Fever-Tree buys German distributor GDP

Mixer producer Fever-Tree has acquired German distributor Global Drinks Partnership for €2.6 million (US$3m) as the firm seeks to accelerate its presence in the market.

Fever-Tree’s performance since March 2020 was impacted by Covid-19

Tonic water maker Fever-Tree announced the acquisition in a new trading update ahead of the release of its interim results on 8 September 2020. The deal comprises €2.6m cash, plus a €5m (US$5.6m) balance that Global Drinks Partnership (GDP) previously owed to Fever-Tree.

The acquisition is said to consolidate the strong partnership developed between Fever-Tree and its sales agent, GDP, over the last seven years in Germany.

During this time, GDP has established a “growing brand presence” for Fever-Tree in the on-trade and a “strong footprint” across the off-trade.

Tim Warrillow, CEO of Fever-Tree, 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 Fever-Tree brand, so I am delighted that they are joining the Fever-Tree team.”

Fever-Tree said Germany represents a “notable opportunity” for the producer as one of the largest mixer markets in Europe. The market is “underpinned by emerging premiumisation trends” across spirits and mixers.

GDP also distributes a portfolio of “complementary” premium beer and spirits brands, which made €10m (US$11.4m) in sales last year, Fever-Tree noted.

Group performance

Fever-Tree said it has had a “solid start” to the year with trading in its first two months in line with expectations. Since March 2020, Fever-Tree’s performance has been affected by the pandemic.

In the UK, the group said it has witnessed “positive momentum” in the off-trade. Fever-Tree’s off-trade sales for the last 12 weeks to 14 June grew 34% compared to the same period last year, according to Nielsen.

The firm’s US off-trade sales also grew “very strongly” with Fever-Tree “driving category growth”.

Nielsen data cited by Fever-Tree, which covers just under half of the group’s off-trade sales in the US, reported 89% year-on-year growth for the 12 weeks to 13 June. The group said its growth was reflected in the increased at-home consumption during lockdown and the “benefit of incremental distribution” during 2019.

Fever-Tree also noted it was “encouraged by the successful implementation of the pricing and format optimisation”, which was gradually introduced on shelves between March and June 2020.

In continental Europe, the group said its off-trade sales were “robust”, however south of the region was more impacted by the pandemic due to its reliance on the on-trade. Fever-Tree said the “increased uncertainty” over the past few months led to some of its importers destocking its products, which hit the group’s European sales during the first half of 2019.

In the rest of the world region, Fever-Tree delivered “strong” off-trade sales and secured new distribution deals. In Australia and Canada the group focused on the reopening of the on-trade.

‘Short-term uncertainty’

Looking ahead to the 2020 full year, the group said there is “ongoing short-term uncertainty” as the on-trade reopens across the world.

The firm said: “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 reopen. 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.”

Fever-Tree said it expects “gross margin headwinds” during the financial year as a result of the pandemic. However, the group noted that it remains committed to planned investments, particularly in marketing. Fever-Tree will maintain its budget of up to £60m (US$75m) of operational costs for the full year.