Shares in posh tonic maker Fever-Tree shot up more than seven per cent in morning trading as the company's chief executive Tim Warrillow told City A.M. the brand is still “very early on” in its growth.
In a trading update the brand said its full-year like-for-like sales were expected to rise 75 per cent from the previous year, while revenue was expected to be around £102.2m, reflecting growth of 73 per cent for the year ended 31 December.
Fever-Tree's share price rose more than 7.14 per cent to 1,216p this morning.
Sales in the UK were particularly strong in the second half of 2016, including solid trading over the Christmas period, sending full-year revenue up 118 per cent on the previous year.
Revenue in continental Europe is expected to be up 39 per cent, while the company expects an increase of 55 per cent in the US and 88 per cent in the rest of the world.
Why it's interesting
Fever-Tree's strong performance in the first half of the year carried on to a sparkling end. In November, the company upgraded its profit guidance due to stronger-than-expected sales. Now, after another two months of trading, it's upgrading expectations even further.
Chief executive Tim Warrillow and Charles Rolls started Fever-Tree in 2005, seeing a gap in the market after a boom in craft gin and spirits but little change in the mixer market. The Aim-listed company floated on the London stock market in 2014, and now its premium alcohol mixers, such as Sicilian lemonade and ginger beer, are sold on and off trade to retailers, hotels, and bars in more than 50 countries.
With no end in sight to gin's dominance over the spirits market, analysts said the company has plenty of room for further growth, with little competition from other mixer brands.
Warrillow said Fever-Tree is working on creating a new tonic designed for dark spirits which will be announced in the next few weeks.
What Fever-Tree said
Tim Warrillow, co-founder and chief executive of Fever-Tree said:
Fever-Tree continues to pioneer and lead the premium mixer category. We believe the global opportunity remains in its early stages and will continue to be supported by the long term premiumisation of the spirits sector as well as the growing movement towards mixed and long drinks.
As a result, the board remain confident of the future outlook for the business.
What analysts said
Phil Carroll, from Shore Capital said:
Once again, momentum in the business has remained strong, and notably strong enough for management to guide to a performance materially ahead of current market expectations. Given the last update was on the 7 November, it highlights how strong sales have been in the final two months of the year.
We continue to believe that there remains plenty of white space for the business to grow into with little in the way of effective competition.
Fever-Tree's growing brand will keep shaking up the mixed drinks industry.