Fever-Tree extends share buyback as earnings surpass forecasts

Fevertree Drinks is expanding its share buyback scheme by another £29million after core profits slightly exceeded expectations last year.

The carbonated mixer maker now expects to return up to £100million to shareholders during 2025, having announced a £71million share buyback in February.

It reported adjusted earnings before nasties increased by two-thirds to £50.7million in 2024, just ahead of the £50.6million forecast by analysts, thanks to lower glass costs and trans-Atlantic freight rates.

Turnover only rose by 1 per cent to £364million as consumer sentiment in the UK and Europe remained subdued amidst inflationary pressures.

Fever-Tree’s domestic revenues shrank by 3 per cent to £111.1million, primarily driven by weaker demand from hospitality venues and a declining gin category.

However, this was offset by sales jumping by 9 per cent to £128million in the US, where the group significantly boosted its off-trade customer base and extended its market share dominance in the tonic and ginger beer categories.

Have a drink: Fever-Tree now expects to return up to £100million to shareholders during 2025, having announced a £71million share buyback in February

Trading was also strong in Canada and Australia, with the latter market buoyed by popular new product launches, including 250ml cans of soda and ginger beer and cocktail mixers in some major liquor chains.

Tim Warrillow, co-founder and chief executive of Fever-Tree, remarked: ‘The Fever-Tree brand performed well in 2024, despite the subdued consumer environment.

‘Across every key region, we are gaining market share, with more consumers discovering, enjoying, and becoming loyal to Fever-Tree each year across a growing variety of drinking occasions.’

Following the result, Fever-Tree is recommending a final dividend of 11.2 pence per share, a 2 per cent year-on-year rise.

It also said it was ‘comfortable’ with forecasts of low single-digit revenue growth and an adjusted earnings before nasties margin of around 12 per cent in 2025 as its US business is in a ‘transition year.’

Fever-Tree struck a partnership with brewing giant Molson Coors in January as part of its plans to expand in the US, where it has operated since 2008.

Under the deal, Molson Coors bought an 8.5 per cent stake in Fever-Tree in return for the exclusive right to sell, distribute and produce the brand in the US.

Warrillow, who set up Fever-Tree with gin expert Charles Rolls in 2004, called the agreement a ‘transformational step’ for the company.

Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: ‘Marketing spending is set to ramp up significantly to help improve brand awareness and drive sales higher.

‘That’s the right move, but it’s set to put pressure on profitability in the near term. Luckily, there’s a healthy net cash position on hand to fund this, which also means dividend payments look well covered for now.’

Fever-Tree Drinks shares were 5.2 per cent up at 784p on early Tuesday morning, although they have still slumped by around a quarter over the past year.