, ginger ale and other mixers were boosted by brisk sales over the Christmas period.

Chief executive Tim Warrilow said the company is looking to replicate its gin and tonic mixer success with recent additions to its dark mixer range for drinks such as rum and whisky, as well as low-calorie mixers.

“We have been very pleased with the initial launch of the extended dark spirits range which has reinforced our belief that, in much the same way we approached the gin category over 10 years ago, an exciting opportunity exists to work alongside these brands to reinvigorate the dark spirits category.”

He added that gin accounts for only 6% of the global premium spirits sales, while the dark spirits category accounts for 60%.

Neil Wilson, senior market analyst at ETX Capital, said: “If Fever-Tree can replicate the success it’s had in tonics, particularly in the UK, then these multiples can be justified for longer and the share price could have further to go.

“Therefore we look for greater growth in ginger, cola and lemonades, particularly in the USA, where there is a significant opportunity for the brand.”

Fever-Tree saw growth in all of its sales regions in 2017, including a 96% surge in the UK. It opened its North American operations in December last year, where sales were up by 39%.

The company sells 13 different flavours of mixer to hotels, restaurants and bars, as well as airlines and supermarkets, and claims to be the number one brand among retailers.

Over half of Fever-Tree’s sales are from abroad, with key markets such as the US, Spain and Belgium.

Fever-Tree, named after the plant that produces the key tonic water ingredient quinine, is one of the largest companies on London’s junior AIM market, with a market value of around £3.1bn.

(c) Sky News 2018: Just the tonic: Gin gives Fever-Tree profits a boost