Fever-Tree hit by rising commodity prices after Ukraine war

17 March 2022

Mixer company Fever-Tree has warned global supply chain disruption and the Ukraine war will hit profits.

In its latest results Fever-Tree said it was “employing a range of mitigating actions” against a “global backdrop of inflationary pressure”. 

“However, commodity prices have increased dramatically in recent weeks because of the terrible events unfolding in Ukraine and this has created significant uncertainty in relation to input costs,” it said.

The company mentioned increased costs for gas, labour, CO2, paper, card, aluminium, and steel.

“We are monitoring the situation in Ukraine and acknowledge that should commodity prices remain significantly elevated, certain elements of cost may be revisited by suppliers as the year progresses,” it said.

The company said profit margins had been cut to 20.2% and profit expectations for 2022 had dropped to £63m-£66m. 

Tim Warrillow, co-founder and CEO of Fever-Tree, commented: “Whilst the tragic situation in Ukraine has resulted in significant uncertainty in relation to our input costs in the short term, the long-term global opportunity for Fever-Tree remains substantial and we are as confident as ever in the brand’s ability to capitalise on this.”

Fever-Tree noted a “gradual return to normality” in the second half of 2021 had been disrupted in December by the emergence of new Covid-19 variants.

Following the results shares slumped by 8% in early trading, leaving them more than 40% lower for the year-to-date.

Fever-Tree said it had retained its number one position in the UK retail mixer category with 39.8% value share. Growth in US markets also led to the company becoming the number one ginger beer and tonic retail brand.

The company said its success was “supported by the increased popularity of drinking premium long mixed drinks at home, which both retailers and spirits companies are investing behind”. 

“As a result, we expect off-trade demand to remain at higher levels than pre-pandemic and are well placed to benefit from this sustained shift in consumer behaviour.”

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