Fevertree Drinks (FEVR.L): Model Update

Research evidence excerpt

Fevertree Drinks (FEVR.L): Model Update

Fevertree Drinks (FEVR.L)

02 July 2026 Citi Research

Fevertree Drinks

Valuation

Our target price of £9.58 is set using both forward PE multiple and DCF methodology, assigning 50% weightage to each. For the

DCF analysis, we use a three-stage DCF. We assume a 4.5% risk-free rate and equity risk premium of 3.0%, which drives a 7.4%

cost of capital. We expect asset turn to improve as premiumisation in mixers drives sales without the need for a step up in

invested capital. We fade the ROIC back to the cost of capital in the long-run. In our forward PE multiple valuation, we apply a

c35x PE to FY26E EPS reflecting Fevertree’s superior organic growth prospects in the medium-term.

Risks

We identify the following risks that apply to Fevertree, which may impact the achievement of our target price either positively

or negatively:

• Consumer trends: The growth of Fevertree’s sales depends on consumer demand for mixed drinks, which generate 100% of its

sales. While mixers currently is an attractive category, if there is a change in demand for mixers it could negatively impact sales.

For example, there could be: (1) shifts away from soft drinks due to health perception around sugar; (2) shift away from alcoholic

drinks that are consumed with Fevertree products; and (3) shift towards other mixer products.

• Macroeconomic conditions: Fevertree’s results are impacted by overall economic conditions in its key geographic markets,

and the level of consumer confidence and spending. A reduction in confidence and/or spending could negatively impact the

sales trajectory. As Fevertree operates in the premium segment of the market, it could be more impacted by a downturn in

consumer spending.