Fevertree eyes Germany amid lockdown off-trade boost

14-Jul-2020 - Last updated on 14-Jul-2020 at 12:51 GMT

Fever Tree has seen a change in buying habits due to Coronavirus

Tonics and mixers supplier Fevertree is eyeing Germany for expansion with the acquisition of Global Drinks Partnership (GDP), the group’s sales agent in the country.

Fevertree said the German market represented a “notable opportunity” for the group as it was one of the largest mixers markets in Europe and was underpinned by emerging premiumisation trends.

The company is to pay €2.6m cash, plus a c.€5m consolidation of historic balances owed to Fevertree by GDP at completion. Fevertree said it had also agreed to fund the repayment of €1.9m in shareholder and other third-party loans owed by GDP.

Tim Warrillow, CEO of Fevertree, said: “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 Fevertree brand, so I am delighted that they are joining the Fevertree team.”

Trading results

Fevertree revealed in a statement that trading in the first two months of the year was in-line with expectations.

However, it said that from March onwards, trading across its regions was dominated by the impacts of COVID-19, leading to widespread closure of the on-trade alongside a consistently strong performance through its off-trade channels. Fevertree said that, for example, its off-trade sales for the last 12 weeks to 14 June in the UK increased by 34% year-on-year.

The company added that the on-trade was gradually reopening across many of its regions, which included the UK, the US, Continental Europe, Australia and Canada, although the easing of restrictions and the extent to which outlets were re-opening had varied, with ongoing short-term uncertainty.

‘Gross margin headwinds’

It said that the changes in channel and territory mix resulting from COVID-19 were expected to lead to “gross margin headwinds” during the financial year.

Fevertree is not the only manufacturer to have been impacted by the coronavirus pandemic.

Owner of brands such as Mr Kipling, Bisto and Oxo, Premier Foods said it expected a 20% rise in revenue in the first quarter of this financial year, boosted by the impact of the virus.

The boss of Associated British Foods recently revealed that its food businesses had to produce “more than ever before” during the weeks of panic-buying.