While on-trade sales through bars, restaurants and hotels have inevitably been hit hard by the closure of the hospitality industry due to the coronavirus, off-trade sales through shops and supermarkets have been ‘very encouraging’ as chairman Bill Ronald put it.
Sales in the UK are evenly split between the on-trade and the off-trade, with the latter seeing a 24% pick-up in April, the first full month of lockdown. The firm says it has seen ‘continued positive momentum since, reflecting increased at home consumption during the period.’
As well as an increase in supermarket sales, the core tonic range has registered ‘notable growth in the convenience channel as consumers increasingly supplement or substitute their trips to large grocery stores.’
In the US, the off-trade represents close to three quarters of sales and since the start of lockdown sales have grown ‘extremely strongly.’ According to data from consultants Nielsen, which covers just under half of FeverTree’s US off-trade sales, growth in the four weeks to 18 April was 98% followed by a 96% increase in the four weeks to 16 May.
While some of this growth has come from the new distribution deal signed last year, which has led to increased product availability, it also reflects the growing strength of the brand with US consumers and the trend towards premium, long drinks.
European sales have been more mixed as Southern Europe is geared towards sales through restaurants and bars while Northern Europe is weighted more towards the off-trade, but FeverTree is still the leading premium mixer brand.
While the board isn’t giving any financial guidance for this year beyond the fact that sales and margins will be impacted, it has plenty of liquidity (£128m of net cash at year-end) thanks to its asset-light model and is taking the opportunity to increase its marketing in order to capitalise on the reopening of the on-trade.
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Disclaimer: The author Ian Conway owns shares in Fevertree Drinks