Fevertree Regulatory News (FEVR)

July 14, 2020

Fever-Tree Drinks plc

Trading update & acquisition of Global Drinks Partnership in Germany

Fever-Tree, the world's leading supplier of premium carbonated mixers, announces a trading update ahead of reporting its Interim Results on 8th September 2020.

We had a solid start to the year with Group trading in the first two months in-line with expectations. From March onwards, trading across our regions has been dominated by the impacts of COVID-19, leading to widespread closure of the On-Trade alongside a consistently strong performance through our Off-Trade channels.

In the UK, positive momentum in both the spirits and mixer categories in the Off-Trade during lockdown has continued, with Fever-Tree's Off-Trade sales for the last 12 weeks to 14th June increasing 34%1 year-on-year as the popularity of long mixed drinks as an everyday affordable treat continues to resonate with consumers.

The Group's Off-Trade sales have grown very strongly in the US, where the increasing popularity of the Fever-Tree brand is driving category growth. Nielsen data, which covers just under half of Fever-Tree's US Off-Trade sales, has reported 89%2 year-on-year sales increases for the last 12 weeks to 13th June, reflecting the increased at-home consumption during lockdown, as well as the benefit of incremental distribution that was secured over the course of 2019. We have also been encouraged by the successful implementation of the pricing and format optimisation, gradually introduced on-shelf between March and June 2020.

In Continental Europe, while Off-Trade sales have been robust across the region, the impacts of COVID-19 have been more significant in the South which is more reliant on the On-Trade relative to Northern Europe. The increased uncertainty during the last few months has led some of our importers to de-stock, which has impacted our European sales over the first half of the year. However, we are confident that our prevailing brand strength will support our growth in the region as countries continue to emerge from lockdown.

In the ROW region, we continue to deliver strong Off-Trade sales and secure new distribution, particularly in Australia and Canada, with our focus turning to the On-Trade as it begins to re-open.

FY20 outlook

The On-Trade is gradually re-opening across many of our regions, although the easing of restrictions and the extent to which outlets are re-opening has varied, with ongoing short-term uncertainty. While the Off-Trade continues to see good momentum in many regions, we expect some of the Off-Trade demand to switch to the On-Trade as it begins to re-open. However, the pace and quantum at which this will occur is likely to be gradual as the On-Trade still has to contend with cautious consumers, social distancing and therefore lower capacities.

As previously highlighted, the changes in channel and territory mix resulting from COVID-19 are expected to lead to gross margin headwinds during this financial year. However, we remain committed to our planned investments, particularly in marketing, and therefore intend to maintain our budgeted c.£60m of operational costs for the full year, enabled by the Group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth.

Acquisition of Global Drinks Partnership in Germany to optimise route-to-market

Fever-Tree is pleased to announce the acquisition of Global Drinks Partnership "GDP", the Group's sales agent in Germany.

GDP is a well-established sales agent and importer of premium drinks, with a strong track record of growing premium brands in a complex, fragmented market. The acquisition consolidates the strong partnership that Fever-Tree and GDP have developed over the last seven years in Germany, during which GDP has enabled Fever-Tree to establish a growing brand presence in the On-Trade and a strong footprint across national and regional retailers in the Off-Trade.

The German market represents a notable opportunity for the Group. It is one of the largest mixer markets in Europe and is underpinned by emerging premiumisation trends evident in both the mixer and spirits categories. The acquisition of GDP, with established management, distribution relationships and sales channels already in place allows the Group to accelerate the strength and depth of its presence in Germany much faster than could have been achieved by building the same capabilities from scratch.

Alongside Fever-Tree, GDP also distributes a portfolio of complementary premium beer and spirits brands, which generated €10 million of sales in 2019. This portfolio approach is highly suited to the size and outlet fragmentation of the German market, and the Group looks forward to continuing to work with these brands in the future.

The total consideration for the acquisition comprises €2.6 million cash, plus a c.€5 million consolidation of historic balances owed to Fever-Tree by GDP at completion. Alongside this, Fever-Tree has agreed to fund the repayment of €1.9m of shareholder and other third-party loans owed by GDP.

Tim Warrillow, CEO of Fever-Tree commented; "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. 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."

For more information please contact:

Investor queries

Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com I +44 (0)7435 828 138

Nominated Advisor and Joint Broker - Numis Securities

Garry Levin I Matt Lewis I Hugo Rubinstein I +44 (0)20 7260 1000

Joint Broker - Investec Bank plc

David Flin I Alex Wright I David Anderson I +44 (0)20 7597 5970

Media queries

Oliver Winters, Director of Communications I oliver.winters@fever-tree.com I +44 (0)770 332 9024

Brunswick Group I fevertree@brunswickgroup.com I +44 (0) 207 404 5959

 1UK Nielsen 12 weeks ending 14th June 2020; 2Nielsen 12 weeks ending 13th June 2020