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UK Drinks Makers And Sellers Bet On Summer Splurge After COVID-19 Pandemic Drought

Published on Jul 21 2021 12:00 PM in Drinks tagged: AG Barr / Fever Tree / Virgin Wines

UK Drinks Makers And Sellers Bet On Summer Splurge After COVID-19 Pandemic Drought

Three UK drinks makers and sellers have raised their financial targets, betting on people stocking their fridges for the summer and soaring demand from bars and restaurants as they reopen after months of COVID-19 pandemic-related lockdowns.

UK Drinks Makers

Irn-Bru maker AG Barr forecast profit for the year ending January 2022 to exceed pre-crisis levels, while Fever-Tree, which sells premium tonics and drink mixers and has just released a trading update for the six month period that ended on June 30, 2021 that reveals that the company's total revenue increased by 36% year-on-year during the period to £141.8 million, expects 2021 revenue to rise by as much as 21% compared to last year.

Online wine retailer Virgin Wines, which was bought out from billionaire Richard Branson's Virgin Group, also upgraded its revenue and core earnings targets following strong demand over the past two months.

"We have seen nothing but encouraging signs over recent months that the customers we have acquired are staying loyal," its boss Jay Wright said.

Companies making and serving drinks are recouping some of their lost business from the past year when the health crisis shut down a major source of their income: the hospitality industry.

That hit could not be fully offset by more people stocking up their bars at home with alcohol and mixers during lockdowns.

Virgin Wines UK shares climbed 4% and AG Barr was little changed by 0757 GMT, while Fever-Tree slumped 6% after a warning that margins would narrow to 44% from 46.2% last year due to supply chain issues and higher input costs.

"Whilst we anticipate some margin improvement next year, we believe logistic cost headwinds will continue alongside input cost increases on raw materials and product cost," Fever-Tree said.

JP Morgan analysts said that Fever-Tree's caution may make some investors wary of the 2022 outlook.

Sales to retail outlets, or off-trade, were strong across all its markets even as tap rooms reopened, Fever-Tree said.

The company, whose tonic water comes in a range of flavours, lifted its revenue forecast for 2021 to between £295 million and £304 million.

It reported £252.1 million in revenue last year.

News by Reuters, edited for Hospitality Ireland by Conor Farrelly. Click subscribe to sign up for the Hospitality Ireland print edition.

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