Fevertree Drinks PLC (FV8.SG) Earnings Call Transcript & Summary

Hello, everyone, and thank you for joining the Fevertree Full Year Results Presentation. My name is Sami, and I'll be coordinating your call today. [Operator Instructions] I will now hand over to your host, Tim Warrillow, Co-Founder and CEO of Fevertree to begin. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us to hear about Fevertree's performance in 2024. My name is Tim Warrillow, Co-Founder and CEO of Fevertree, and I'm joined on the call by Andy Branchflower, CFO. So this morning, we'll be talking about the brand's performance during 2024, how the global opportunity for the Fevertree brand continues to expand and evolve as well as the transformational partnership we've entered into with Molson Coors in the U.S. So there are three important things we want you to take away from today's presentation. Firstly, that the global trends in the beverage sector are firmly in Fevertree's favor, and we believe that we're uniquely positioned to take advantage of all of the trends across adult socializing, from traditional mixing to lower ABV to nonalcoholic options. Secondly, we will be reemphasizing the importance of our long-term strategic partnership with Molson Coors and how it provides a platform for significant revenue and profit growth in the medium and long term. And thirdly, as a result of this new partnership, Fevertree not only has a greater revenue opportunity, but a significant level of guaranteed U.S. profits and lower working capital requirements, which will all lead to increased quality of earnings and cash generation. And as a result of this, this morning, we're announcing an extension to our initial buyback program of GBP 29 million, subject to shareholder approval, taking the total to GBP 100 million for the year. Turn over the page. Looking back over '24, Fevertree continued to gain share across our key markets as the brand grows in strength around the world. In the U.S., our largest revenue-generating region, the brand delivered double-digit growth at constant currency and outperformed the mixer category, extending our #1 share in the Ginger Beer and Tonic categories for 32% and 27%, respectively. In the U.K., Fevertree remains the #1 brand by value by significant margin despite continued gin declines impacting the tonic category. We've been focused on diversifying our portfolio to cater to the greater variety of drinks being consumed. And as a result of this focus, our Non-Tonic products now comprise almost 30% of our total U.K. sales. Europe had a tough first half of the year with unfavorable weather during the period. However, the brand bounced back strongly, delivering growth of 12% at constant currency in the second half of the year. We remain the largest premium mixer brand across Europe, extending our value share as we continue to grow ahead of the competition as well as driving growth of the Ginger Beer category. Finally, in the Rest of World region, we delivered 22% year-on-year growth at constant currency, driven by continued share gains in our two largest markets in the region, Australia and Canada. So turning to the future opportunity. We continue to see consumer trends evolve and develop across the adult socializing spectrum. Spirits continue to take share from wine and beer, and this is being largely driven by the growing premiumization of the long mixed drink, a drinking trend that allows spirits to be enjoyed on more occasions throughout the day. This trend lends itself perfectly to the continued growth of our core mixer range, where we still have a lot of white space to penetrate around the world. In addition, we're