Fevertree Drinks (LSE:FEVR) Q2 2025 Earnings Call

0:00 Thank you and good morning everyone and thank you for joining us today. I am delighted to be here to share our results and some of the significant progress we've made over the first half of the year. I'm joined by Andy Branch-Flanner, our CFO, who you all know well, and also for the first time, Steve Nightingale. Steve has stepped in as our Interim Director of Investor Relations whilst Anne is away on maternity leave. and I'm sure you'll join me in wishing Anne all the very best at this very exciting time and welcoming Steve to the team. So, looking at the agenda for today, we'll begin with a summary of the first half and then some of the global trends shaping our category.

0:45 I'll then take you through an update on our Molson Coors partnership before annual provider review of the financials. From there, I'll return to give you a broader business review and then we'll wrap up with a short summary before opening up to questions. So, turning the page. It's been an encouraging period for the group where we've combined a robust financial performance with real strategic progress. We remain the premium mixed category leader across all our major regions and our growing portfolio beyond tonics is broadening the brand into more occasions. but undoubtedly the most significant development in the first half was signing our transformational partnership with Molson Coors in January.

1:31 The overall transition is progressing well and as we will come on to, it's very encouraging to see how the underlying brand momentum has been maintained in the US. Finally, our financial performance has been robust and the combination of strong cash flow and transaction inflows received from Molson Coors have driven a significant uplift in the group's cash positions The £100 million share buyback programme announced earlier this year is expected to run until the end of 2025. And today, I'm pleased to say we have announced an extension to the programme by a further £30 million to continue into 2026. A clear reflection of continued confidence, improved cash flow resulting from the Molson Coors partnership.

2:19 So, against this backdrop of resilient performance and strategic process, it's important to step back and look at the consumer trends that are shaping our industry. These trends towards premiumization, moderation, and longer, lighter drinks are being seen across the array of adult socializing occasions and have been at the forefront of our strategy as we have deliberately evolved our portfolio in recent years. First, premiumization. Even in more challenging consumer environments, premium spirits continue to outperform as people choose quality over quantity. Consumers aren't trading down, they're trading up, and that behavior has been remarkably consistent across markets.

3:05 Second, moderation. This is fundamentally reshaping how people socialize. It's not simply about drinking less, it's about having the choice. Whether you're drinking alcohol or not, there's now a clear expectation for sophisticated, high-quality alternatives. And third, the rise of longer, lighter, mixed serves. These serves sit at the intersection of premiumization and moderation, being lower in alcohol but crafted, flavorful, and designed for social extended occasions. And it is within these social occasions, whether that's a barbecue with friends, and night out at the bar, the sports event, or a meal together that the trends are being reflected in the way consumers are choosing to drink.

3:50 In the same moment, you'll see classic long spirit mixes alongside crafted cocktails, lighter spritz-style serves, next to sophisticated premium sauce, and increasingly credible alcohol-free choices. And what's unique about Fevertree is that we have developed our portfolio to reflect these shifts and deliberately mirror the way people actually drink today. Our tonics anchor the classic long drink occasion where we lead the category. Cocktail mixers open up more complex serves, both at home and in the entree. Our sodas and gingers support longer, lighter highballs and spritz-style moments. will our growing premium soft range provide a sophisticated non-alcoholic choice without trading down on quality. And finally, our new non-alcoholic RTDs bring bar-quality flavor to zero ABV occasions.

4:50 Because the brand carries credibility with and without alcohol, we are more relevant to more consumers more often, deepening loyalty while bringing new drinkers into the brand. The breadth of our range means we're not reliant on any single serve or trend. We're ideally positioned to benefit as adult socializing continues to evolve. But over the page, it's not just about having the right portfolio. It's also about having the ideal platform to execute against this growing opportunity. We are the clear global number one in premium mixers. with leadership across the UK, Europe, the US and beyond. And that leadership is reflected not only in share, but in household penetration, showing Fevertree has shifted from being a premium choice to a mainstay across many markets.

