Hello everyone, and thank you for joining the Fevertree FY25 interim results call. My name is Claire, and I will be coordinating your call today. During the presentation, you can register a question by pressing * followed by 1 on your telephone keypad. If you change your mind, please press * followed by 2 on your telephone keypad. I will now hand over to Tim Warrillow, Co-founder and CEO of Fevertree, to begin. Please go ahead.
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 Branchflower, 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. 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. 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. I'll then take you through an update on our Molson Coors partnership before Andy provides a 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. 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 mixers category leader across all our major regions, and our growing portfolio beyond tonic water is broadening the brand into more occasions. Undoubtedly, the most significant development in the first half was signing our transformational partnership with Molson Coors in January. The overall transition is progressing well, and as we will come onto, it's very encouraging to see how the underlying brand momentum has been maintained in the U.S.
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 position. The £100 million share buyback program 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 program by a further £30 million to continue into 2026. This is a clear reflection of continued confidence in improved cash flow resulting from the Molson Coors partnership. Against this backdrop of resilient performance and strategic progress, 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. 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. 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.
It is within these social occasions, whether that's a barbecue with friends, a night out at the bar, a sports event, or a meal together, that the trends are being reflected in the way consumers are choosing to drink. In the same moment, you'll see classic long spirit mixes alongside crafted cocktails, lighter spritz style serves next to sophisticated premium sodas, and increasingly credible alcohol-free choices. 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 on-trade. Our sodas and ginger beers support longer, lighter highballs and spritz style moments, while our growing premium soft drinks range provides a sophisticated, non-alcoholic choice without trading down on quality.
Finally, our new non-alcoholic RTDs bring bar-quality flavor to zero ABV occasions. 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. 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 U.S., and beyond. 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.
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 serve strategies. 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. 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., 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 Coors' 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. Local production. Over time, onshoring will cut freight costs, shorten lead times, and deliver operational efficiencies. Together, this partnership transforms our largest growth market and builds an even stronger long-term foundation for Fevertree in the U.S. Having set out the rationale for the partnership, this slide shows how it translates into real revenue growth for Fevertree. Molson Coors 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 core premium mixer category. The second element is depth. By leveraging Molson Coors' senior customer relationships and category management expertise, we can increase the number of Fevertree 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-alc and ready-to-drink. 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-changing marketing investment. Together, this will drive rate of sale per product and significantly raise brand awareness. Put simply, this partnership doesn't just give us scale, it multiplies the growth levers of breadth, depth, and velocity.
As planned, our H1 results still largely reflect the legacy Fevertree 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-trade and liquor channels, with the relevant retail customers being handed over during the second half. Organizationally, our former Fevertree US team is now fully integrated as Molson Coors' non-alc division, while we've kept a small focus team in place to oversee the partnership. 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 are working incredibly well together, and 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.
Thank you, Tim, and good morning, everyone. The Fevertree brand delivered 2% constant currency growth in the first half and a 1% increase at knee-length as we worked through the initial period of transition into the Molson Coors partnership in the U.S. Working capital, as expected, has improved significantly, driving strong cash generation, and this morning we announced a further £30 million expansion of the share buyback program, which will run into 2026. Turning the page, in the U.S., 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. In the U.K., 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 notably gin, and mixer categories, with Fevertree not immune to those wider headwinds. However, our U.K. 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 U.K. sales mix, which, alongside our clear leadership position in the category, strong brand awareness, and broad household penetration, provides the platform for an improved U.K.
performance in the second half and beyond. 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 increase value share, with ginger beer remaining a notable growth driver, up 26% year on year, and 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 order phasing, but again, looking at underlying depletion growth, that was strong at 8%, driven by Australia, where our premium soft flavors and formats are delivering strong growth alongside good performance in Canada and Japan.
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 U.S., we delivered adjusted EBITDA of £5 million. As expected, the move to the U.S. 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 U.S. profits with Molson Coors. As we set out earlier this year, over the medium term, we expect to drive significant improvements in U.S. EBITDA as the partnership P&L leverages Molson Coors' scale, with a step change expected once U.S. production is onshored.
