FEVERTREE DRINKS PLC

PRELIMINARY RESULTS 2019

AGENDA

1 Update on COVID-19

2 FY19 Summary & Highlights

3 FY19 Financial Review

4 FY19 Regional Review

5 Summary
UPDATE ON COVID-19
COVID-19
Current situation
• Lockdown has severely impacted on-trade revenues across
most of our regions
• Very strong initial sales in off-trade
‒ Positive ‘stockpiling’ effect entering into lockdown
‒ Sales have remained robust
‒ Potential moderation as no in-home entertaining occurs
‒ More people switching to online shopping
• Continue to work closely with our bottling and canning
partners to maintain production, and with our logistic partners
to ensure finished goods stock is held in separate locations
• Determined to support all employees. Focus on redeployment
of staff to maintain efficiency across the business, rather than
using furlough schemes
Actions to safeguard and mitigate
• Increased levels of contingency stock and raw materials
Operations during the early stages of the outbreak
• Supporting our bottling, canning and logistic partners as
they enact contingency plans, such as segregated shift
patterns
• Optimising channels and formats
Off-trade ‒ Increased distribution to convenience
‒ New larger pack format
‒ Upweighting our online presence
• Adjusting promotional plans
• Working with our accounts to support them through the
On-trade extended period without revenue
• Maintaining good relationships with spirit partners (e.g.
joint provision ‘bundles’ mailed to consumers)
• Putting in place attractive deals for wholesalers and on-
trade accounts ready for on-trade re-opening
COVID-19: FY20 SCENARIOS
FY20 impact uncertain Key data points

• Too early to quantify financial impact on full year Revenue breakdown by region, channel, and quarter
• Key uncertainties
Region % Group On- Off- % Group
‒ Length of time governments impose restrictions revenue FY19 trade trade revenue FY19
‒ How restrictions are relaxed (gradual opening of the on-trade UK 51% 50% 50% Q1 20%
likely)
US 18% 30% 70% Q2 25%
‒ Consumer behaviour changes as restrictions are relaxed
Europe 25% 45% 55% Q3 25%
‒ Structural impact to the on-trade
‒ Global economic impact ROW 6% 45% 55% Q4 30%

• On-trade revenue loss: assume zero for the duration of
lockdown in each region
• Initial strong performance in off-trade
‒ Sales uplift as consumers increased their frequency of visits and
basket sizes
‒ Consistently strong performance across regions
Gross margin and Opex
• Gross margin impact from FX movements, elevated inventory costs,
changes to channel and regional mix
• High level of variable costs, mostly relating to A&P
• Short-term savings from lower A&P spend, with the aim of
reinvesting these savings later in the year (i.e. no change to level of
spend over the year)
COVID-19: FEVER-TREE WELL-POSITIONED TO NAVIGATE UNCERTAINTIES
• Revenues generated from a diversified set of regions,
channels and end customers
Diversified revenues
• All regions have a good mix between on- and off-trade
‒ The US is particularly weighted to the off-trade

• Strong cash flows

Strong balance sheet • Debt free

• FY19 cash position £128m

• Asset light, outsourced model

Flexible business • Low capital expenditure requirement and few fixed costs
model
• Ability to flex variable costs if needed

• International network of 5 bottlers and 2 canners means we are able to mitigate the impact of short-term
Strong & diverse disruption at specific sites
operating model • Good levels of contingency stock and other key raw materials
• Numerous and diverse set of on-trade accounts
COVID-19: SUPPORTING OUR PEOPLE AND COMMUNITIES
Supporting our employees Supporting our local communities
Using our strength as a small, close-knit team Donations to local charitable
Continue to offer support and clarity to all our employees, with no initiatives across our regions
intention to furlough

Focus on redeploying our on-trade

team to different departments
broadening their knowledge and skill set

Supporting key workers Supporting our customers & suppliers

Helping ‘Salute the NHS’ to provide one million
meals to NHS frontline staff over the next
three months, donating 60K drinks to be
included in meal packs
Piloting a scheme in UK called “Protect
you Local” to support independent
outlets, through a digital voucher-based
fund

Partnered with Treats Help in the US to Supporting the North American bartender
distribute our drinks to hospitals. So far we have community through donations to the Restaurant
donated to 20+ hospitals across the US Workers' Community Foundation and offering
bartenders digital seminars
2019 REVIEW
FY19 SUMMARY & HIGHLIGHTS