seeing the trend for drinks with lower ABV and lower calories starting to really gain traction. Once again, a trend that is dependent upon mixers. And finally, the desire for sophisticated nonalcoholic drinks is no longer a niche category. In the last few years, it has really started to gain wide-scale consumer and trade attention. And this is another trending category that Fevertree is uniquely positioned to play an important role in. So looking at each of these trends in turn, what is so exciting is that there is no brand better positioned to satisfy consumers' new and evolving expectations than Fevertree. The brand's strong credentials as a sophisticated high-quality product, our position as the #1 premium mixer globally and our unmatched range of products makes us uniquely placed to benefit from the growing range of mixing occasions as well as expand our reach into stand-alone opportunities as a sophisticated soft drink or nonalcoholic alternative. Furthermore, Fevertree's global distribution focus on not just the off-trade, but also the on-trade means it is uniquely placed to target the full range of adult socializing occasions. And it's this unique position at the heart of so many of these adult trends that has led to the transformational partnership with Molson Coors that we announced just a few weeks ago. This exciting partnership will allow Fevertree to unlock the next phase of our growth in the U.S. market, where we still have an enormous runway ahead with our core mixers, not to mention the opportunity once we take into account product extensions and additional channels the brands will be able to access in the future. Crucially, the strategies of the two businesses are clearly aligned, ensuring that Fevertree is a priority brand within Molson Coors' total beverage ambitions as both businesses are committed to driving the brand's opportunity across alcoholic and nonalcoholic categories. This commitment and execution will be supported by substantial incremental marketing fund, providing the firepower to further drive brand awareness. And finally, they will manage the onshoring of local U.S. production to enable Fevertree to capitalize on Molson Coors' supply chain and procurement strength and expertise to drive operational efficiencies. So alongside increasing and accelerating the U.S. opportunity for the Fevertree brand, the partnership with Molson Coors will drive a step change in Fevertree's quality of earnings going forward. As we drive that opportunity, Molson Coors' operational expertise and economies of scale will increase profitability and reduce volatility, all underscored by guaranteed levels of royalty fee, which materially derisks Fevertree's U.S. profit trajectory over the medium term. And because Molson Coors will fund the working capital required to drive U.S. growth, Fevertree will convert U.S. profits into cash highly efficiently. This reduces the cost of U.S. growth and will, in turn, further strengthen our balance sheet, creating incremental firepower to drive the global opportunity for the brand alongside the potential for further shareholder distributions. So before I hand over to Andy for the financial review, I'd like to update you on our progress as part of our ESG agenda, where we are driving action across the full ESG spectrum, including developing our first net zero road map and our first global packaging footprint analysis, alongside continuing our funding efforts for malaria and more and supporting our colleagues through a range of DEI events, employee resource groups and training initiatives. I will now hand over to Andy to take you through the financial review.

