Fever‑Tree profit falls as UK sales dip, US expansion boosts revenues

Fever‑Tree Drinks reported a 15% drop in first‑half pre‑tax profit as UK sales weakened, while overall group revenues edged higher on growth in the US and other international markets.

The maker of premium mixers said pre‑tax profit for the six months to the period end fell to £11.2 million from £13.2 million a year earlier, even as adjusted revenue rose 2% to £172.2 million. Revenue in the company’s domestic market declined 6% to £48.1 million, while US sales increased 6% and rest‑of‑world sales grew 17%.

Fever‑Tree said subdued UK demand reflected a challenging on‑trade environment, with higher duty, wages and business rates driving pricing pressure that is "disproportionately impacting the spirit and mixer categories." That weakness was partially offset by solid off‑trade performance, where customers are buying a broader range of products across the portfolio, including ginger beer and soft drinks; products beyond tonic now account for 45% of group revenue.

The company has been expanding in the United States through a partnership with brewer Molson Coors that began in January. Under the arrangement, Molson Coors acquired a stake in Fever‑Tree in return for exclusive rights to sell, distribute and produce the brand in the US. Fever‑Tree said a majority of the products sold in the US are still manufactured in Britain after it wound down a major US bottling arrangement ahead of the partnership.

That production pattern has exposed the partnership to a tariff impact. In July the companies agreed to share the costs of a 10% US tariff on UK imports equally. Fever‑Tree said the tariff has pressured US margins but that it and Molson Coors are working to mitigate the impact ahead of planned onshoring of some US production over the medium term. The group also cited improvements in global supply chain and procurement processes as factors that should allow margin recovery over time.

Chief Executive Tim Warrillow said the transition of the business to Molson Coors "is progressing well despite the complexity of such a transition." He reiterated that while the wider on‑trade category in the UK remains challenged, off‑trade performance has been robust and the group had made a good start to the second half. Fever‑Tree said it remained comfortable with full‑year market expectations.

The firm’s cash balance nearly doubled to £130 million, reflecting trading and inflows from the Molson Coors partnership. The board declared an interim dividend of 5.97 pence per share, up 2% on the previous year, and extended its share buyback programme by a further £30 million to continue into next year.

Fever‑Tree shares rose sharply on Thursday despite the profit decline, reflecting investor focus on the company’s international growth and the potential for US onshoring to restore margins. Mark Crouch, an analyst at eToro, said the Molson Coors partnership was intended to scale the business in the all‑important US market and improve visibility and distribution; he added that while there are early signs of progress, momentum remains laboured.

The results underline a contrast between domestic market pressures and international opportunities for premium mixer makers. Fever‑Tree’s management highlighted diversification of the product mix and geographic expansion as central to offsetting near‑term UK on‑trade weakness and to supporting longer‑term margin recovery as the partnership with Molson Coors evolves.