Shares of Fevertree Drinks surged almost 24% yesterday after Molson Coors took an 8.5% stake in a $88m deal that gives the beer giant exclusive rights to market the UK company's cocktail mixers and tonic water in the US.
As the thirst grows for non-alcoholic drinks, Danish brewer Carlsberg last July agreed to buy British soft drinks maker Britvic for $4.2 billion.
Fevertree, which generates more than a third of its revenue in the US, forecast low-single-digit growth for 2025 as the partnership takes effect, double-digit growth in 2026, and a sustained increase in medium-term revenue.
"Whilst full-year 2025 will be a transition year, the deal is a game changer for Fevertree's potential earnings power," Jefferies analysts said in a note.
Molson Coors has been grappling with the impact of higher prices on sales volumes in the US, and has looked to expand beyond alcoholic beverages.
"It fits squarely into the non-alcoholic space," said Molson Coors CEO Gavin Hattersley, adding that the brewer plans to expand Fevertree across its US accounts spanning big box stores, restaurants, liquor stores and bars.
In November, Molson Coors forecast lower full-year sales and said it would buy a majority stake in ZOA Energy, a drinks company co-founded by Hollywood actor Dwayne "The Rock" Johnson.
Fevertree, known for its cocktail mixers, tonic water, ginger beers, and flavoured sodas, said US revenue grew 12% at constant currency in 2024.
"It looks like an interesting deal for Fevertree as it gets to leverage the Molson Coors platform both on production and distribution," analysts at Peel Hunt said in a note.
Fevertree, a name derived from the colloquial term for the tree whose bark produces an essential ingredient of tonic water, said it would return proceeds from the stake sale to shareholders via a share buyback.