Crucially, Molson Coors have agreed to guarantee an absolute level at 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 U.S. 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 latter prior year revaluation adjustments. 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. However, as phasing unwinds, these costs will reduce as a percentage of revenue as we progress through the second half, while 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 U.S. partnership, with local working capital relating to U.S. customer receivables and inventory now funded by Molson Coors. We still retain some U.S. working capital on our balance sheet, which relates to U.K.-produced inventory in transit to the U.S., as well as receivables from Molson Coors. However, this will further reduce over the medium term as U.S. production is onshored.
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 Fevertree 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 margin 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.
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 Coors' operational capabilities and economies of scale, all underpinned by guaranteed profit levels in the U.S. That well-underpinned EBITDA growth then converts to even stronger cash generation as U.S. working capital requirements fall away for the group. The Molson partnership highlights the underlying value of this business, whereby the Fevertree brand can combine with an asset-light business model to drive a virtuous circle from revenue growth to cash generation. 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 to our share buyback program. With that, I'll pass back to Tim.
Thanks, Andy. 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 mixers, holding the number one position across all our major markets. As we referenced over the years, we've seen hundreds of #MeToo copycats come and increasingly go in that time as we've continued to strengthen our leadership position. 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. That combination of market leadership, household penetration, and brand equity makes Fevertree 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.
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's revenues, a clear reflection of both evolving consumer trends, I covered earlier, and the strength of our innovation globally. 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. Naturally, as the clear category leader, our performance in this market has mirrored those wider dynamics. However, it's important to remember that gin remains a very large and significant category in the UK, and the G&T, an incredibly important and well-established popular drink.
While the on-trade has undeniably been affected by the wider category headwinds and pricing pressures, Fevertree is the clear number one tonic brand by significant distance, and we continue to invest behind the G&T, and tonic portfolio will remain a highly profitable part of our business. Stepping back to a global perspective, the picture is more encouraging. The gin category has seen 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 U.S., where premium tonics are still in their relative infancy. This gives us a strong platform to capture future and further shares internationally, even as the UK adjusts. While tonic continues to anchor our business, diversification is already emerging as a key pillar of future growth. What makes this particularly exciting is the breadth of the opportunity across our broader portfolio.
As I illustrated earlier, Fevertree Drinks PLC is uniquely positioned to straddle all adult socializing 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 Fevertree now purchase from our broader range beyond our tonics. As shown by this graph, our wider portfolio is gaining significant scale and driving meaningful growth across our whole group. If you want one product that really brings this to life, how successful our diversification strategy is proving to be, that is our ginger beer. Fevertree Drinks PLC is now the biggest global ginger beer brand by value, and most importantly, we still believe it 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 mixed serve and cocktail, but is 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. 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. 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 soft has been featured in premium dine-in deals and broader entertaining occasions. At retail, we're opening up more channels and store-facing in different non-alcoholic parts of the store. In Europe, we're seeing new opportunities emerge in new on-the-go channels. In the U.S., as already mentioned, our Molson Coors partnership provides significant incremental marketing funds, which we'll begin to deploy once the distributor transition is fully bedded in.
To wrap up, our key messages are clear. First, product diversification is driving growth across many regions and strengthening Fevertree's position as the global leader in premium mixers. Second, our U.S. partnership with Molson Coors represents a step change in our biggest market, with the transition progressing well. Third, our strong cash generation and financial discipline give us the resource to invest, deliver returns, and build for the long term. Finally, the guidance we gave at the start of the year remains unchanged, and we remain comfortable with market expectations. Thank you for your time, and we will now open the call to any questions.
Thank you. To ask a question, please press * followed by 1 on your telephone keypad now. If you change your mind, please press * followed by 2. 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.
Good morning, Tim, Andy, and Steve. Three questions, please. The first is on the U.S. Pretty encouraging to see the delivery despite the integration and the potential disruption that might have happened. Could 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 that you're vigilant to M&A opportunities. If you were to replicate the asset-light partnership in other markets, for instance, in Europe, what are the things you would look for in a partner? The third question, perhaps for Andy, is pretty interesting that you split out margins of the U.S. versus non-U.S. business. I think when we look at consensus, fiscal 2028 still shows U.S. margins well below non-U.S. margins.
I'm not asking for guidance, but is there any reason why over time the U.S. cannot catch up to the non-U.S. margin of nearly 24%?
