Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Fevertree shares fall on margin concerns

Shares in upmarket mixer supplier Fevertree Drinks (FEVR:AIM) fell flat on 14 July as investors focused on cautious comments regarding the firm’s gross margin instead of its
sales growth in its latest trading update.
Despite positive momentum in spirits and mixers in UK and US supermarket and convenience shop sales post lockdown, and the gradual reopening of the pub, hotel and restaurant trade across most regions since June, the firm advised that changes in its channel and geographic sales mix would create gross margin headwinds over the course of this year.
That was enough to send the shares down 5% to £22.95, reversing two days of strong gains.
After a solid start in January and February, the closure of the hospitality and leisure sector to Covid-19 meant that sales from March to June were almost entirely dependent on customers buying its products to consume at home, known as the off-trade.
Consultancy Nielsen estimates that the firm’s UK off-trade sales grew 34% in the 12 weeks to 14 June, which Fevertree puts down to ‘the popularity of long mixed drinks as an everyday affordable treat’ during lockdown.
In the US, Nielsen data, which covers just under half of Fevertree’s US off-trade business, said the company’s sales rose by 89% in the 12 weeks to 13 June thanks to increased in-home consumption, revised pricing and format, and improved distribution.
Sales in Continental Europe were more problematic given the huge skew towards bar culture in countries such as Italy and Spain and
the dominance of the on-trade (pubs, restaurants and hotels) as a result.
Also, uncertainty over how soon hospitality and leisure outlets would be able to reopen led some of its importers to destock, which amplified the negative impact on sales.
Despite these headwinds, the firm remains committed to its investment plan, including its sizeable marketing spend, and is looking for new ways to add value.
Along with the trading update, it announced the acquisition of Global Drinks Partnership, its sales agent in Germany.
Fevertree has worked with Global Drinks Partnership for seven years to build its presence in the German market, which it calls a ‘notable opportunity’ given its sheer size and the fact that the premiumisation trend in spirits and mixers – which has been such a key driver of its sales success in the UK and the US – is just beginning. Stockbroker Numis estimates premium mixers only accounted for 18% of the overall German mixer market at the end of 2019.
Buying Global Drinks Partnership with its established relationships is an important strategic move as it allows Fevertree to accelerate the strength and depth of its presence in Germany much faster than could have been achieved by building the same capabilities from scratch.
DISCLAIMER: The author Ian Conway owns shares in Fevertree.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Editor's View
Feature
First-time Investor
Great Ideas
- Market share gains to fuel Motorpoint
- Analyst upgrades Luceco forecasts for the second time in as many months
- Play the healthcare boom via ‘best in class’ UDG
- QinetiQ growth strategy progressing despite challenges
- Buy care home investor Target Healthcare for a 6% yield
- Hipgnosis is cashed up and ready to buy more songs
- Ocado has a monumental growth opportunity
Investment Trusts
Money Matters
News
- US earnings season unlikely to add clarity to full year outlook
- Red hot Tesla could put huge stock offering on the table
- Fevertree shares fall on margin concerns
- Global company debt could jump by $1 trillion in 2020
- Halma’s record profit streak set to end
- B&M shares hit new record high as analysts upgrade forecasts