6th Jun 2024 11:27
(Alliance News) - Fevertree Drinks PLC's trading update offered reassurance that the company is on track ahead of the key summer season, analysts on Thursday said.
The London-based producer of premium drink mixers was updating investors on trading ahead of Thursday's annual general meeting.
"The brand has continued to drive market share gains across its regions and deliver top-line growth in the year to date. We look forward to our key summer trading period, which will include a range of marketing initiatives and activations, and remain comfortable with full year expectations," the company said in a statement.
Shares in Fevertree Drinks were down 0.1% to 1,081.60 pence each in London on Thursday morning.
In the UK, Fevertree said it has strengthened its category-leading position, driven by the performance of its broad portfolio, with cocktail mixers gaining even more popularity.
In the US, Fevertree remains the biggest contributor to growth in the overall carbonated mixer category at retail, it said, and it has extended its number one position in the tonic and ginger beer categories.
In Europe, Fevertree is seeing good underlying momentum, notably in Italy, France and Denmark.
In the Rest of the World region, Fevertree said it expects to deliver strong growth in financial 2024, following the set-up of a new subsidiary model in Australia.
AJ Bell Investment Director Russ Mould said the update "goes some way to reassure that the business is back on track ahead of its key summer trading period".
"Importantly, the company seems to be gaining market share versus rivals, which include the larger consumer goods names seeking to ape Fevertree's premium offering," he noted.
Peel Hunt's Andrew Ford said there had been "some concern around the numbers with the US showing signs of slowing, the UK still in decline, and [new product developments] not performing as expected."
Ford thinks financial 2024 numbers are "achievable given the low bar set - our concerns centre on the progress that can be made from there."
Peel Hunt reiterated a 'reduce' rating on Fevertree.
AJB's Mould noted after a successful start to life as a public company, Fevertree in recent years has lost some of its "fizz". Efforts to expand into markets such as the US and into different drinks categories have met with "mixed success".
"Some of Fevertree's problems reflect the growing pains experienced by any rapidly expanding company as it has struggled to get manufacturing and distribution up to the levels required. The pandemic meant restaurant and hotel sales took a hit. More recently, the consumer environment hasn't helped," Mould noted.
"A longer-term concern for the business may be the shift in attitudes among Gen Z who are less likely to indulge in regular or heavy drinking," he suggested.
Liberum described the update as "solid", with continued market share gains and sales growth.
But the investment bank struck a note of caution.
"We note that the consumer-demand environment remains weak across most of Fevertree's key markets, and delivery of the top-line target would require good trading during the key summer period."
Nonetheless, Liberum retains a 'buy' rating on Fevertree shares.
By Jeremy Cutler, Alliance News reporter
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