Thank you, Tim, and good morning, everyone. The group delivered 4% constant currency growth for the Fevertree brand, which translated to a 66% increase in adjusted EBITDA on the back of a strong margin recovery, whilst working capital optimizations drove a 150% operating cash flow conversion, resulting in a 60% increase in net cash to GBP 96 million. So turning the page. Gross margin continued to improve as we progressed through the year, driven by recovering glass costs, recalibrating transatlantic freight costs and net pricing actions taken to customers across our regions, underlining the continued progress we are making in margin recovery. Looking forward, we have local bottling currently coming online in Australia, and we'll continue to optimize our existing bottling footprint, drive procurement, efficiency and technical optimization initiatives, all leveraging the investment we've made in recent years in our technology platform. Whilst geopolitical and macroeconomic uncertainty remains elevated, we remain focused on driving continual improvement across our operations. Our global supply chain capability, procurement processes and operating business models have improved significantly following our hard work and investment in recent years, and the Molson Coors partnership will only further strengthen this position. As flagged in the release, the group incurred GBP 5 million of exceptional costs. The majority of these related to the exit from our primary U.S. bottler ahead of entering the strategic partnership with Molson Coors, alongside advisory fees incurred in respect to the transaction. Turning the page. We delivered a strong operating cash flow conversion of 150%, reflecting a notable improvement in working capital as we optimized inventory levels, leveraging our new ways of working and technology platform. As such, cash increased by 60% to GBP 96 million, and we're recommending a 2% increase in our final dividend whilst also extending our current share buyback program to GBP 100 million, which we expect to return to shareholders over the course of this year. Turning the page. I'm going to briefly recap some of the key aspects of the Molson Coors partnership and transaction as announced in January. Sitting at the heart of the strategic partnership is a license agreement between Fevertree and Molson Coors. Under the agreement, Molson Coors will be responsible for the sales, distribution, marketing execution, and production of Fevertree in the U.S. whilst Fevertree retains full control of brand identity, vision, and the development of new products for the U.S. market. The partnership will be managed by a joint governance committee made up of both Fevertree and Molson Coors senior management, which will oversee all key elements of the arrangement, including annual and strategic planning, decisions on marketing investment levels, and product strategy. The transaction included the sale of our local U.S. trading entity, Fevertree USA Inc. to Molson Coors to allow for the transition of working capital, employees, and operations under the partnership. And alongside this, Molson Coors acquired an 8.5% shareholding in Fevertree issued for cash consideration of GBP 71 million. This investment demonstrates both Molson Coors' commitment to the partnership and their belief in the opportunity ahead and will underpin the long-term relationship between parties. Under the license agreement, the partnership P&L will sit within Molson Coors' financials rather than Fevertree. As we set out on this slide, Molson Coors brings operational capabilities and economies of scale that will unlock significant incremental U.S. profitability over time. The main driver of this improvement will be the onshoring of U.S. production over the initial years of the partnership. Once delivered, this will drive underlying product cost improvements and reduce exposure to transatlantic freight costs. With regards to tariffs. Were they to be levied? whilst there could be an impact on the partnership P&L in the short term, we're confident that the onshoring of production and the guaranteed profit mechanism will materially mitigate any impact from 2027 onwards. The partnership will also leverage Molson Coors's logistics scale, marketing buying power, and national sales teams. Therefore, as the U.S. business scales, we should see a step change in levels of profitability made by the Fevertree brand in the U.S. And the profits generated by the partnership will be shared based on the contractually agreed formula, whereby both parties will receive a broadly equal share of profits. Fevertree will recognize their share of the partnership's profits via a royalty fee. And crucially, Molson Coors has agreed to guarantee an absolute level of these royalty fees over the period from 2026 to 2030, underlining their confidence in the opportunity. Reflecting the still early stage in the U.S. transition, our outlook remains unchanged from January. In order to unlock the sustained long-term benefits of the U.S. partnership, we need to invest for growth in the near term. From a revenue perspective, it's prudent to assume that the transition of the U.S. route to market could impact U.S. revenue growth in 2025. However, from 2026 onwards, we expect U.S. revenue growth to rebase to a much stronger trajectory over the medium term. That revenue growth will be fueled by the deployment of an incremental marketing fund in the U.S., which will temporarily offset strong underlying EBITDA margin growth. But following this initial period of transition and marketing investment, we're confident that the benefits of the partnership with Molson Coors will drive a sustained uplift in the group's revenue and EBITDA growth, positioning Fevertree to continue to deliver a high quality of earnings over the medium term, which, as this slide sets out, means that strong revenue growth driven by U.S. acceleration converts to even stronger EBITDA growth driven by Molson Coors' operational capabilities and economies of scale, all underpinned by guaranteed profit levels. And that well-underpinned EBITDA growth then converts to even stronger cash generation as U.S. working capital requirements fall away for the group. And so in many ways, the Molson partnership is a demonstration of the true underlying value of this business, where the Fevertree brand and its unique position and relevance within evolving drinking trends across alc and non-alc occasions globally can combine with the asset-light business model to drive a virtuous circle from revenue growth to cash. And whilst we'll ensure we retain sufficient funds to fuel global growth opportunities, any excess cash generated over the medium term by our asset-light cash compounding business model can be returned to shareholders as demonstrated by the announcement today to extend the current share buyback program by a further GBP 29 million, resulting in up to GBP 100 million return to shareholders this year. With that, I'll pass back to Tim.

