Why have Fever-Tree’s sales fallen? And how is it planning to get them back?

Fever-Tree’s losing its fizz in grocery. 

The brand today reported a 44% decline in pre-tax profits after inflationary pressures squeezed margins and Brits bought fewer posh mixers.

While the brand’s overseas sales jumped 18% in the year ended 31 December 2022 – driving an 11% gain in group revenue to £344.3m – its performance at home was no cause for celebration. 

In the UK, Fever-Tree’s biggest market, sales fell 2% to £116.2m. That was driven by an 11% slump in the off-trade, as it came down from the elevated consumption of cocktails at home during Covid. That is no surprise. After all, plenty of other drinks brands have seen sales soften since the halcyon days of lockdowns.

What is shocking, however, is the scale of Fever-Tree’s collapse in retail. As revealed in Britain’s Biggest Brands 2023 – due online on 24 March – the brand has shed 18.9% of its value [NIQ 52 w/e 31 December 2022]. That’s the fastest decline in the top 100. And being the equivalent of £25m, it’s also the biggest.

The data also indicates this is about more than Covid restrictions. After all, Fever-Tree was worth £107.5m last year in grocery – £8.1m less than the £115.6m reported in Britain’s Biggest Brands data for 2019.

Chief among these more deleterious factors, no doubt, is the cost of living crisis. It’s driving more shoppers to trade down in their choice of beverages. That’s bad news for Fever-Tree, which sports an average unit price of £2.69. It’s more than 60% higher than Schweppes’ average of £1.67 and nearly four times costlier than a litre of own-label tonic water in Tesco.

Speaking of Schweppes, the Coca-Cola brand last year parked its tanks squarely on Fever-Tree’s lawn, rolling out fancier lines like Slimline Grapefruit Tonic and 600ml glass bottles of its established tonic water. Fever-Tree, however, was slow to respond in kind, leaving itself even more vulnerable to a loss of market share. And that seems to have played out, according to our data: Schweppes is only down 8.4% in value.

Still, Fever-Tree has since upped its innovations game, rolling out its first cocktail mixes in three classic variants. Margarita, Mojito and Espresso Martini cost £4.50 for 500ml – enough for four stiff ones.

With the brand expecting to return to growth in 2023, despite the challenging trading environment, the new trio could be just the tonic for its sales performance.