Fever-Tree Drinks PLC shares fell 5.13% to $775.55 after the bevetechnology company reported half-year results for fiscal year 2026 that showed strong top-line growth but margin pressure in its fastest-expanding market.
Total Fever-Tree brand revenue reached £183.6 million, up 8% at constant currency, driven by an 11% gain in the United States and double-digit growth across Europe and the rest of the world. U.S. off-trade sales accelerated through the period—6% in Q1, 11% in Q2, and 16% in July and August—suggesting momentum is building ahead of planned canned-product trials in autumn 2026.
Beyond-Tonic products accounted for 47% of total group sales in the first half and contributed roughly 85% of revenue growth, with global ginger beer revenue rising nearly 20%. The company achieved its highest-ever value share in both the tonic and ginger beer categories at U.S. retail, according to Circana data, while also gaining approximately 2 percentage points of value share in UK off-trade and 1 percentage point in European off-trade.
Adjusted EBITDA margin improved 20 basis points to 10.9%, but the improvement masked a significant regional divergence. The U.S. segment's adjusted EBITDA margin contracted 190 basis points to 6.2%, while the rest-of-group segment delivered a 24.5% margin, up 70 basis points. Central costs declined to 7.0% of adjusted revenue, and a £2.6 million provision was recorded for the potential full-year UK on-trade Extended Producer Responsibility levy.
Normalized earnings per share grew 5% to 11.00 pence. Operating cash flow conversion reached 90%, and net cash stood at £68 million at the end of the period. Working capital represented 17.4% of trailing twelve-month adjusted revenue.
The company confirmed a £60 million share buyback program for FY26, building on a £100 million buyback completed in FY25 and bringing total shareholder returns across the two years to £160 million. Combined programs are expected to reduce shares in issue by approximately 7% versus December 2024 levels. Consensus forecasts project more than £100 million of free cash flow across FY27 and FY28, with a profit guarantee from partner Molson Coors covering 2026 through 2030.
Fever-Tree shares are trading roughly 20% below their 52-week high of $973 and carry a valuation multiple of 41 times earnings. Management expects U.S. sales volume to be split 45:55 between the first and second halves of the year, with more than half of U.S. products expected to be locally produced in FY27 as onshoring ramps up.
On the consumer front, Fever-Tree cited Circana research indicating that 49% of U.S. adults, 54% of UK adults, and 71% of European adults intend to moderate their alcohol consumption over the next year. In the UK alone, the shift away from alcoholic drinks between 2022 and 2025 redirected approximately 700,000 lost alcoholic drinks annually into the soft and non-alcoholic category, creating a retail value pool exceeding £700 million.
