Lindsell Train lauds Fevertree as investment trust lags benchmark

Nick Train’s fund house is the largest shareholder in the UK drinks business


The Finsbury Growth and Income Trust has singled out Fevertree as a shining light in the portfolio during September, a month the investment company underperformed its benchmark.

The trust reported a total return of -2.2% on a net asset value basis and -3.3% on a share price basis during the month, compared with the FTSE All-Share’s -1%.

But portfolio manager Nick Train (pictured) highlighted “decent performer” Fevertree as being up more than 5% during the month.

According to Fevertree’s website, Lindsell Train Investment Management is the largest shareholder with a 7% position as of 9 August.

Writing in the trust’s latest factsheet, dated 30 September, Lindsell Train analyst and portfolio managers’ assistant Ben van Leeuwen said Fevertree had been able to maintain focus throughout the “trying” past 18 months thanks to its “capital-light business model and rock-solid balance sheet”.

He noted the firm’s H1 revenues were up in both Europe and the rest of the world, while shares were up in all relevant markets, including 300 basis points in France and 100bps in the UK. Sales in the “crucial” US market climbed 32% on H1 2020.

Van Leeuwen flagged the extent and scale of Fevertree’s relationships with leading global spirit brands for co-promotions. These include with Bacardi to promote Bombay Sapphire and Grey Goose in the US, and with Diageo to promote Tanqueray in Sweden and Smirnoff in Ireland.

These co-promotions are a core part of Fevertree’s growth strategy, according to its website, which says: “Fevertree intends to drive growth from further involvement in co-branded promotional activities with both craft and global sprits brands across the wider spirits category reflecting the continued focus the category will receive.”

Van Leewen said: “Whatever the spirit, Fevertree has the mixer to match it, and as the only premium mixer brand with global recognition and scale it remains a partner of choice for these demanding, prestige-conscious companies.”

He added: “This is an attractive position to hold, especially when it comes with a business model that has the potential for 50% gross margins and 30% Ebitda margins at scale.

“This is exactly why we continue to encourage the company to keep pursuing its global potential, whilst some other investors seem to worry more about short-term margin impacts from the elevated freight costs or channel/country mix etc. This is a young dynamic UK growth company, and we believe it is still very early in its innings.”

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