Fevertree Posts Mixed FY25 Results Amid US Transition and Diversification Push

Innovation also ticked up: two non‑alcoholic ready‑to‑drink cans launched in the UK (a Gin & Tonic and an Italian Spritz), a new Lemon, Lime and Bitters is in development for Australia with Angostura, and the “Signature G&T” initiative in bars aims to protect the classic gin and tonic occasion at a more accessible price point.

Margins and the EPR levy: why EBITDA fell

Adjusted EBITDA declined 16% to £42.4m, with margin down 240 bps to 11.3%. Two big factors:

• US transition effect – the shift to a partnership and royalty model means Fevertree now recognises a share of US profits rather than the full operating margin. Short-term transition inefficiencies and higher marketing also weighed.
• EPR provision – adjusted EBITDA includes a £4.4m cost for the UK’s Extended Producer Responsibility levy. £1.6m relates to Off‑Trade glass. A further £2.8m provision covers On‑Trade glass formats after the Environment Agency challenged Fevertree’s view that these should be exempt as non‑household packaging. Fevertree has launched a legal challenge. Excluding the £2.8m post‑period provision, adjusted EBITDA would have been £45.2m, in line with prior guidance.

Positively, the Rest of Group margin improved to 23.6% (from 22.4%), showing underlying operational progress even as central costs rose to £23.2m due to staff and inflationary pressures.

Accounting change in the US: understanding the new look P&L

Under the Molson Coors partnership, US activity now sits in Molson Coors’ financials. Fevertree recognises a royalty linked to US sales plus sales of finished goods/ingredients to Molson Coors at cost. That is why statutory Group revenue fell to £325.0m from £368.5m even though underlying adjusted revenue rose. The company now presents “Adjusted Revenue” and splits profitability between a US segment and a Rest of Group segment to stay comparable with history.

The trade‑off is clear: a lower reported margin in the short term for a wider, more scalable US platform in the medium term, especially once US production is onshored to remove tariff friction and unlock scale benefits.

Cash generation, buybacks and dividends: signalling confidence

Working capital improved sharply to 16.7% of adjusted revenue (from 20.3%), helped by transferring US inventory and receivables to Molson Coors. Cash generated from operations was £36.8m (86.2% of adjusted EBITDA), a figure that does not fully capture the working capital transfer benefit due to how the sale of Fevertree USA Inc. was structured.

Shareholder returns were punchy: a £100m buyback was completed in 2025 (12,033,912 shares at an average £8.31), and a further £30m buyback is underway for 2026. The total dividend is up 2% to 17.31p, with a proposed final dividend of 11.34p, underlining confidence in cash generation.

Management tone and 2026 outlook

Despite a “challenging” backdrop, the outlook message is steady: expectations for 2026 are unchanged and aligned with market expectations. The plan is to lean into the US opportunity with higher marketing, continue broadening the portfolio beyond tonic, and keep building leadership in premium mixers and premium soft drinks.

My take: what’s good, what’s not, and what to watch

Positives

• Underlying brand momentum – adjusted revenue up 4% at constant currency, accelerating to +5% in H2, with share gains across regions.
• Diversification gaining real scale – 45% of revenue beyond tonic, with Ginger Beer delivering double‑digit growth and category leadership.
• US platform in place – 400 distributors, retail sales and value share gains maintained through the transition.
• Capital discipline – improved working capital, strong cash, £100m buyback completed and another £30m in progress, plus a higher dividend.

Negatives

• Profitability dip – adjusted EBITDA down 16% and US margin compressed to 6.3% due to transition costs and profit‑sharing.
• UK On‑Trade still difficult – On‑Trade revenue down 9%, reflecting sector‑wide pressures and softer gin demand.
• EPR uncertainty – a £2.8m provision has been booked for potential On‑Trade glass obligations, pending the legal challenge.

Watch list for 2026

• US onshoring timetable – removing tariff drag is a clear margin lever for the medium term.
• Marketing ROI in the US – spend is set to build; evidence of faster top‑line growth would be a strong validator.
• EPR outcome – a favourable ruling would reverse the £2.8m provision; an adverse one would crystallise the cost.
• UK channel mix – can Off‑Trade and beyond‑tonic growth offset ongoing On‑Trade softness?
• Working capital trajectory – further gains are guided as the Molson Coors model settles.

Bottom line

Fevertree delivered what you would expect in a transition year: solid brand growth and stronger H2 momentum, offset by a mechanical squeeze on margins from a new US model and one‑off costs. The prize is a bigger, more scalable US business, a broader product set with genuine consumer pull, and the cash generation to fund both investment and shareholder returns. With guidance “comfortable” for 2026, execution on US marketing and production onshoring will be the main catalysts to watch.