5:43 We also lead the category in innovation, broadening occasions for consumers and being central to customers across the on and off trade who look to engage with us when they're developing their drinks and service strategies. And finally, We have deliberately established a bespoke route to market, with distribution that is deeply embedded across both the on and off trade throughout our regions, giving us the reach and agility to scale new formats quickly and extend the brand into new occasions without ever compromising on quality. All of this wasn't lost on Molson Coors, who approached us, recognizing, as they did, the unique position we've established to scale both our core mixing portfolio and new growth areas.

6:30 As a reminder, our strategic partnership was announced in January, providing Molson Coors with exclusive rights for sales, distribution, and production in the U.S. And while we retain full control of our brand, vision, and product development, the rationale is clear. Strategic alignment. Both businesses share a vision to grow Fevertree across alcohol and non-alcoholic occasions, aligning with Molson Causes' Beyond Beer ambitions. Scale and Platform Their national network across on- and off-trade accelerates distribution, expands reach, and drives rate of sale through stronger customer contact. Marketing Investment Access to incremental funds, buying power, and execution strength will boost brand awareness and category growth.

7:19 Local production. Over time, onshoring will cut freight costs, shorten lead times and deliver operational efficiencies. So together, this partnership transforms our largest growth market and builds an even stronger long-term foundation for Fevertree in the US. So having set out the rationale for the partnership, this slide shows how it translates into real revenue growth for Fevertree. Molson Calls gives us breadth. Their distribution platform covers 400 independent distributors, servicing half a million accounts and making 30,000 deliveries a day. That reach creates a huge opportunity to expand the number of accounts we're in, particularly given the white space that still exists in the Call Premium Mixer category.

8:10 The second element is depth. By leveraging MolsonCourse's senior customer relationships in category and management expertise, we can increase the number of FibreTree products stocked per account, not just tonic but across our wider portfolio, which over time may also open up opportunities in adjacent categories such as non-alcoholic and ready-to-drink. And third, Velocity. Their ability to increase visit frequency, improve in-store execution, secure better placement, and grow off-shelf space is combined with a step change in marketing investment. Together, this will drive rate of sale per product and significantly raise brand awareness. So put simply, this partnership doesn't just give us scale, it multiplies the growth levers of breadth, depth, and velocity.

9:04 So, as planned, our H1 results still largely reflect the legacy Fubertree standalone model. But the transition to Molson Coors is now well underway and progressing smoothly. The first stage was Molson Coors completing a full tendering process across their distributor network. Since June, the brand has successfully moved into around 400 regional distributors nationwide. The initial focus has been on the on-trading liquor channels. with the relevant retail customers being handed over during the second half. Organizationally, our former Fevertree US team is now fully integrated over Molson Cause's non-app division, while we've kept a small focus team in place to oversee the partnership.

9:50 And whilst the second half will remain a transition period with plenty still to do to bring all distributors fully up to speed on the brand and portfolio, we've been delighted with the progress so far. The teams have worked incredibly well together. We're excited about the long-term growth platform we're building in the US. I will now hand over to Andy to take you through the financials.

10:13 Thank you, Tim, and good morning, everyone. The Fevertree brand delivered 2% constant currency growth in the first half and a 1% increase in EBITDA as we worked through the initial period of transition into the Molson Coors partnership in the US. Working capital, as expected, has improved significantly driving strong cash generation, and this morning we announced a further £30 million extension of the Share Buy Back programme, which will run into 2026. So, turning the page. In the US, we were pleased to deliver 6% constant currency growth. Brand momentum has remained strong across channels through the initial phase of transition that Tim has just talked through, and we increased share, extending our leadership position in the ginger beer and tonic categories.