1 Double digit Group revenue growth

Retained category leadership in the UK in both

2
on-trade and off-trade

Strong performance in the US with 33% revenue

3
growth and a stronger distribution network

European sales increased 16% as Fever-Tree

4
drives the growth in the premium mixer category

Continued to invest in the substantial global

5
opportunity
FINANCIAL REVIEW
FY 2019 HIGHLIGHTS

REVENUE GROSS PROFIT ADJUSTED EBITDA

£260.5M 10% £ 131.5 M 7 % £ 77.0 M 2%

GP MARGIN EBITDA MARGIN

50.5% 29.6%
DILUTED EPS NET CASH TOTAL DIVIDEND

50.26p £128.3M 15.08p

OPERATING PERFORMANCE
• Strong total revenue growth, with good progress in international
£m FY 2019 FY 2018 Change
regions
Revenue 260.5 237.4 10%
‒ More challenging year in the UK offset by 24% growth across
- UK 132.7 134.1 (1)% international markets
- US 47.6 35.8 33% ‒ Acceleration in Europe and the US during H2
- Europe 64.4 55.5 16% • Positive FX impact due to US dollar strengthening
- RoW 15.8 12.0 32% ‒ Adjusting for FX, constant currency growth was
Gross profit 131.5 122.9 7% ▪ 28% in the US
Gross margin 50.5% 51.8% (130)bps ▪ 17% in Europe
Operating expenses (54.5) (44.3) 23% ▪ 9% for the Group
% of sales 20.9% 18.7% 220bps • Gross margin retraction was driven mainly by increased glass costs
EBITDA 77.0 78.6 (2)% and the impact of storage costs from holding elevated inventory
for periods during the year
EBITDA margin 29.6% 33.1% (350)Bps

Operating Profit 72.2 75.4 (4)% • Operating expenditure increased ahead of revenue growth as we
continued to invest for the future, where we see huge
Profit Before Tax 72.5 75.6 (4)%
opportunity, especially in the US and Europe
Normalised EPS (pence per share) 51.08 53.40 (4)%
• Total dividend up 4% year-on-year to 15.08 pence per share
Dividend (pence per share) 15.08 14.50 4%
STRONG CASH POSITION
£m FY 2019 FY 2018 • Working capital decreased primarily due to
Working capital: 54.2 57.9
‒ Decreased in inventory levels at year end, reflecting
- Inventories 20.8 28.3
- Trade and other receivables 60.8 62.9 improved operational efficiencies and elevated levels held
- Derivatives 0.1 (0.3) at the previous year end
- Trade and other payables (27.5) (33.0)
‒ Improvement in collection of trade receivables
Working capital as % of LTM revenue 20.8% 24.4%
• Working capital improvements resulted in operating cash
flow conversion of 103%

£m FY 2019 FY 2018 • This resulted in a strong FY19 net cash position of

EBITDA 77.0 78.6 £128.3m, up 53% year-on-year
Movement in working capital 3.0 (20.2)

Cash generated from operations 80.0 58.4

Operating cash flow conversion 104% 74%

All other movements (41.4) (25.7)

Net cash flow 38.6 32.7

Cash at beginning of period 89.7 57.0

Cash at end of period 128.3 89.7
CAPITAL ALLOCATION

1 Invest in the global opportunity

• Hold sufficient cash to upweight investment and take

advantage of opportunities to accelerate growth

• Retain ability to upweight marketing spend across growth

regions at the appropriate stage

2 Assessment of M&A opportunities

• Remain vigilant to opportunities that would further assist

with the delivery of our strategy

3 Consider additional distribution to shareholders

• Consider additional distribution to shareholders where

the Board considers surplus cash is held
REGIONAL REVIEW
UK
UK 2019 HIGHLIGHTS
On-trade Off-trade

• Good performance • Performed in-line with

against tough 2018 category, which lapped
comparators strong summer 2018
• c.45,000 accounts with comparators and faced
macro headwinds in H2
good regional growth
• Strong performance with
• Strong growth within
extended Ginger range
national Groups
• Positive co-promotional
• Extended our leadership
activities
position in the mixer
category • Maintained leadership
position in the mixer
category with 40% value
share*

Revenue: £132.7m

*IRI Total UK Retail Mixer Market value share, 13 weeks to 19 Dec 2019
UK – STRATEGIC PROGRESS & OBJECTIVES
Portfolio management &
Distribution Marketing
Innovation

• Leverage category leadership position
• Continue to grow our range of
mixers to target new drink occasions
• Attract new consumers to the brand
through various long mixed drink
serves such as whisky & ginger
• 2020 launch of a premium soda range
• Focus on both core range and
secondary growth drivers
• Continue to gain distribution in on-
trade, especially regionally
• Clear opportunities to gain further
distribution
• Focus on reaffirming our key points of
difference
• Drive awareness and trial
• Develop point-of-sale presence across
both the on-trade and off-trade

Supported through our strong partnerships with a range of spirits companies

USA
US 2019 HIGHLIGHTS
Strong overall performance:
Revenue +33% YoY

Deepening relationships with key customers and

partnerships with spirits brands

Significant distribution landed through the year across all

channels

Accounted for two-thirds* of premium mixer growth

Revenue: £47.6m

*Nielsen 2019
FEVER-TREE USA HAS BEEN UNDER TRANSITION:
NOW POISED TO CAPITALIZE ON STRONG FOUNDATIONS

2018 H1 2018 H2 2019

Changing the Business

Strengthen Network Building Out the Foundations
Model

• Open Fever-Tree USA • Optimize route-to- • Expanding distribution across channels –

