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Molson Coors snaps up Fever-Tree stake
UK-based mixer producer Fever-Tree has agreed to sell an 8.5% stake to brewing giant Molson Coors for £71 million (US$88.4m) to “take the brand to the next level” in the US.
The ‘long-term strategic partnership’ will see Chicago-headquartered Molson Coors handle the exclusive sales, distribution and production of the Fever-Tree brand in the US through a licence agreement that will begin on 1 February.
In 2023, the US overtook the UK as the biggest market for the British tonic and mixer producer, which entered the States in 2008.
Tim Warrillow, co-founder and CEO of Fever-Tree, said the move marked a “transformational step” for the brand in the US.
Warrilow also noted that the brand is the number-one tonic and ginger beer brand across America, calling it a “remarkable achievement” that has “redefined the US mixer category”.
He continued: “But what is so exciting is that as the Fever-Tree brand has grown in the US, so has the opportunity ahead of us, reflecting the increasing number of categories and occasions that our products are relevant to.”
The tonic maker said Molson Coors’ expertise, scale, and ambition provides a ‘transformational platform to drive the brand to the next level’ in the US.
Through Molson Coors, Fever-Tree will have access to the company’s national network of US distributors and customers across the on- and off-trade, alongside the ‘scale and strength’ of the brewing giant’s sales and commercial teams.
In addition, the mixer producer will be able to leverage Molson Coors’ extensive supply chain network, and procurement capabilities to increase operational efficiencies.
To enable the transition of production during 2025, Molson Coors will buy the mixer company’s local operating unit in the States, Fevertree USA, for US$23.9m in cash.
The companies are also planning a ‘substantial incremental’ fund for marketing to boost the brand and category awareness for an initial period.
Warrilow added: “With a national network providing significant scale and muscle, alongside its proven track record, supply chain expertise and clearly stated strategic desire to drive the future of their business beyond beer, Molson Coors are the ideal long-term partner to take the Fever-Tree brand to the next level across the US.
“This partnership will be fuelled by a step change in marketing investment to take advantage of the highly compelling opportunity ahead.”
The CEO of Molson Coors Beverage Company, Gavin Hattersley, described the deal as a “meaningful step” in the firm’s ambition to become a “total beverage company with a winning portfolio of drinks for a wide variety of consumer occasions”.
“We are building on that progress in a significant way with Fever-Tree as the latest and largest non-alc brand to join our portfolio,” he continued.
“The US is our biggest global market by revenue, and the same is true for Fever-Tree, so we believe this partnership provides ample opportunity for our teams to build on the strong success Fever-Tree has achieved to date.”
Fever-Tree has also begun a share buyback programme of £71m, beginning in February 2025. The firm said it would also consider further shareholder returns beyond the buyback programme due to the ‘enhanced cash’ it believes will come from the Molson Coors deal.
As part of the deal, Molson Coors will receive a proportion of Fever-Tree annual profits from 2026 to 2030 based on an agreed business plan.
Michelle St Jacques, chief commercial officer of Molson Coors Beverage Company, Americas, added that the deal compliments the company’s Beyond Beer strategy as it seeks to premiumise the portfolio.
As part of the firm’s goal to expand beyond the beer category, Molson Coors made its first spirits acquisition in 2023 with the purchase of Bourbon and rye whiskey producer Blue Run Spirits.
Full-year sales update
Fever-Tree has also disclosed a trading update for its 2024 financial year with the group’s total revenue rising by 1% to £367.9m (US$457.7m). During the first six months of 2024, Fever-Tree’s total revenue was relatively flat.
Total full-year revenue for the Fever-Tree brand was up by 3% to £363.4m (US$452.1m).
The company’s US revenue grew by 9% to £128m (US$159m) while the UK reported a 4% drop to £110.5m (US$137.5m) as a result of the ‘subdued spirits backdrop’, particularly in the on-trade.
The firm said its sales in the US had accelerated in the second half of the year with Fever-Tree finishing 2024 with a 27% and 32% share of the tonic and ginger beer categories, respectively, in the off-trade. The company also noted ‘strong growth’ of its Club Soda products with its canned format also contributing to US growth.
In the UK off-trade, Fever-Tree said it had ‘outperformed the competition’ and increased its value share across the year to extend the company’s number-one position.
Revenue for Europe was down by 2% to £92.7m (US$115.3m) due to the ‘poor weather and subdued consumer backdrop’. Despite the ‘tough’ environment, Fever-Tree said it had achieved its highest value share across Europe and extended its position as the number-one premium mixer brand across the continent.
The rest-of-the-world region posted a 19% gain to £32.2m (US$40m), driven by the group’s new Australian division.
Outlook for 2025/26
In terms of its earnings in the medium term, the mixer producer said the partnership with Molson Coors would ‘significantly de-risk the US profitability profile for Fever-Tree’.
Fever-Tree also said the deal means that its US working capital needs will reduce over time, leading to ‘incremental firepower to drive global opportunity’.
Looking ahead, Fever-Tree expects low single-digit growth for the group’s total revenue for 2025 as the company establishes its new partnership in the US.
The group expects a better performance in the following year with double-digit group revenue predicted for 2026, alongside a ‘significant step-up in US marketing spend’.
Molson Coors is not the only brewer to invest in the mixer category. Earlier this month, Carlsberg completed its £3.3 billion (US$4.2bn) purchase of Britvic, owner of mixer brand London Essence Company.
Meanwhile, soft drink giant Coca-Cola acquired Greek mixer brand Three Cents in 2022.
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