11:01 In the UK, whilst we've seen improved trading over the summer months, the first half result was softer than expected. Whilst progress in the off-trade was solid, with 1% growth at retail, conditions in the on-trade remain challenging. Outlets and groups facing ongoing inflationary cost pressures alongside business rates and national insurance increases have had little choice but to pass these costs through to the consumer. and the resulting pricing pressure is impacting the rate of sale of the spirits most known to be gin and mixer categories with Fevertree not immune to those wider headwinds however our UK innovation launched over recent years is performing well across both channels as we've diversified our product range with non-tonic products including our premium soft drinks and cocktail mixers growing at a 13% CAGR and now making up almost a third of our UK sales mix which alongside our clear leadership position in the category, strong brand awareness and broad household penetration provides the platform for an improved UK performance in the second half and beyond.

12:08 While sales in Europe at the half year can be impacted by the phasing of orders to our distributors, underlying depletion growth in the region was positive at 2%. We continue to drive category growth across European retail and increased value share, with ginger beer remaining a notable growth driver, up 26% year-on-year. We've further extended our leadership position with now over 40% share of the ginger beer category across Europe. The rest of the world region is performing well. Revenue is up 17% on a constant currency basis, reflecting some benefit from all the phasing. But again, looking at underlying depletion growth, that was strong at 8%. driven by Australia, where our premium soft flavours and formats are delivering strong growth alongside good performance in Canada and Japan.

12:58 As we flagged earlier in the year, the Molson Coors Partnership impacts the presentation of our financials. We've included detail on these changes in both this morning's statement and within an appendix to these slides. We present here the segmental view of performance to EBITDA level, which we'll be talking to going forward. In the US, we delivered adjusted EBITDA of £5 million. As expected, the move to the US partnership has initially impacted EBITDA margins, not only because we're working through a transition this year, but also because we're now in a partnership and so share US profits with Molson Coors. As we set out earlier this year, over the medium term, we expect to drive significant improvements in US EBITDA as the partnership P&L leverages Molson Coors scale.

13:45 with a step change expected once U.S. production is onshore. And crucially, Molson Coors have agreed to guarantee an absolute level of Fevertree's U.S. profits over the period from 2026 to 2030, underlining their confidence in the opportunity. Over the initial years of the partnership, these underlying profitability improvements will be partially tempered by a significant increase in U.S. marketing spend, which will run through the partnership P&L. providing the catalyst to deliver strong US revenue growth in the years to come. In the rest of the group, we've continued to drive margin recovery, with the EBITDA margin improving to 23.8%, as we drove underlying operational improvements and lapped a prior year revaluation adjustment. Partially offsetting these improvements has been an increase in marketing spend and the impact of the UK EPR levy. Finally, central covers the cost of our central teams and senior management, alongside corporate expenditure, including IT, insurances, and PLC costs. These are marginally elevated compared to the first half of 2024.

14:48 However, as phasing unwinds, these costs will reduce as a percentage of revenue as we progress through the second half, whilst we're focused on delivering further efficiencies going forward as we benefit from the investments we've made in improved technology and operational processes in recent years. We delivered a strong improvement in working capital year on year, reflecting a continuation of good underlying work from the second half of 2024. The improvement also reflects the impact of the US partnership with local working capital relating to US customer receivables and inventory now funded by Molson Coors. We still retain some US working capital on our balance sheet, which relates to UK produced inventory in transit to the US, as well as receivables from Molson Coors.

15:34 However, this will further reduce over the medium term as US production is onshore. As a result, we've continued to drive strong cash generation, with the cash position up 67% year-on-year before we take into account movements relating to the Molson Coors equity issue and share buybacks. Turning to Outlook, we've seen an improved sales performance since period end, with year-to-date sales growth at the end of August increasing to 4% on a constant currency basis for the BeaverTree brand and 2% on a reported basis. As a result, the revenue guidance we gave at the start of the year remains unchanged, and we remain comfortable with market expectations. We're confident that we'll see an improvement in EBITDA margins as we progress through the year, particularly as we leverage central costs, and as such are comfortable with market expectations for EBITDA margin this year, which, as per our guidance, anticipates a year-on-year reduction due to the U.S. transition.

