Fever-Tree brushes off Schweppes push as profits fizz

The boss of posh tonic maker Fever-Tree says attempts by major rival Schweppes to wrestle back customers have not dented sales, as the upstart batted off competition to become the best selling mixer brand in Britain's shops.
Chief executive Tim Warrillow said buoyant Christmas trading and better display positioning of its beverages in supermarkets, such as at the ends of aisles, where more shoppers pass them, had helped Fever-Tree's UK sales to almost double to ?88m.
He said this had helped the tonic maker to see off attempts by Schweppes to claw back market share with its premium range of mixers, named Schweppes 1783.
"They launched with great fanfare last year, with television and national press adverts, new packaging and new formats, but in that period our market share has grown very notably," Mr Warrillow said.
The Aim-listed company has piggybacked on the growing popularity of premium spirits, particularly gin, helping it to become the top mixer brand in shops last year.
Fever-Tree Drinks
The popularity of the brand's products also helped mixers become the fastest growing carbonated drinks category in the UK, something Mr Warrillow said he could not recall happening before.
"When we started Fever-Tree in 2005, the category was in decline," he said.
Mr Warrillow said its office in the US, which will be up and running by June, would help Fever-Tree to take advantage of the rising popularity of more expensive spirits, as consumers drink less beer.
The robust performance meant Fever-Tree's pre-tax profits soared 64pc to ?56m in 2017 on the back of a 66pc jump in revenues to ?170m. Sales of its light tonic more than doubled in the UK, meaning it now accounts for more than 30pc of the brand’s off-trade sales.
Most of Fever-Tree’s revenues come from tonic water, but the company is hoping to sell more mixers to go with so-called “dark spirits”, such as whiskey, dark rum and cognac, which account for 60pc of global premium spirits sales.  It launched two new ginger ale flavours - smoky and spiced orange - last year.
The brand’s gross margin fell by around 2 percentage points to 53.5pc last year, after it introduced a new bespoke glass bottle design towards the end of 2016.
Fever-Tree brushes off Schweppes push as profits fizz

Fever-Tree hopes to sell more mixers to accompany "dark spirits" such as its Madagascan Cola
Fever-Tree has been one of the fastest growing Aim-listed companies in recent years. Its stock doubled in value in 2017 but was down 5pc in morning trade at ?25.47.
Neil Wilson, an analyst at ETX Capital, said the dip was most likely due to investors cashing in their profits after the surge.
He added: “The market has become rather accustomed to Fever-Tree beating expectations and upgrading guidance, so when results are just moderately ahead, things look a little flat.”
Fever-Tree's shareholders will receive full-year dividends totalling 10.65p per share, up 58pc on last year.
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