Thank you, Andy. Right, over to the strategic update. So Fevertree had another successful year in the U.S., delivering revenue of GBP 128 million, which is 12% growth on a constant currency basis. Fevertree continues to significantly outperform the competition, both premium and mainstream, with particularly strong market share gains in Tonic and Ginger Beer over the last 4 years, almost doubling our value share in both categories to hold 27% value share of the Tonic category and 32% in Ginger Beer. Over the page. Looking forward, we're excited about our future growth prospects following the announcement of our strategic partnership with Molson Coors. As this slide demonstrates, Molson Coors with its broad multichannel approach across both on- and off-trade channels makes them the perfect partner for the Fevertree brand. In headline numbers, their network covers over 500,000 accounts and makes 30,000 deliveries every single day. That network is supported by a dedicated national sales force, best-in-class category management and long-established customer relationships, and deep sales insights. And it is these capabilities that will combine to accelerate our growth and expand our U.S. addressable opportunity. Within Fevertree's core U.S. premium mixer opportunity, there remains significant white space across the on and off-trade in both the number of accounts the brand is currently in and the number of Fevertree products per account. The initial business case we built with Molson Coors will leverage their distribution platform, their customer relationships, and their category management capabilities to increase both distribution breadth and depth. We will then further compound growth by driving an increased rate of sale of products in those stores and on-trade outlets, whether through leveraging merchandising capabilities at the point of sale, increasing off-shelf space for the brand, or by increasing brand pull as we make a step change in U.S. marketing investments. And it is this revenue growth multiplier effect, which underpins an ambitious initial plan, and this is before we consider the potential for incremental innovation-led opportunities that the Molson platform is perfectly positioned to execute against, such as non-alc or RTD. And so in summary, this is why we are so excited about the road ahead for Fevertree in the U.S. and why we believe this partnership will be truly transformational. And while it's early days since the announcement, good initial progress has been made and underlying brand momentum remains very strong, and we look forward to embedding the partnership and working with Molson Coors in the coming months to fully transition Fevertree into their business. So moving to the U.K. Fevertree delivered GBP 111.1 million in revenue in the U.K., a decrease of 3% year-on-year following a period impacted by low consumer spend sentiment, especially in the on-trade as well as a declining gin category. However, we had a much more positive second half of the year, including a return to growth in the off-trade, and continue to outperform the competition to retain our position as the #1 mixer brand by value by a significant margin. Importantly, we remain focused on diversifying our portfolio beyond tonics to cater to a greater variety of drinking occasions. Our non-tonic sales have increased by 14% CAGR over the last 5 years and now represent almost 30% of our total U.K. sales. This year, we continue to see good performances from our cocktail mixers and Adult Soft range alongside one of our most recent product additions, Pink Grapefruit Soda, which grew strongly as we capitalize on the increasing popularity of premium tequila and the Paloma serve. In the U.K., our most mature market, Fevertree has already built an unrivaled portfolio that catered to a broad range of mixing occasions across a growing number of spirit categories. We have a very high level of brand awareness and strong brand credentials, which means that Fevertree is by far the brand best placed to satisfy consumers' desire to socialize with sophisticated drinks across the alcoholic and nonalcoholic spectrum. In addition, it opens up exciting opportunities to work with brands across the beverage industry from traditional spirit and mixer combinations to wine spritz and lower alcoholic options. The most recent example of this is our new Blood Orange Spritz RTD in conjunction with Papa Salt, a fast-growing gin brand owned by Margot Robbie and