By Shashwat Awasthi
(Reuters) -Shares of Fevertree Drinks surged almost 24% after Molson Coors took an 8.5% stake in a $88 million deal that gives the beer giant exclusive rights to market the British company’s cocktail mixers and tonic water in the United States.
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 United States, 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.
Shares in Molson Coors gained just over 0.5% in early U.S. trading.
The company has been grappling with the impact of higher prices on sales volumes in the United States, 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 U.S. 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 U.S. 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.
(Reporting by Shashwat Awasthi and Aby Jose Koilparambil; additional reporting by Jessica DiNapoli; editing by Savio D’Souza, Varun H K, Jason Neely, Emelia Sithole-Matarise and Barbara Lewis)
