Not enough fizz: Fever-Tree 2021 outlook disappoints

By Vishwadha Chander and Pushkala Aripaka

(Reuters) - Tonic maker Fever-Tree on Thursday forecast a 2021 sales rebound driven by at-home drinking and a gradual easing of pandemic-led curbs on bars and restaurants, but its revenue and earnings forecasts still fell short of market expectations.

The maker of premium tonics and drink mixers said it expected 2021 sales to grow by 12% to 16%, with margins around 2020 levels. Both forecasts fell short of a company-compiled analyst consensus, driving the London-listed shares down as much as 10% and wiping out the stock's gains so far this year.

The COVID-19 pandemic has boosted demand for affordable drinking at home as many countries closed bars and restaurants and banned events, prompting Fever-Tree to spend heavily in an effort to tap that demand with new drinks and packaging.

The London-based company said sales for home consumption, or off-trade sales, remained "very positive" in the first months of this year and it expected to sales to drinking venues to regain momentum gradually, though it noted ongoing uncertainty around the pace of vaccinations and lifting of restrictions.

"Our performance in the off-trade was especially strong, exceeding our expectations across all our regions," said co-founder and Chief Executive Tim Warrillow.

Fever-Tree reported a 3% drop in sales last year, confirming preliminary figures released in January that showed retail sales nearly offset a loss of business with pubs and restaurants.

The company also reported a 22.6% drop in earnings before interest, tax, depreciation and amortisation (EBITDA).

While 2020 sales and earnings were in line with expectations, analysts were predicting a nearly 17% rise in sales this year and a marked improvement in profit margins.

Liberum analysts said 2020 results reflect the company's resilience and robustness of its international strategy.

"We continue to expect Fever-Tree to be a winner once on-trade reopens," they said.

($1 = 0.7157 pounds)

(Reporting by Vishwadha Chander and Pushkala Aripaka in Bengaluru; Editing by Tomasz Janowski and David Goodman)