her co-founders, where we have created a refreshing serve in a 250 mL can with only 107 calories and 5% ABV. The product will officially launch in U.K. supermarket during the March in time for summer months when lighter spritz serve starts to become popular. So as I hope these 2 slides demonstrate, despite another year with a tough macro backdrop, the brand continues to be the mix of choice in the U.K. with a higher value share than other brands by significant margin and is best placed to capitalize on the latest consumer trends as sentiment improves. Turning to Europe. The Fevertree brand delivered GBP 97.7 million revenue, which was flat year-on-year at constant currency, following a significant acceleration of 12% growth at constant currency in the second half of the year, helped by the phasing of orders, which moved into July and August. Fevertree performed well against competition, growing value share of total mixers by 0.6 percentage points and a share of premium mixers by 1.9 percentage points as we continue to outperform and drive growth of the category. Consequently, we finished the year with our highest ever value share of the total mixer category at 15.8% and now hold over 2/3 value share of the premium mixer category across European retail. Over the page. In a similar way to other markets, the strength of the Fevertree brand across Europe is also extending into categories beyond Tonic. Ginger Beer is the best example of this as we gained another 3.5 percentage points of share this year to reach 38.6% value share in the category across European retail, almost double the next largest ginger beer brand. We're well aware that consumption of our Ginger Beer as well as some of our sparkling range span both mixing and soft drink occasions. So this year, we capitalized on this versatility and launched 250 more cans of Ginger Beer and sparkling grapefruit in Benelux and Switzerland as an on-the-go Adult Soft Drink option for consumers. We supported this launch with Fevertree branded fridges at a number of locations, such as convenience stores and travel hubs to enhance the brand's visibility and extend its occasionality and look to extend this format to more European markets in '25. Overall, while the first half of the year presented a challenging backdrop, the brand performed well in the second half of the year, which, along with the continued strength of the brand across a broadening range of products gives us optimism for future success in this region. Our final region is Rest of the World, where Fevertree delivered GBP 32.2 million revenue, a 22% increase year-on-year at constant currency. This strong growth is due to a combination of good underlying brand performance as well as lapping of a prior year inventory buyback as we transition the Australian market to a new subsidiary setup. Our 2 largest revenue-generating markets within the Rest of World region are Australia and Canada, both of which saw share gains during the year. In Australia, Fevertree continues to grow ahead of the total mixer category, driven by our soda range with our new 250 mL cans also helping to drive growth. In addition, we launched 3 cocktail mixers during '24, which has got off to a good start as we broaden our portfolio to cater to the latest drinking trends. In Canada, Fevertree grew its value share by 2% year-on-year and contributed more value growth to the category than any other brand. Our cans have been a significant contributor to our growth this year as we see the popularity of this format increase, mirroring the success we've had from our cans in the U.S. market. So, in summary, I'd like to finish where I started by summarizing the key messages I want you to take away today. Firstly, that the global trends are firmly in Fevertree's favor, and we believe that we're uniquely positioned to take advantage of all of the trends across adult socializing from traditional mixing to non-alc options. In the U.S., our strategic long-term partnership with Molson Coors will not only provide the platform for significant revenue and profit growth in the medium term, but will also lead to increased quality of earnings and cash generation for the group. And as a result, this morning, we're announcing our intention to extend the initial program by GBP 29 million, subject to shareholder approval, taking the total to GBP 100 million for the year. So thank you for listening this morning. Andy and I are now very happy to answer your questions.