16:32 As we look to the medium term and as we presented earlier in the year, we're confident that strong revenue growth driven by U.S. acceleration will convert to even stronger EBITDA growth driven by Molson Core's operational capabilities and economies of scale, all underpinned by guaranteed profit levels in the U.S. 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 the Molson Partnership highlights the underlying value of this business, whereby the Fevertree brand can combine with an asset-like business model to drive a virtuous circle from revenue growth to cash generation. And whilst we will retain sufficient funds to fuel global growth opportunities, excess cash generated over the medium term by this cash-compounding business model can be returned to shareholders, as demonstrated by the announcement today of a further £30 million extension Thanks Andy.

17:36 So as we start the business review, it's important to highlight the ongoing strength of the Fevertree brand. We are firmly established as the global leader in premium mixes, holding the number one position across all our major markets. And as we referenced over the years, we've seen hundreds of Me Too copycats come and increasingly go in that time as we've continued to strengthen our leadership position. And this isn't just about market share. Our position is underpinned by repeated recognition from the industry with multiple awards naming Fevertree the world's best-selling and top-trending mixer brand. So that combination of market leadership, household penetration, and brand equity makes Foodtree not only the clear category leader today, but also gives us a powerful foundation as we continue to broaden our portfolio beyond Tonic and navigate shifts in the wider spirits landscape.

18:33 As we've already touched on, one of the biggest drivers of our growth has been diversification, expanding well beyond Tonic into a much broader portfolio that is delivering strong growth across categories and regions. Over the past three years, this part of the business has grown at a 16% CAGR and now represents 45% of group revenues, a clear reflection of both evolving consumer trends I covered earlier and the strength of our innovation globally. And whilst we've seen a modest 2% decline globally in tonic over that period, this has been driven largely by the UK, where the overall gin category has come off its previous highs. And naturally, as the clear category leader, our performance in this market has mirrored those wider dynamics.

19:21 However, it's important to remember that gin remains a very large and significant category in the UK, and the gin is an incredibly important and well-established popular drink. And while the on-trade has undeniably been affected by the wider category headwinds and pricing pressures, the future of the clear number one Sonic brand by significant distance and we continue to invest buying the GMT and tonic portfolio will remain a highly profitable part of our business. But stepping back to a global perspective, the picture is more encouraging. The GM cash growth is seeing growth internationally year on year and over time we still see headroom for our tonic business across many of our major markets, not least in the US, where premium tonics are still in their relative infancy.

20:09 So this gives us a strong platform to capture future and further shares internationally, even as the UK adjusts. But while Tonic continues to anchor our business, diversification is already emerging as a key pillar of future growth. What makes us particularly exciting is the breadth of the opportunity across our broader portfolio. As I illustrated earlier, Futur is uniquely positioned to straddle all adult socialising occasions, meaning we're driving greater consumer relevance, frequency and loyalty. Take the UK as an example. Half of the 3.6 million households that buy foodtree now purchase from our border range beyond our tonics. And as shown by this graph, our wider portfolio is gaining significant scale and driving meaningful growth across our whole group.

21:03 And if you want one product that really brings this to life, Fevertree is now the biggest global ginger beer brand by value, and most importantly, we still believe has a significant growth opportunity ahead. Its success is being driven by the fact that it straddles both alcoholic and non-alcoholic occasions. It's brilliant in a classic long mix serve and cocktail, but it's equally as delicious as a sophisticated premium non-alcoholic drink. That dual opportunity is what underpins our ginger beer innovation and marketing plans, creating more specific formats for both mixing and non-alcoholic occasions, opening up new retail channels to drive the non-alcoholic distribution.

21:53 And furthermore, we continue to develop our marketing messaging to ensure people consider us for both occasions The results are clear. Sales have doubled over the last five years. Our three-year global CAGR is 14%, and Ginger Beer is now our second largest product after Tonic. Geographically, we're seeing outstanding traction. We lead the category in the US, and we're building strong momentum across Europe, notably in France, where we're investing behind a sizable ginger opportunity. In short, Ginger Beer is the blueprint for how we look at our broadening portfolio. Premium, versatile and relevant, whether you're choosing a mixed drink or going alcohol free, whether you're in the on trade or the off trade.

