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Fever-Tree, the maker of upmarket mixers, has signalled a cautious outlook for the rest of the year as drinkers make a slow return to pubs, bars and restaurants with the lifting of lockdowns.

The group, whose glass bottles of tonic water, ginger beer and soda have become a familiar sight in gastropubs, said it expected full-year revenues of £235 to £243m, below last year’s £260.5m, assuming there are no further significant lockdowns.

Many countries still have restrictions on socialising, while consumers have also proved cautious.

“We expect to continue to see a very gradual recovery as we proceed through the remainder of the year,” Fever-Tree said.

The shift to at-home drinking, which is less profitable, will result in an ongoing hit to margins, it said. However, the company has increased its dividend after consumers drinking more spirits with mixers at home helped limit the hit to sales.

The company said it would raise its interim dividend by 4 per cent from last year to 5.41p a share, despite pre-tax profits falling 37.9 per cent to £21.7m in the first half. Revenues dropped 11.2 per cent to £104.2m.

Shares in the group were down 5.14 per cent in early trading to £20.11.

Tim Warrillow, chief executive, said: “People’s interest and excitement about mixing drinks at home has really taken hold over the lockdown period, attracting more households to the Fever-Tree brand than ever before.

“Consequently, we have increased our penetration in the UK, consolidated our number one position, and driven value share gains in the US, Europe, and as far afield as Canada and Australia.”

Fever-Tree has been pushing into the US market, where revenues were up 39 per cent to £27.4m in the first half, partly thanks to promotional price cuts. In the UK, it ran its first national TV advert targeting consumers at home.

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Unlike others in the sector, Fever-Tree has resisted cost cuts, saying it remains committed to underlying operating expenses of about £60m in 2020, with “significant” marketing activity planned.

The company dominates the market for premium mixers, but faces growing competition as drinks companies turn their attention to alcohol-free options.

Edward Mundy, analyst at Jefferies, said the lockdown caused by Covid-9 had “provided a sampling opportunity for premium mixers. What is less clear is how sticky new consumption habits are post-lockdown.”


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