NewsNational News

Popular tonic brand Fevertree reports dip in profits citing increased freight costs

Many on social media report not being able to find the product on store shelves
Germany DHL Air Freight Hub
Posted at 8:33 PM, Sep 13, 2022

Popular tonic brand Fevertree has reported a loss in profits for the first half of the year, even with strong sales in Europe and the U.S. citing fallout from a prolonged supply chain crisis.

The company says that despited high demand for its products on both sides of the Atlantic, volatile freight costs for trans-Atlantic air shipments have managed to greatly cut into the company's bottom line.

Comments on the company's social media suggest that there have been issues getting products on store shelves as well signaling an ongoing supply chain issue in the U.S.

Commenters saying they are from the UK and the U.S. are reporting issues, with one commenter on Instagram writing, "Are you having supply issues? Not finding you on shelves locally anymore."

As Reuters reported, inflationary pressures have been coupled with unfavorable shipping costs.

In April, the the travel, logistics and infrastructure publication McKinsey & Company reported that an ongoing supply-chain crisis has been the driving force behind an increase in freight rates. The report saidthat "Between 62 and 85 percent of revenues are channeled into purchasing carrier capacity (such as shipping lines or cargo airlines)."

"For both ocean and air freight, gross profit margins shrink as carrier rates increase, and inflate at times of low rates," the report said.

Fevertree said in a statement, "Labor shortages at our East Coast bottler in the U.S. have impacted our ramp up."

The London-based company also said that the availability of glass will also hurt their profits in the second half of the year.

According to the U.S. International Trade Commission, though most shipping, including in maritime capacity, returned to 2019 levels, port capacity and container availability continued to be a problem. Supply chain issues in 2020 and 2021 have appeared to flow into 2022 in the form of changes in future demand. There has been an evolution in the recovery from the height of the pandemic into future means of merchandise transport and trade.