Sales have soared 77% at premium mixer brand Fever-Tree (FEVR) to £72m in the first half on the back of “exceptional” growth in the UK.
Distribution gains continued to drive the performance in its domestic – and largest market – with the 150ml can format proving a hit with supermarkets and c-stores. Fever-Tree has expanded distribution of the format, added new flavours and won a listing across the Virgin Atlantic fleet from this month.
Revenues in the UK grew 113% to £33.6m in the six months to 30 June, compared with the same period a year ago.
Fever-Tree said it had driven 99% of the value growth in the entire UK mixer category within retail in the past 12 months and now holds a 30% market share, according to data from IRI.
Sales were also up 64% across continental Europe, 43% in the US and 45% in the rest of the world.
Adjusted EBITDA more than doubled in the period to £25.2m, compared with £12.4m a year ago, but gross margins retracted slightly from 54.8% in the first half of 2016 to 54.5%.
Pre-tax profits were £24.1m, up from £11.8m in 2016.
The stock exchange darling upgraded its full-year forecasts thanks to the strong performance in the first half and expects profits to be materially ahead of its expectations.
CEO Tim Warrillow said: “We are delighted to report another strong performance in the first half of 2017, continuing the momentum seen in 2016.
“We achieved growth in all our regions, driven by further distribution gains and underlying rate of sales growth as the two key trends of premiumisation and mixability continue to gather pace globally.
“We continue to invest and improve our infrastructure, relationships with key suppliers and customers as well as adding to our senior team. The strength of our brand and first mover advantage means we are well positioned as the opportunity for premium mixers continues to gather momentum across our key markets.”
Shares have soared 9% to 1,900p as markets opening this morning.
Supermarket sales were boosted by the summer weather and a series of sporting events in the past month, according to the latest data from Nielsen. The amount shoppers spent on groceries during the four weeks ending 15 July 2017 was 5.1% higher versus the same period a year ago – the highest year-on-year rise for at least four years. It follows on from a 4% year-on-year rise in the previous four-week period. Shoppers also made 4% more grocery trips to supermarkets compared with the same period last year, when the weather was cooler and wetter. At the peak of the heatwave, sales of strawberries and cream rose 18%, while packs of strawberries alone increased 10% in the final week of Wimbledon.
“Various factors typically drive extra spend in grocery shopping – more disposable income, more promotions, peak events and changes in weather, and lifestyle,” said Mike Watkins, Nielsen’s UK head of retailer and business insight. “However, the first two have been falling in recent times which shows the impact that hot weather and big sporting events – such as Wimbledon, the British Grand Prix, the British and Irish Lions rugby and the women’s cricket World Cup – had on people’s purse strings. This combination encourages shoppers to spend more, particularly on fresh foods and to use convenience stores more often. With the likelihood of eating and drinking outside also increasing people are more inclined to indulge and treat themselves.”
The latest grocery market share figures from Kantar Worldpanel for the 12 weeks ending 16 July 2017 showed market growth has exceeded 3% for the fourth consecutive period – the first time it has done so since November 2013. Supermarket sales increased by 3.9% compared with the same period last year. One year on from the EU referendum, price rises are no longer accelerating with like-for-like inflation now standing at 3.2%, the same rate of increase as this time last month.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Robust market growth this year has been boosted by higher grocery inflation, but consumers will be pleased to hear that price rises are no longer accelerating. One year on from the EU referendum – which had a marked impact on the price of imported groceries – hard-pressed shoppers could soon start to feel upward pricing pressures ease.”
He added: “June’s hot spell was good news for UK grocers, with sales particularly buoyant around the hottest June day for 40 years. Ice cream sales were up 34% in June alone, while sales of suncare products increased by 40% year on year as Brits enjoyed the unexpected sunshine. Over the 12-week period, celebratory shoppers spent an additional £158m on alcohol. Fruit and vegetable sales also spiked – up 7% – as shoppers parted with an extra £170m to help offset the summer indulgence.”
Lidl was once again Britain’s fastest growing supermarket, increasing sales by 19.4% – its strongest growth since October 2014. Its market share has in turn risen to a record high of 5.1%. Close behind, Aldi’s sales grew by 17.9%, increasing its share of the market by 0.8 percentage points to 7%. Elsewhere competition was tight as Tesco, Sainsbury’s and Morrisons saw sales increases of 2.3%, 2.2% and 2.1% respectively.
