Fevertree Drinks plc – Risk Profile
Fevertree Drinks Plc (Fevertree) has a strong risk profile and is one of the top five companies based on our proprietary risk assessment of the non-alcoholic beverages sector in the consumer industry. Country, industry, and financial risk pillars boosted the overall risk score for Fevertree. The company's profitability and liquidity position are its strengths, while the recent decline in revenues remains a cause for concern.
About the Company
Fevertree develops and supplies premium mixer drinks. The company offers four variants of tonic water, two variants of ginger beer, three variants of lemonade, and one variant each of spiced orange, ginger ale, soda water, and cola to hotels, restaurants, bars, and cafes. Its brand portfolio includes Premium Indian Tonic Water, Refreshingly Light Tonic Water, Mediterranean Tonic, and Refreshingly Mediterranean Tonic.
Fevertree is one of the leaders in the non-alcoholic beverages industry, with reported revenue of $323 million in the financial year 2021 (FY2021), which declined 2.71% over that in FY2020. The company's net income also decreased 29.33% in FY2021 compared to that in FY2020.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Fevertree overall risk score is better than the sector's average. Companies like Monster Beverage Corp, National Beverage Corp, and Nongfu Spring Co Ltd are the leaders in the sector.
Country Risk:
Fevertree has a country risk score of 4.13. It has a presence in diverse territories, insulating it from the risk associated with economic and political factors of a specific region. The company has a country risk score of 4.13, with the majority of its revenue derived from the UK (40.98%), followed by Europe (25.90%), the US (23.21%), and Other countries (9.92%).
Industry Risk:
The company's primary exposure is to the non-alcoholic beverages sector. Moderate profit margins and weak growth projections compared to other sectors characterizes the non-alcoholic beverages sector, resulting in an industry risk score of 3.0.
Operational Risk:
The company has a below-average operational risk score of 2.66, primarily attributed to its business positioning and smaller scale of operations. However, mid-20s profitability margins and return on equity boosted the overall operational risk scores.
Financial Risk:
The company has a solid financial risk score of 4.23, higher than the industry's average. The company has a healthy liquidity position, which increases its ability to repay its short-term obligations and puts the company at an advantage, especially while foraying any potential opportunities arising in the market. A lower proportion of debt on its balance sheet has strengthened the leverage and cash flow ratios.
About our Methodology:
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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