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Fevertree faces sharp cost increases from Ukraine crisis

Fevertree and others in the industry were already facing logistical snags before the outbreak of war in Ukraine
Fevertree and others in the industry were already facing logistical snags before the outbreak of war in Ukraine

Tonic maker Fevertree said today that dramatic rises in commodity prices following Russia's invasion of Ukraine have led to uncertainty around costs for the British company and will hurt its 2022 profit.

Sanctions against Moscow for invading its neighbour have sent prices soaring amid uncertainties over commodity supplies from both nations and added to worries of inflation.

Fevertree and others in the industry were already facing logistical snags.

The London-listed company, which sells premium tonics and drink mixers, said it expects core profit of £63-66m this year, lower than analysts' consensus of £71.7m.

Fevertree reported a profit of £63m for 2021 and had previously forecast 2022 profit in the range of £69-72m.

The company did not specify which price rises were hurting it and did not immediately respond to a request for details.

Earlier in the day, commodities trader Glencore said markets must adapt to a lack of Russian and Ukrainian commodities.

Russia, which has called its actions in Ukraine a "special military operation," is a key supplier of oil, natural gas, coal, aluminium and nickel, while Ukraine is a major grain producer and exporter.

"Whilst the tragic situation in Ukraine has resulted in significant uncertainty in relation to our input costs in the short term, the long-term global opportunity for Fever-Tree remains substantial," chief executive Tim Warrillow said in a statement.

Analysts said Fevertree's troubles were "probably far from over", with rising Covid-19 cases in several countries also posing a threat to restaurant and bar sales.