Refresco (RFRG) has continued its buy-and-build strategy with the $1.3bn (£1bn) acquisition of the bottling operations of Canadian drinks manufacturer Cott. The deal will create the world’s largest independent bottler for retailers and brands in Europe and North America with a combined production volume of approximately 12 billion litres, Refresco said. Cott’s bottling activities are made up of a beverage platform with a full portfolio of non-alcoholic beverages, focused on retailer brands and contract manufacturing. The deal adds 19 production sites in the US, four in Canada, one in Mexico and five in the UK. Cott’s bottling activities generate annual revenues of approximately $1.7 billion and make up about 47% of its total business.
“This acquisition is a transformational deal right at the heart of Refresco’s buy & build strategy,” Refresco added.
The transaction has been unanimously recommended and supported by Refresco’s executive and supervisory boards. Completion of the deal is expected in the second half of 2017, subject to customary conditions, including anti-trust approval in various jurisdictions and Refresco shareholder approval. Integration will start immediately after closing with the UK, representing around 30% of Cott’s business, being integrated into Refresco Europe and the North American organization being combined with Refresco US.
Lindt & Sprüngli Group has increased revenues by 3.1% to 1.5bn Swiss francs (CHF) (£1.3bn) in the first six months of 2017 despite a stagnating chocolate market, partly thanks to “very good” results in the UK, but it cut full-year forecasts due to struggles in North America. The Swiss chocolate maker reported organic growth of 3.6% for the half as it won share in “strategically important” markets. Profits also rose 5.7% in the period to CHF 76.3m (£61.7m).
“In the first half-year, Lindt & Sprüngli was once again confronted with stagnating or slow-growing chocolate markets, especially in its most important market, North America, and consumer sentiment that remained largely restrained,” the group said.
“Thanks to numerous innovations and excellent point-of-sale presentations, the seasonal business performed very well in the first half-year. Lindt & Sprüngli is once again growing faster than the chocolate market as a whole and was able to gain important market shares.”
Lindt added that growth in Europe in the half had been “good”, with sales up 6% on an organic basis to CHF 759.8m. It singled out the UK and Germany as doing particularly well in the half.
“Thanks to its premium positioning and, in particular, its leading position in products with high cocoa content, Lindt & Sprüngli is very well placed to meet the requirements both of the trade and its consumers,” CEO Dieter Weisskopf said.
Full-year revenues have fallen at household products manufacturer PZ Cussons (PZC) as currency devaluation in Nigeria, its largest market, continued to drag, as well as general tough trading conditions across the rest of the world.
Sales in the year to 31 May fell 1.5% to £809.2m as Africa recorded a 14.5% slump on the back of a 50% drop in the value of the naira to the US dollar.
Operating profits slipped 2% to £106.3m, but pre-tax profits nudged 0.5% higher to £103.5m.
Chairman Caroline Silver said: “The group has delivered a solid set of results with profits slightly ahead of the previous year. This is despite a significant year-on-year currency devaluation in the group’s largest market Nigeria and general tough trading conditions in most of the markets in which we operate.
“Our strategy of ongoing brand innovation and renovation continues to underpin the Group’s ability to maintain or grow our market shares.”
She added: “Despite consumer confidence remaining fragile in most markets, the group remains well placed to deliver full-year expectations and, with a strong balance sheet, to pursue growth opportunities as they arise.”
The group also announced chief operating officer Chris Davis is to retire from the board as a director with effect from the AGM on 27 September 2017 and will not stand for re-election. His responsibilities will be assumed by the CFO and other members of the company’s executive committee.
Yesterday in the City
Shares in B&M European Value Retail (BME) leapt 4.7% to 356.9p after The Sunday Times speculated the discounter was about to be the target of a £4.4bn takeover approach by Asda. The retailer poured cold water on the idea and it seems the City isn’t convinced a deal is going to happen given the modest rise in the price of the stock.
Cranswick (CWK) enjoyed a 2.6% rise to 2,917p after it reported a 27% jump in sales in a short first quarter trading update.
Reckitt Benckiser (RB) shares dived 3.2% to 7,627p after the Vanish and Dettol supplier reported the lingering effects of the cyber attack in its first half results. First-half like-for-like sales fell 1% at FTSE 100 consumer goods firm but profits rose.
McColl’s Retail Group (MCLS) had a volatile day but finished 0.9% higher at 209p as sales in the first half grew thanks to the acquisition of the 298 Co-op stores.
There were barely any other risers in the grocery/fmcg world to speak of yesterday, with TATE & Lyle (TATE), Associated British Foods (ABF), Booker (BOK) and Diageo (DGE) all in the red, down 2.2% to 669.5p, 2.1% to 2,880p, 1.8% to 190.2p and 1.7% to 2,246.5p.
Fever-Tree (FEVR) also fell 1.9% to 1,745p as the City waited for its interims this morning.