• Build a team across all
functions to work
alongside our global
team
market through number of accounts and points of
national partnership distribution per account
with SGWS across the
on-trade and off-trade • Activate marketing agenda through brand
activation events, awards, media articles and
social media presence

Grew >20% over transition year as we Accelerated growth and became the
established a leading position in the premium #1 driver of growth in tonic and
mixer market ginger beer overall categories

20
2020 – TAILORING OUR APPROACH TO THE US CONSUMER AND MARKET

LEVERAGE STRONG FOUNDATIONS & RELATIONSHIPS

OPTIMIZE PRICE ALIGN INNOVATION & ACTIVATION

DRIVE TRIAL & AWARENESS
& FORMATS WITH US HABITS

• Ensure relevance for the US market based
on consumer behavior trends key
• Thorough testing and engaging
• Implementation from 1st Feb 2020
• Align the portfolio to 4 core drinking
occasions
• Strategy to drive growth in each occasion
• Continued in-store and in-bar activations
• New focus on the on-line space with
Google and Amazon
• Effective targeting and instant results
obtained
OPTIMISING PRICE

H2 2019 February 2020

Understanding Consumer Behaviors

Optimizing Fever-Tree Strategy

Key Stakeholder Engagement

Implementation
DETAILED PRICING ANALYSIS

Elasticity Assessment Consumer Research Retailer Trials

Bespoke consumer research with panel of ~10k

Detailed elasticity analysis of weekly volume Number of trials testing comparative velocities per
online mixer consumers testing their willingness to
performance at price points across key retailers store at new price points across the US
purchase products at different price-points

Current Suggested
Volume Intention to price price
(Units/ purchase
week)

% Velocity
Increase at
New Pricing

Ginger Beer
R² = 0.85 Tonic Water
Club Soda
Ginger Ale

High Price Low Top 5 SKUs

Price ($/Unit)
24
OPTIMISING FORMATS
An affordable premium position has been achieved in the UK New formats create opportunities

• Different entry price points are enabled through the use of different
UK format evolution formats, which can unlock significant volume uplift

UK sales, £m
45

40

£2.99 £1.70 £4.00 $5.99 / $4.99 $2.99/ $2.49 35

30
500ML Glass

25 8X150ML Cans

4X200ML Glass
20

Mainstream 15

competitor
equivalent 10

£1.19 £4.00 $4.29 $1.20 Q414 Q415 Q416 Q417 Q418

ALIGN INNOVATION TO US DRINKING HABITS
• On Trade Pricing enables “Four Drinks” strategy
• Targeting drinks occasions to ensuring we become the #1
mixer brand by value
• Grapefruit launch is tailored to the tequila mixer
opportunity in the US

FEVER-TREE
CLASSIC
PALOMA

FEVER-TREE
GRAPEFRUIT
SPRITZ
EUROPE
EUROPE – 2019 HIGHLIGHTS
Good performance across key territories:
Revenue +16% YoY

Positive momentum in the premium gin category

Widening distribution in both on- and off-trade

Continued to evolve and strengthen route-to-market

sales and distribution partners

Revenue: £64.4m
EUROPE – STRATEGIC FOCUS

“Core Markets” “Next Wave” “Earlier Stage”

Leverage strength of the Brand Broadening and deepening Build distribution and route-to-
and category leadership penetration market

• Multiple growth drivers remain • Whitespace in on- and off-trade • Ensure right RTM by market
• Range and format extensions • Gin & Tonic in strong growth • Increase headcount where
• Growing focus on Ginger range • Building relationships with key appropriate
partners

Upweighted brand activation across the region

ROW
ROW – 2019 HIGHLIGHTS
Strong performance across key territories:
Revenue +32% YoY

Growth driven by increased RoS and further

Australia distribution wins in a strong growth market

Distribution gains with national retailers led to

Canada a very strong off-trade performance

Successfully upweighted presence in the region

Asia with a focus on key cities

Revenue: £15.8m
SUMMARY
SUMMARY

FEVER-TREE IS WELL POSITIONED

TRACK RECORD MULTIPLE GROWTH

LEADERSHIP
& FIRST MOVER DRIVERS
Clear No.1 Global
Proven category leader Across categories &
Premium Mixer Brand
across multiple markets regions

RELATIONSHIPS BUSINESS MODEL

Unrivalled Relationships Outsourced, asset light,
& Partnerships cash generative
 Tel. 0207 349 4922
186-188 Shepherds Bush Road, London W6 7NL
info@fever-tree.com