Fevertree share price: where next after UK sales slump

The premium producer of carbonated mixers saw its share price slide after a disappointing set of full-year results highlighted the potential pitfalls of premiumisation.

Fevertree shares have fallen more than 30% since the beginning of January, with its full-year results last week highlighting the pitfalls of its premiumisation strategy, with UK sales shrinking 1% to £132.6 million in 2019 after Christmas trading was ‘subdued’.

However, weak UK sales were offset by strong revenue growth in the US and Europe, with the two markets expanding by 33% and 16% respectively. As such, group revenue is expected to hit £260.6 million, representing growth of around 10%, though this is below the company’s own guidance.

‘Despite the subdued end to the year in the UK, we have delivered a strong performance across many of our regions in 2019 and begin 2020 with real momentum in a number of key growth markets,’ Fevertree CEO Time Warrillow said.

‘Whilst the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond,’ he added.

‘Fever-Tree is the No.1 premium mixer globally and our performance in 2019 across US, Europe and as far afield as Australia and Canada highlights the fast-growing international strength of the business.’

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Analysts downgrade Fevertree share price outlook

Several analysts including Deutsche Bank, JP Morgan Cazenove, Jefferies and RBC Capital Markets downgraded their price target for the stock in January.

RBC Capital Markets offered the dimmest outlook for Fevertree in 2020, with its analysts downgrading its target price to £13 a share.

Based on the stock trading at £14.45 a share as of 12:30 (GMT) on Tuesday, RBC Capital Markets believes the stock has a potential downside of -10%.

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