22:43 The versatility of our range is also being supported by marketing investment across our markets. Tonic remains a core focus, but alongside it we've been highlighting the increasing relevance of our range. As an example, in the UK, our premium sauce has been featured in premium dining deals and broader entertaining occasions. At retail, we're opening up more channels and store-facing in different non-alcoholic parts of the store. And in Europe, we're seeing new opportunities emerge in new on-the-go channels. and in the US, as already mentioned, our Molson Coors partnership provides significant incremental marketing funds which will begin to deploy once the distributor transition is fully bedded in.

23:29 So, to wrap up, our key messages are clear. First, product diversification is driving growth across many regions and strengthening FeeTree's position as the global leader in premium mixers. Second, Our US partnership in Molson Coors represents a step change in our biggest market with the transition progressing well. And third, our strong cash generation and financial discipline give us the resource to invest, deliver returns and build for the long term. And then finally, the guidance we gave at the start of the year remains unchanged and we remain comfortable with market expectations. So thank you for your time. and we will now open the call to any questions.

24:19 Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We have our first question from Edward Mundy from Jefferies. Your line is now open. Please go ahead.

24:42 Morning Tim, Andy and Steve. Three questions please. So the first is on the US. Pretty encouraging to see the delivery despite the integration and the potential disruption that might have happened. Can you perhaps talk about what's gone better than expected and then what the next priorities are on the integration into the second half and also into 2026? That's the first question. The second is on the slide where you sort of mentioned your vigilance to M&A opportunities. If you were to replicate the asset-like partnership in other markets, for instance in Europe, what are the things you would look for in a partner? And then the third question, perhaps for Andy, is pretty interesting. You split out margins of the U.S. versus non-U.S.

25:28 business. I think when we look at consensus, fiscal 28 still shows U.S. margins well below non-US margins. I'm not asking for guidance, but is there any reason why over time the US cannot catch up to the non-US margin of nearly 24%?

25:49 Okay. Well, thanks, Ed. Good to hear from you. I presume you've got up pretty early for this, so that's much appreciated. So, First question, U.S. transition. Yeah, as we said, it is progressing well. I mean, as you all know, with transitions, you know, there are many banana skins that you've got to be careful about. First off, of course, that we announced the deal in January, but, you know, we were still trading with our network up until June. So in that period, you know, it is quite typical for to see your current network and distributors down tools. You know, fortunately on the back of the great relationship that we have and have with Southern Glazers and also I have to say the relationship that Molson Cools have with them because they also trade with us.

26:43 We were able to keep goodwill going through that period. which we're grateful to Southern for and so that meant that there was less disruption than can typically happen in these circumstances but I think also underlying it is the fact that the brand momentum has continued and you know the other thing that happens typically in periods of uncertainty is you know competition start to really flex their muscles well whilst they've tried they've had little success because we've seen our brand and market share continue to grow in that period which is very unusual and the competition you know continue to struggle I mean we've We've talked a lot over the years about our major competitor in the US being Q-Tonic.

27:43 You'll remember that four or five years ago, they were half our size in the US. Well, they're now a fifth of our size and have been declining quite notably. That brand strength and momentum has really helped during this transition period. It's something I know Molson have been very, very pleasantly surprised to see because whilst obviously they read the statistics, now they're actually seeing this in their network and seeing the desire for the brand. I think it's given them even more confidence and belief in the potential. But we are conscious that we're still in the throes of transition. We handed over to 400 distributors in June and you can imagine all of their education and system integration that is needed to get that working properly so that's still very much in process and then we've got direct retail and broadline retail that we will start to transition to over the remainder of this year. And we will do that with Molson, of course, but when it's relevant.

