Fever-Tree has reached its annual profit expectations following a strong performance in the US market and increased regional production to offset inflationary pressure.

Overall, revenue at the British tonic producer increased 6% year-on-year to £364.4m, with the gross margin being in line with expectations at 32.1%, which was a 240 bps decline on 2022.

The firm stated that it has been struggling with rising glass costs in Britain as a result of energy prices increases following the Russia-Ukraine conflict.

As a result, Fever-Tree has increased its prices and boosted US glass production to help overcome the pressures.

Its new glass contracts and reduced transatlantic freight rates are also set to help profit increase in 2024.

The firm also made an adjusted EBITDA of £30.5m, which was in line with expectations, despite a drop of 23% year-on-year.

Co-founder and chief executive officer at Fever-Tree, Tim Warrillow, said: "2023 was a year when the Fever-Tree brand once again grew in breadth and depth, with market share gains across the globe. Perhaps the most significant milestone was establishing the US as our largest region, and with it, extending our market leadership position in both the US tonic water and ginger beer categories.

"The G&T of course remains an integral growth driver for the group but 2023 was a year where we saw a step change in our non-tonic portfolio. Not only have our gingers and sodas continued to see strong growth but the last 12 months have seen the launch of our range of cocktail mixers alongside the roll out of our adult soft drink range in the UK.

"Taken alongside softening inflationary pressures, the operational efficiencies we are delivering means I am confident that we are entering 2024 in a very strong position from an operational perspective and have an excellent platform for strong profitable growth going forward."

Looking forward, the firm has said that it is comfortable with expectations for 10% growth in the next year.

Furthermore, it looks to continue with double-digit growth in the US and a return to growth in the UK and the rest of the world.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, said: "The US is now Fever-Tree’s largest region by revenue, yet still offers exciting growth opportunities given the vast size of this market.

"The balance sheet is in very good shape thanks to low debt levels. And after a one-off buyback of inventory in Australia, it looks like the worst of the operational challenges are now behind the group. But this year’s profit targets look stretching, so Fever-Tree’s going to need to keep a tight grip on cost if it wants to nearly double its profit margins. And the sky-high valuation’s already pricing a lot of this in. Many investors will want to see more concrete signs that expansion in the US is boosting the bottom line before getting too excited about this mixer maker."

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