The world’s leading supplier of premium carbonated mixers, Fevertree Drinks (FEVR:AIM) released a short statement ahead of the annual general meeting (AGM) today, highlighting progress made in 2018. Last year, Fevertree not only reinforced its leading market position in the UK, it also established its own operations in the US.
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The US has been traditionally been a tough market for UK companies to crack, so it will be interesting to see how quickly Fevertree can gain traction.
The early signs are very encouraging. In March, the soft drinks star turn reported that Fevertree US revenues saw accelerating growth in the second half of last year to reach £35.8m, after just 7 months of operation.
CAN FEVERTREE US REPEAT THE UK SUCCESS
Fevertree US has a team of 35 people across 11 cities and has already established an impressive distribution footprint. For example, in the on-trade market the company has teamed up with the largest Wine and Spirits distributor in the US, Southern Glazers Wine and Spirits, (SG) which has $18.5bn of revenues.
The deal gives Fevertree US access to 29 states including 15 new states, with national account support and allows the company to leverage existing spirits partnerships.
The US is seeing similar trends to other parts of the world, notably declining beer consumption at the expense of rising spirits consumption. For example, beer has seen its share fall from 52% a few years ago to 45.5% today while spirits have grown from 32% to 37.3%.
Central to Fevertree’s strategy in the US is the delivery of premium strategies to the leading spirits brands; a good example here is the Jameson Ginger and Lime campaign, featuring the company’s ginger ale product alongside the tag-line ‘Mix with friends, Jameson Ginger and Lime’.
The shares have fallen almost a third from £39 last September, to £27.93 today, partly due to a sell-off in growth shares, but also on creeping doubts that slowing UK growth is not being compensated by international growth.
Fevertree has taken a 42% market share of the UK mixer market, in under five years, while in the US its current share is only 11%. If the company replicates its UK success in a market which is roughly 16 times bigger, the shares could again regain their old fizz.