[Operator Instructions]. We have a question from Edward Mundy from Jefferies.

Three questions, please. The first is around the guaranteed level of royalty fees and the fact that the EBITDA margin of the partnership P&L should also increase as you get more scale and after that initial period of investment. I think if you look at Molson Coors' U.S. beer business, they've got a margin -- an EBITDA margin in the 20s. Is there anything structural that would prohibit you from achieving a similar type of margin when the business is in full throttle? That's the first question. The second question is really around cash. And as you think about the optimal capital structure, given that the deal step changes your ability to generate cash, but it also derisks your business to a large extent. You're currently running with a cash balance. But does this deal change the way you think about your optimum capital structure when thinking about shareholder distributions? And could you potentially start to end up with some debt on your balance sheet as opposed to currently running with a cash position? And then the third question is around innovation. Tim, I think you showed some quite interesting innovations coming through. It'd be interesting to see how busy the team are. And is the focus really on extensions of existing products or thinking about new products and categories to tap into?

Thanks, Ed. I'll take those first 2. I think, look, on the levered profit, no, there's nothing structural that would prevent certainly the partnership from delivering very strong EBITDA margins and then our share, Fevertree share of those profits also delivering EBITDA margins in line with the numbers you quoted there. I think from a cash perspective, as we spoke before, we retain significant levels of cash in the business to drive growth. We always have, and that remains our priority. The Molson deal takes away the need for cash to drive the U.S. opportunity because Molson will ultimately be incurring the working capital. And in the instance of the up-weighted marketing investment, they will be the ones deploying the cash to drive the opportunity. So therefore, it does change our cash requirements for the group because we only need cash to drive the non-U.S. opportunity. And so certainly, we have that in mind in terms of the level of cash we need to hold and the opportunity to return excess cash to shareholders as we generate that over the coming years by virtue of that compounding effect we've described in the presentation of once we're through this transition year, very strong revenue growth, translating to even stronger EBITDA growth and an even stronger operating cash flow generation. Your question about debt, that isn't something we're considering in terms of the structure of the business. No, we're not looking to change that.

And Ed, in answer to your question about innovation, look, I mean, I think it's fair to say we're we've got more going on in the innovation pipeline than ever. And this is reflective of the way the drinks opportunities are opening up, which I hope I described in the presentation just now. I mean as you would know, Ed, the spirit companies are all turning their attention to how to encourage people to drink their drinks long, which ultimately means mixed. So there are more and more opportunities opening up across more spirits categories for us there. There's also this big move and desire to move into lower ABV, lower calorie drinks, which again requires mixing. And then, of course, there's increasing interest in nonalcoholic and soft sophisticated soft drink options. So all of these categories and areas suit the Fevertree brand beautifully. And as the market leader, we sit here in this very enviable position where a lot of companies come to us to talk about wanting to develop products together. And at the same time, retailers around the world are offering us shelf space to launch new products into these categories. So as a result, we're pretty busy on the innovation front, and there are some very exciting projects we're working on. But I just mentioned our latest launch with our Papa Salt RTD, which is in support of the Spritz launch that we announced last year with our Rose business. So this is a growing Spritz range, which we're excited about. And there's also our sort of first move into, if you like, sort of a classic RTD, which is another area that we think has enormous opportunity for the brand going forward. So a lot going on and a lot of opportunity ahead.

We now have a question from Anubhav Malhotra from Panmure Liberum.

Hi, Tim, I've got three, if you don't mind. Maybe firstly, touch on the gross margin expectations for the next year. I know how you'll be reporting will not be able to see the gross margin progression properly because of the way the deal with the U.S. funds works. But maybe for the rest of the business, what are your expectations on gross margins? And what sort of rates on energy and glass have you been able to secure there? And I think that matters for the U.S. business as well since you will be supplying a lot of the production from the U.K. to the U.S. for now at least. And then secondly, on Europe, I mean, I noticed you already have 2/3 of the premium mixer category there in terms of market share. And you grew market share, but sales were still in decline. So are you worried that the premiumization trend in the mixer category is not progressing as well as you would have hoped in terms of the opportunity in Europe? And is it more a case similar to the U.K. now, where it will have to be driven by other categories beyond mixers in terms of growth? And then just last one on the nonalcoholic trend. I know you have launched with Papa Salt in alcoholic RTD, but are you considering nonalcoholic RTDs with brands maybe such as Seedlip? Or is that something too early now? Thank you.

Yes, do you want to take the first one?

I'll take the first question on gross margin. Yes, look, in terms of how we think about gross margin for the non-U.S. part of the business in 2025, you can see the trajectory of gross margin since we put it in the slide since the first half of 2022, really in terms of the reduction and the steady incremental improvement. I think as we look into 2025, we've secured a further improvement in glass cost underpinned by improving energy levels, which we've hedged for this year. We've seen other improvements in other categories like sugar. We're taking pricing actions with customers again. And we continue to drive all of those technical optimization projects, which we've spoken about over the last couple of years. So preannouncing the Molson deal, we talked about confidence in delivering a 200 basis point improvement in margins kind of year-on-year for the group. And certainly, that hasn't changed for that non-U.S. part of the business, if that's helpful.