29:01 So that's why we foresee this transition continuing to last for the rest of the year. But look, what I say in answer to your question is that It really is going well. And when I say that, you know, our team, the majority of our team that we have now moved over, they've integrated very well with Molson, enjoying working with them. We are really enjoying working with them. We've had a lot of interaction at senior level and throughout the organization. They really are adopting the brand as if it's their own and really seeing the potential of it. So that's been fantastically encouraging. and we're very optimistic that when they get through the transition period and get into the sales period that we're really going to see all of the benefit of their scale and muscle so that's why we're increasingly optimistic into 26 in fact we've got a significant moment next week I'm off out to the US because it is the Molson Calls Distributor Conference and so I'll be presenting to three and a half thousand sales guys who will now be out selling the Fevertree brand and so that is going to be a significant moment because there's going to be I hope on the back of what we're going to be telling them a lot of excitement so far so good

30:33 and then your question about partnerships look as you can imagine the deal that we came to in Molson hasn't been lost on others in the trade and clearly you know there's been sort of incoming on the back of that but I think what it's demonstrated to us is what we already knew is that we really like this idea of partnership and being able to work proactively and invest together and you know that we spend a lot of time looking at our partners and ensuring we've got the right partner for the right age and the right stage of the brand and so this is something that we will continue to do quite vigorously but we'll also be keeping this sort of partnership structure very much in mind because

31:35 as we look to the future Andy I think in terms of your question on US profitability so in terms of the US segmental profit that we're disclosing at this point in time that's very much the start point that represents our share of that US partnership P&L which of course now sits with Molson Coors and if we think about that partnership P&L and the opportunities to drive margin improvements over the next couple of years from an underlying perspective, you know, that really will, we're very confident as a Molson on the ability to leverage scale, operational efficiencies, and absolutely as US production is on short in the medium term, that will also provide a step change in the profitability of that local P&L.

32:24 As I spoke to earlier, that profitability will be tempered by the decision we've taken together to really invest behind the brand and the bulk of that investment we expect to be deployed through 26 and 27 so it's really but what it means is that US P&L will improve in underlying profitability tempered in the short term by US marketing but as you say by 2028 we should start to see the true underlying profitability of that US partnership and then we'll take our share into our P&L so if you look at where consensus margins of is moving to. It's staying around circa 12% this year and next year, but then it starts to step into sort of mid-teens and then higher teens as we get into 27 and 28.

33:13 And I think our U.S. profitability should reflect that change as well over the medium term. Great. Thanks, everyone. Thank you. Our next question comes from Anubhav Malhotra from New York Liberum. Your line is now open. Please go ahead.

33:33 Hi Dean, thanks for taking my question. First on tariffs, what sort of discussions have you had with Molson Coos on sharing the impact of the tariffs on the suppliers from the UK to the US and how have you been managing that impact and is that now completely in your guidance? then secondly on EPR I know I mean we are in September already you're still in discussions it's unlikely the government moves very quickly on these things what's the likelihood that the 3 million people potential impact has to be booked in by the end of the year and just clarification on that as well is that the 4.5 million that you have pointed out is that a 9 month impact or is that a full 12 month impact if you clarify that and just one last on this UK given you have been struggling in the on trade for a while now I am just trying to understand have you been adjusting your cost base particularly with respect to people in the UK market to make sure that you are not losing profitability and reflecting the reality of the oil trade market in the UK.

34:41 Thank you.

34:44 Thank you. So I'll take the first two on that in terms of the numbers. So tariffs, as I just spoke to in terms of that US partnership P&L, that's where the tariff impact happens. That happens in the partnership P&L. And then because we share that profitability, we take a we share a proportion of that impact by virtue of a lower royalty fee into our P&L. As you can imagine, we're working with Molson to mitigate the impact. The fundamental mitigation will be the ensuring of production in the US, and that's why structurally, over the medium term, tariffs won't have a long-term impact on the business. But it is already being reflected in the partnership P&L and already being reflected In our share of US profitability, and by the time you get to our share of those tariffs, it's a relatively, you know, we're talking a couple of million dollars here in terms of impact. From an EPR perspective, we set out the fact that, you know, we are in scope for the off trade, and that's a 1.5 million full year cost impact. The 3 million relates to Yontrade, where we're very confident in terms of the fact that the products that we sell into Yontrade aren't covered by the levy. But we are in discussions with government.

