Posh tonic water specialist Fevertree Drinks (FEVR:AIM) has reached a major milestone in its career by overtaking Schweppes to become the number one mixer brand by value in UK shops and supermarkets.
It’s no wonder that Fevertree is a favourite among investors, given how quickly the business has grown.
A £5,000 investment in the company when it joined the stock market in November 2014 would now be worth an astonishing £96,745.
We’ve lost count of how many times Fevertree has issued a trading update to the stock market to say its performance is better than market expectations.
It’s now done it again, saying a very strong sales performance in the second half of 2017 leads the board to expect that full year results for 2017 will be ‘comfortably’ ahead of market expectations.
That pushes up its share price by another 6.5% to £25.93 which is very impressive considering it joined the stock market at a mere 134p per share just over three years ago.
HOW MUCH MONEY DID IT MAKE IN 2017?
It expects to report £169m revenue for the year which is 66% ahead of the 2016 result and 7% better than analyst forecasts.
This strong growth rate forces analysts to revisit their forecasts for the new financial year in order to factor in higher earnings assumptions.
HOW MUCH COULD IT MAKE THIS YEAR?
Investment bank Investec says it has increased its 2018 sales and earnings per share forecasts by approximately 7%.
It now expects Fevertree to generate £194.8m in revenue, £59.4m pre-tax profit (2017 forecast: £56.8m) and 40.9p earnings per share (2017 forecast: 39.3p).
The UK continues to be Fevertree’s bright spot. The company expects 2017’s revenue for the country to be nearly twice that of the 2016 result.
‘The group's performance over the Christmas period was particularly notable with impressive rate of sales growth across all channels, formats and flavours,’ it says in a statement to investors.
‘The growth of the mixer category continues to accelerate, driven by Fevertree’s unwavering focus on quality and supported by the on-going premiumisation of the wider spirits sector.’
Sales for the rest of the world grew by an estimated 57% in 2017, according to the company.
WHAT’S THE PLAN FOR US DOMINATION?
It has decided to bring forward plans to spend more money on operations in the US. Fevertree generate £13.2m revenue in the US for the first half of 2017 compared to £33.6m in the UK.
The US is its biggest overseas region, followed by Continental Europe where it generated £22m sales in the first half of 2017.
Fevertree has previously commented that the premium mixer opportunity is still at a relatively early stage in the US - however it is hoping to have the first mover advantage.
