Overview

Fevertree Drinks, the premium mixer supplier, has announced that 2019 sales will be below expectations.  Cue headlines about the carbonated drinks leader ‘losing its fizz’, its ‘flat sales’ and the ‘lack of sparkle’ in its results.

The reported 10% year-on-year growth in sales to £260m follows a period of extraordinary revenue expansion from £35m in 2014, the year of its Initial Public Offering (IPO).  As it overtook Schweppes as the UK’s favourite tonic water, then went after the US (where consumers prefer a Ginger Beer in their Moscow Mule over a G&T, apparently) and Western Europe, it appeared to have the market all to itself.  However, the other challenger brands should not be ignored.

Who are the challenger brands?

Franklin & Sons, first introduced by the Franklin brothers in 1886, posted revenues of £46 million in its last reported financial year, up 19% on the prior period.  Fentimans, the producer of tonics and other mixers using a botanical brewing technique, last reported sales of £40 million and boasts an impressive 21% compound annual revenue growth rate over the past 5 years.  With its range of cordials and standalone soft drinks, Bottlegreen is not a pure play mixer brand, but entered the market in 2014 during which time group sales have grown from £17.6 million to £23.5 million.  Further down the food (or drink?) chain are privately-owned Luscombe, Peter Spanton (shareholders include Janet Street-Porter), Double Dutch and Cushiedoos. London Essence is part of the Britvic stable and Lamb & Watt is part of a group that includes Whitley Neill gin.

aNALYSIS

Fevertree has not had a free run at the market but their execution has been superior – an astonishing 50% compound annual revenue growth since IPO proves that. Looking ahead, as the results of the privately-owned brands are reported, we will discover the extent to which Fevertrees’s growth slowdown is a category-wide trend.

All data sourced from MarktoMarket.

Disclosure: Doug Lawson, CEO of MarktoMarket, owns shares in Fevertree Drinks plc.