Okay, thanks, Ed. Good to hear from you. I presume you got up pretty early for this, so that's much appreciated. First question, U.S. transition. As we said, it is progressing well. As you all know, with transitions, there are many banana skins here that you've got to be careful about. First off, of course, we announced the deal in January, but we were still trading with our network up until June. In that period, it is quite typical to see your current network and distributors down tools. Fortunately, on the back of the great relationship that we have and have had with Southern Glazers, and also, I have to say, the relationship that Molson Coors have with them because they also trade with them, we were able to keep goodwill going through that period, which we're grateful to Southern for.
That meant that there was less disruption than can typically happen in these circumstances. I think also underlying it is the fact that the brand momentum has continued. The other thing that happens typically in periods of uncertainty is competition starts to really flex their muscles. 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. The competition continued to struggle. We've talked a lot over the years about our major competitor in the U.S. being Qtonic. You'll remember that four or five years ago, they were half our size in the U.S. 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 Coors 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. 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 the education and system integration that is needed to get that working properly. That's still very much in process. We've got direct retail and borderline retail that we will start to transition to over the remainder of this year. We will do that with Molson Coors, of course, when it's relevant. That is why we foresee this transition continuing to last for the rest of the year.
What I say in answer to your question is that it really is going well. When I say that, our team, the majority of our team that we have now moved over, they've integrated very well with Molson Coors, 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. That has been fantastically encouraging. We are very optimistic that when they get through the transition period and get into the sales period, we're really going to see all of the benefit of their scale and muscle. That is why we're increasingly optimistic into 2026. In fact, we've got a significant moment next week. I'm off out to the U.S. because it is the Molson Coors Distributor Conference.
I'll be presenting to 3,500 sales guys who will now be out selling the Fevertree brand. 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. Your question about partnerships. As you can imagine, the deal that we came to in Molson Coors hasn't been lost on others in the trade. Clearly, there's been sort of incoming on the back of that. I think what it's demonstrated to us is what we already knew, that we really like this idea of partnership and being able to work proactively and invest together. 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.
This is something that we will continue to do quite vigorously. We'll also be keeping this sort of partnership structure very much in mind because we certainly think it's a great blueprint as we look to the future. Andy, I think.
Yeah, and in terms of your question on U.S. profitability, in terms of the U.S. segmental profit that we're disclosing at this point in time, that's very much the start point. That represents our share of that U.S. partnership P&L, which of course now sits with Molson Coors. If we think about that partnership P&L and the opportunities to drive margin improvement over the next couple of years from an underlying perspective, we're very confident as a Molson on the ability to leverage scale, operational efficiencies, and absolutely as U.S. production is onshored in the medium term, that will also provide a step change in the profitability of that local P&L. As I spoke to earlier, that profitability will be tempered by the decision we've taken together to really invest behind the brand. The bulk of that investment, we expect to be deployed through 2026 and 2027.
It's really what it means is that U.S. P&L will improve in underlying profitability, tempered in the short term by U.S. marketing. As you say, by 2028, we should start to see the true underlying profitability of that U.S. partnership, and then we'll take our share into our P&L. If you look at where consensus margin is moving to, it's staying around circa 12% this year and next year, but then it starts to step into mid-teens and then higher teens as we get into 2027 and 2028. 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 Panmure Liberum. Your line is now open. Please go ahead.
Hi, Dean. Thanks for taking my question. First, on tariffs, what sort of discussions have you had with Molson Coors on sharing the impact of the tariffs from the supplier from the UK to the US, and how have you been managing that impact, and is that now completely in your guidance? Secondly, on EPR, I know 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 potential impact has to be booked in by the end of the year? Just clarification on that as well, is the $4.5 million that you have pointed out a nine-month impact, or is it a full 12-month impact? If you could clarify that. One last on the UK.
Given we have been struggling in the on-trade for a while now, I'm 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 on-trade market in the UK? Thank you.
Yeah, thank you. I'll take the first two on that in terms of the numbers. Tariffs, as I just spoke to, in terms of that U.S. partnership P&L, that's where the tariff impact happens. That happens in the partnership P&L. We, because we share that profitability, 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 Coors to mitigate the impact. The fundamental mitigation will be the onshoring of production in the U.S. That's why structurally, over the medium term, tariffs won't have a long-term impact on the business. It is already being reflected in the partnership P&L and already being reflected in our share of U.S. profitability.