36:04 As you say, these things can take time. But by virtue of the fact we haven't recognised a provision or even a contingent liability in relation to this amount, our position is clear that we're not liable for that cost, but we're just flagging that we're

36:20 that position to change that would be the impact and again that would be something we'd look to mitigate should that occur Let me take the on trade one you say we're struggling in the on trade let's be clear we're not struggling in terms of the fact that our distribution remains very very strong and with it our market share we've got 44% market share in the on trade that's twice the size of our nearest competitor of Schweppes um so you know the the position remains strong what of course has happened is as reflected in the gin category you know gin and tonic cells have come down in line with gin uh but you know it's notable that you know this year uh whilst gin has declined it's declined in terms of volumes at half the rate of the previous year and IWSR are predicting the fact that this is now going to slow this decline is going to slow dramatically to the point of stabilisation in the next few years so that is going to be very beneficial to us but in terms of the resource absolutely not we haven't reduced our resource in the entree partly because we've got still so many accounts to manage but also because of the broader portfolio products that we are now selling through the Entrez and realize have even more opportunity through that channel

37:50 with the fantastic distribution we have. So in many ways, we're working ever closer with our Entrez partners to broaden the portfolio, broaden their drinks offers, and also to pick up opportunities with the sort of premium soft drink portfolio we now have. So in summary, we haven't reduced the resource looking after the entree because we see, you know, future opportunity, particularly as that gin category starts to normalize.

38:28 Thank you very much. Andy, can I just clarify on that EPR point, whether the impact that you have accounted for the 1.5 million and the potential 3 million, is that for nine months of EPR? Because I guess it started from April this year, or is that a full-year impact?

38:43 It's a full-year impact. Okay, thank you. And it's 1.5, yeah, to be fair. Thank you. Thank you. Thank you. Our next question comes from Philip Spain from JP Morgan. Your line is now open. Please go ahead.

39:02 Good morning. Thank you very much for taking my questions. Just to follow up on the US onshoring in terms of that helping to mitigate tariffs, do you have a rough timeline of when you expect that the onshoring to accelerate and when it will be fully complete, just in terms of how many years that's likely to take? That's my first question. My second question is just on the level, because if you give some colour on the level of pricing that you took this year to help you, I suppose, support your margins. And given, particularly in the on-trade, some of the pressures you spoke about in terms of the higher costs being passed on to consumers, how are you thinking about pricing moving forward in that channel as well? and then my final is just focusing around and the moderation or you know consumers moderation you've spoken about you know your broad range of products that you have to fit both locations both alcoholic and non-alcoholic as you're non-alcoholic and particularly those premium soft drinks in terms of your penetration and outlets and the entrees performing I'd just be interested to know what kind of penetration compares entrees versus off trades and where you are seeing that moderation occur, do you think that this is incremental to the sales you're already doing or do you think it's more of it cannibalises those mixed certifications that you have already?

40:22 Thank you very much.

40:23 In terms of the timing of unshoring, we've said over the medium term, I think if you look at the shape of consensus, there's a step up in group EBITDA margins expected in 2027, which aligns with our current expectation of when that onshoring should occur. In terms of pricing, look across the non-US part of the business, we've continued to take inflationary price increases. In the US, we chose not to, in agreement with Molson, not to take price this year as we work through the transition.

41:04 And just to pick up that point about pricing in the on-trade, you know, as you might be aware, because this has been much discussed over the last three or four years, you know, we've always taken a moderate sort of pricing increase to the on-trade, unlike, you know, some of our competitor friends who have been servicing the on-trade have taken, you know, noticeably higher pricing to them, particularly in terms of cost inflation. And so we will continue to pursue that more moderate path. At the same time, we're working with them very proactively to ensure the pricing of their spirit-based drinks is appealing to customers. And we've been driving hard our spritz.