And just quickly on Europe, the sales, as we say, were flat in Europe, but actually, they grew encouragingly in the second half. So we're not concerned that the mix of category is going backwards. We've still got a lot of white space there. And whilst as you rightly say, we've got sort of 2/3 of the market share in the premium category, we're currently 16% of the overall category, and we see real opportunity to grow and drive that with new distribution opportunities in on- and off-trade in multiple markets. But we're also excited about the non-mixer opportunity. I mean we flagged the fact that we have launched these products to tackle that sophisticated soft drink category. Our Ginger Beer is doing fantastically well across Europe, leading that charge, and we see growing opportunity there. So please don't misunderstand. We're doing a fantastic job in Europe. We've got a fantastic market position, and we see real opportunity ahead, both in mixing and in other categories. And then you had a question on non-alc. It is, of course, something that we are thinking very hard about. And as I referred to in my answer to Ed's question earlier about innovation, it's something that is being looked hard at in the innovation team because there's no question that, that is becoming ever more interesting as a category. There's great desire from retailers to improve their offering. They're very conscious that they've got a growing portfolio of nonalcoholic beer, but relatively little else. And so it's very apparent to us that this is a real opportunity for the Fevertree brand. So I'm sure we'll be talking more about that in the months to come.

[Operator Instructions] We now have a question from Rashad Kawan from Morgan Stanley.

A couple for me, please. So first, I mean, I appreciate the strength of the brand across markets, which continues to be impressive. But since the update in January, sentiment across consumers in Europe and the U.S. seems to have gotten weaker overall. Have you seen a change in consumption patterns or anything on the ground since your last update that surprised you? And then second question, obviously, your cash position improved quite substantially. Outside of the benefits, obviously, to come from the Molson partnership, I mean, what have you done differently last year around inventories and working capital to enable that improvement that you weren't necessarily doing maybe as efficiently before?

Yes. No, look, it's sort of very short answer to your first question. We haven't seen any change. I mean, looking at our U.S. business that continues to grow very positively, the momentum that we have built in that business, we are seeing certainly in the first few months of trading. So I know there's been talk about U.S. consumer sentiment changing, but that's not something we've seen reflected in our business to date.

Yes. And on the working capital, we've spoken over the last couple of years about the investments we've made in our systems, our processes. And really, the working capital improvement was driven by an inventory optimization, which was driving the benefit of that platform, the ability to real-time forecasting, production scheduling and then really being able to optimize the inventory we're holding in various places around the world. And that was a program we were really prioritizing delivering over the course of last year, and you see the benefit it drove in working capital.

We now have a question from Philip Spain from JPMorgan.

My first one is on the U.S. and I appreciate the great work you've done in the last few years to improve the non-Tonic part of your portfolio. But is there something more you could do to accelerate that part of the portfolio? I'm particularly thinking is there any cocktail trends that you think would lean into some of those products in the non-Tonic area? And then my second question is just on whether given the partnership with Molson Coors in the U.S., is there a similar partnership you would consider within Continental Europe that could provide similar benefits in terms of larger distribution and kind of accelerate that growth opportunity?

Yes. I mean the answer to your first question is that as I think you'll know is that we are adding new drinks targeted at new cocktails on a quite a frequent basis. And so we've got a wide variety covering a wide variety of these cocktail occasions. So we're well covered. But clearly, in lots of these, we're quite early on in that distribution journey. And so we see lots of opportunities to increase our footprint with lots of this new innovation. So we think that's only going to continue to fuel and drive our non-tonic business, which we're very optimistic about. And then in answer to your question on the other partnership opportunities. Look, I think it's fair to say that the deal we've struck with Molson has not been lost on the rest of the trade. I know it's been received with great interest, and that is reflected in some of the incoming that we've had. So this is part of the way we always look at our business is to make sure that we've got the right partner for the right age at the right stage of development in our market. So this is something that we will continue to review. But as I say, it certainly provokes some interesting conversations already.

We currently have no further questions. And with that, this concludes today's call. Thank you very much for joining, and you may now disconnect your lines.