Fevertree Drinks PLC

Good morning, everyone, and thank you for joining us to hear about Fevertree's performance in the first half of 2024. My name is Tim Warlow, co-founder and CEO of Fevertree, and I'm joined on the call by Andy Broch, our CFO, and Charles Gibb, who has very notably got up very early in the morning, our North American CEO. So this morning, we will talk about Fevertree's robust performance despite the tough macro environment how we've delivered almost 80% EBITDA growth as we begin to drive strong margin recovery, and as well as demonstrating how we continue to position the business for long-term success. Fevertree continues to gain share across our key markets as the brand grows in strength around the world. The focus of this slide and the following slide is to show how we're controlling the controllables. despite the well-publicized headwinds that are impacting the drinks industry around the world. In the US, our largest revenue-generating region, the brand delivered double-digit growth at constant currency despite the subdued spirit backdrop. Future is also outpacing the total mixer category by about 10% as we continue to drive distribution gains and maintain our superior sales velocity on the shelf. In the UK, Fevertree remains the number one brand by value by a significant margin. The on-trade channel remains challenging, which was compounded by poor weather in June, but we performed well in the off-trade and are delivering good growth from our non-tonic products, which are catering to the greater variety of drinks being chosen by consumers.

Europe had a tough first half of the year with unfavorable weather during the period.

However, we remain the largest premium mixer brand across Europe. extending our value share as we grow ahead of the competition. In addition, our depletions, which represents our sell-out to the market, were significantly ahead of our reported sales, which reflects our shipments to distributors due to the phasing orders between June and July. Finally, in the rest of the world region, we delivered very positive year-on-year growth as we lacked the transition to our subsidiary setup in Australia. supported by continued share gains in our two largest markets in the region of Australia and Canada. Another way in which we're controlling the controllables is through our margin improvements. As you all know, the group has experienced significant macro cost headwinds over the last few years, resulting in gross margin pressure on the business. However, we have turned an important corner. improving our gross margin by 520 basis points year on year during H1. This is primarily being delivered through better glass pricing and transatlantic freight costs, as well as continue to take consistent price increases to offset underlying inflationary cost pressures. And we're confident of continuing this improvement to deliver 600 basis points of gross margin improvement across the full year. In addition, we've been focused on driving improvements for the long term, including the optimization of our global footprint alongside driving operational efficiencies across our end-to-end systems from forecasting to procurement and inventory management, which will drive improvements in the years to come. Despite the headwinds we've experienced, we've not compromised investment in the brand, unlike many of our competitors. We continue to increase our marketing spend across multiple regions, as well as extending the brand through innovation, which I'll come on to talk about a bit later. And the reason we've not compromised on our investment is due to the clear opportunity that lies ahead for the group. As you can see from the left hand side of the slide, spirits are forecast to continue to grow by around two to three, 2.3% every year until 2028. and this will be led by the premium end of the market as consumers care more and more about quality. We're also seeing a number of important trends develop from a desire for longer, lighter drinks that can be enjoyed throughout the day to interest in a broader set of spirits and serves as well as more mindful drinking where consumers want to socialize with lower or non-alcoholic drinks but crucially expect them to be the same quality and sophistication as their alcoholic beverages. And we believe that when it comes to every one of the evolving consumer trends outlined, we are best placed to satisfy these new and evolving expectations. For example, not only do we have the broadest distribution of any premium mixer brand globally, but our range of mixes is unmatched. And we have recently developed products of an extension to our mixer range, creating new flavors and formats perfect for that of soft drinks. Innovation will continue to be at the heart of the Fevertree proposition as we broaden the brand into more premium drinking occasions. We've built on our strong tonic range and mixing reputation to great ranges of gingers and flavoured sodas, which all contribute meaningfully to our growth and give us the ability to flex our portfolio to cater to differences in consumption habits by market. In addition, we've started to expand our total opportunity beyond our core mixers into both cocktail mixers and adult soft drinks. which attract younger consumers and broaden our reach to any adult socializing occasion. Consequently, we now have a much more balanced global sales mix. Our non-ponic products have grown by 24% caca over the last six years and now make up 40% of our sales, up from just over 20 in 2018. We expect the portfolio to continue to diversify as we grow across different markets and enter significant new categories. which gives us confidence about driving growth long into the future. Before I hand over to Andy for the financial review, I'd like to update you on our progress as part of our ESG agenda. As you can see from the slide, we're driving action across the ESG spectrum, but I'd like to point out three areas of focus from the first half of the year, climate, communities and colleagues. Firstly, under our climate branch, we started to develop our first net zero roadmap, which builds on the work we've done to map out our carbon footprint, both at a corporate and product level. Secondly, under the communities branch, as well as continuing with our important support of malaria no more, we've updated our human rights charter, engaging directly with our ingredient supply chain partners on human rights and responsible sourcing practices. And finally, under our colleagues branch, We've advanced the DEI agenda significantly, rolling out new events, training and employee resource groups to better support our fantastic team. I will now hand over to Andy to take you through the financial review.