41:55 menus to ensure that there's pricing that sits under that £10 mark and we've had some real success with them recently driving that kind of proposition and so that's something that we're going to work on even harder with them in H2 this year and beyond. Your question about moderation and is it incremental? Absolutely we see it as incremental because moderation as we try to describe really sort of takes two aspects. One is the fact that people are wanting to drink their spirits as we describe it longer and lighter and really what we're talking about there is mixed and we're also seeing the rise of these lower ABV Spirits you know obviously Aperol Spitz is the poster boy for that but you know there are many other opportunities that we're seeing that you know to drive those longer lighter drinks with the spirit partners and at the same time in terms of moderation there's also of course that opportunity for non-alcoholic drinks and soft drinks and that's where we're seeing fantastic growth.

43:13 In the UK we've seen that portfolio grow at over 20% in the first half of this year. We've also introduced our latest launch which has been our non-alcoholic gin and tonic, non-alcoholic spritz that's only gone in a few months ago and has had a fantastic early sales response are really starting to lead the category almost overnight versus the competition in that. So we see real opportunity to expand that across the entrees and indeed it answers your question in the entrees as well. So definitely we see those as incremental.

44:00 Okay, thanks very much. Thank you. Our next question comes from Matthew Ford from BPN Paribas. Your line is now open. Please go ahead.

44:11 Morning all, thanks for the question. I've got two questions really. First one's on the UK. Clearly, as you mentioned, the on-trades continues to be quite tough in the UK business. But I just wanted to get your thoughts on H2. I think you mentioned in the release you've seen better trends in July and August. But I know the comps are sequentially tougher in the second half. So I just want to get your view on how you see H2 playing out and what the expectations are for the full year. and then I suppose longer term I think if we look at 26 estimates in consensus and kind of that mid-term growth profile I think consensus has around 2% you know like sales growth in the UK from 26 onwards do you think that's kind of realistic at those levels given the pressures you're seeing would you expect those to sort of clear up you know at the end of the year and for next year to be more in line with that mid-term level.

45:06 And then the second question is, to be honest, it's the same question on Europe. ConsenSys has a kind of mid-single-digit growth rate in Europe. Clearly Q1 was impacted – sorry, H1 was impacted by some one-offs there. But what's your expectation of the mid-term growth profile of the European business as well? Thank you.

45:30 Yeah, so in terms of that first part on the UK, yeah, look, we have had some good summer trading, particularly in the off trade. So we've seen an improvement in that UK position. And look, I think what we, if you look at last year, we had a minus 6% as well in H1, but we ended the year circa minus 3. And that's probably a reasonable shape for how this year will play in the UK. So an improvement in H2, and we've certainly improved

45:59 seen that over summer but still over the full year being low single digit decline and then I think you were asking about into 26 I mean look we are confident of returning to growth because the tonic category as I just mentioned is predicted to stabilise and the wider portfolio continues to scale and will become even more meaningful a part of the sales mix

46:29 so that's why we are confident of returning to the growth that ConsenSys has I think in terms of Europe this year as well we anticipate if you look at that 2% underlying deflation growth phasing starts to catch up with that and then also recognising that there's an FX tailwind in the second half so you should see an improvement if you like an acceleration in reported revenue growth in the second half and then in the outer years again consensus tends to be around mid single digit and it reflects many of the things Tim just spoke about in the UK in terms of the diversification of our sales mix we called out in the presentation the strong growth we're seeing in ginger beer particularly and then within it some fantastic momentum in really quite significant markets not not least France as well, which is a significant growth driver.

47:25 So they're the factors that underpin our ability that there's still, you know, good growth opportunities ahead for us across Europe.

47:34 Great. Thank you. Thank you. We currently have no further question and therefore concludes today's call. Thank you for joining. You may now disconnect your lines.