Fever-Tree’s share price fell more than five per cent this morning, as investors took stock of its trading update amid the coronavirus pandemic.
While the first two months of this year were in line with the company’s expectations, the drinks maker said trading had been “dominated” by coronavirus from March onwards.
Its so-called on-trade division was impacted by widespread closures, with “ongoing short-term uncertainty” as the rate of outlets reopening varies.
Fever-Tree gave no figures for its on-trade division in the update. However off-trade sales, which cover at-home consumption, rose 34 per cent year-on-year in the three months to 14 June.
While off-trade sales were “robust” across continental Europe, Fever-Tree said increased uncertainty led some of our importers to de-stock, which impacted its European sales over the first half of the year.
Confident that its brand strength will support its growth as countries continue to emerge from lockdown, it added that it does not plan to increase its budget for marketing and other operational costs.
It maintained a forecast of “gross margin headwinds” for the financial year, with its interim results set to be reported on 8 September.
The drinks maker also announced the acquisition of its German sales agent Global Drinks Partnership (GDP) for around €9.5m.
“The completion of the GDP acquisition is an important step as we execute our growth plans in Germany, providing us with an ideal platform to take advantage of the opportunity within the German market and accelerate our growth,” said Tim Warrillow, chief executive of Fever-Tree.
“I have worked closely with Morgan Zuill and his team at GDP since we first entered the German market and have been impressed with their approach and expertise in growing the Fever-Tree brand, so I am delighted that they are joining the Fever-Tree team.”