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 we are in scope for the off-trade, and that's a $1.5 million full-year cost impact. The $3 million relates to the on-trade, where we're very confident in terms of the fact that the levy, our products, the products that we sell into the on-trade aren't covered by the levy. We are in discussions with government. As you say, these things can take time. By virtue of the fact we haven't recognized a provision or even a contingent liability in relation to this amount, our position is clear that we're not liable for that cost. We're just flagging that we're in that position to change. That would be the impact.
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. With it, our market share, we've got 44% market share in the on-trade. That's twice the size of our nearest competitor, Schweppes. The position remains strong. What has happened is, as reflected in the gin category, gin and tonic sales have come down in line with gin. It's notable that this year, whilst gin has declined, it's declined in terms of volume at half the rate of the previous year. IWSR are predicting the fact that this is now going to slow. This decline is going to slow dramatically to the point of stabilization in the next few years. That is going to be very beneficial to us. In terms of the resource, absolutely not.
We haven't reduced our resource in the on-trade partly because we've got still so many accounts to manage, but also because of the broader portfolio of products that we are now selling through the on-trade and realize have even more opportunity through that channel with the fantastic distribution we have. In many ways, we're working ever closer with our on-trade 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. In summary, we haven't reduced the resource looking after the on-trade because we see future opportunity, particularly as that gin category starts to normalize.
Thank you very much. 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?
It's a full-year impact.
Okay, thank you.
It's one and a half, yeah, to be clear.
Thank you.
Thank you. Thank you. Our next question comes from Philip Spain from JPMorgan Chase & Co. Your line is now open. Please go ahead.
Good morning. Thank you very much for taking my questions. Just to follow up on the U.S. 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'll 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 color on the level of pricing that you took this year to help, to help your, I suppose, support your margins. Given, particularly in the on-trade, some of the pressures you spoke about in terms of the higher cost being passed on to consumers, how are you thinking about pricing moving forward in that channel as well? My final is just focusing around 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. How do you see your non-alcoholic and particularly those premium soft drinks in terms of your penetration and outlets in the on-trade performing? I'd just be interested to know what kind of that penetration compares on-trade versus off-trade. 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 actually, it's more of accountabilizes those mixer applications that you have already? Thank you very much.
Yeah, hi. In terms of the timing of onshoring, 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-U.S. part of the business, we've continued to take inflationary price increases. In the U.S., we chose not to, in agreement with Molson Coors, not to take price this year as we work through the transition.
To pick up that point about pricing in the on-trade, as you might be aware, because this has been much discussed over the last three or four years, we've always taken a moderate sort of pricing increase to the on-trade, unlike some of our competitor friends who have been servicing the on-trade who have taken notably higher pricing to them, particularly in times of cost inflation. 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. We've been driving hard on our spritz menus to ensure that there's pricing that sits under that £10 mark. We've had some real success with them recently driving that kind of proposition. That's something that we're going to work on even harder with them in H2 this year and beyond.
Your question about moderation, is it incremental? Absolutely, we see it as incremental because moderation, as we tried 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. What we're talking about there is mixed. We're obviously seeing the rise of these lower ABV spirits. Obviously, Aperol Spritz is the poster boy for that, but there are many other opportunities that we're seeing to drive those longer, lighter drinks with the spirit partners. At the same time, in terms of moderation, there's also, of course, that opportunity for non-alcoholic drinks and soft drinks. That's where we're seeing fantastic growth. 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, really starting to lead the category almost overnight versus the competition in that. We see real opportunity to expand that across the off-trade and indeed, in answer to your question, in the on-trade as well. We definitely see those as incremental.
Great, thanks very much.
Thank you. Our next question comes from Matthew Ford from BNP Paribas. Your line is now open. Please go ahead.
Morning all. Thanks for the question. I've got two questions really. First one's on the UK. Clearly, as you mentioned, the on-trade continues to be quite tough in the UK business. 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. I know the comps are sequentially tougher in the second half. I just want to get your view on how you see H2 playing out and what the expectations are for the full year. I suppose longer term, I think if we look at 2026 estimates in consensus and kind of that midterm growth profile, I think consensus has around 2% like-for-like sales growth in the UK from 2026 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 near the end of the year and for next year to be more in line with that midterm level? The second question is, to be honest, it's the same question on Europe. Consensus has a kind of mid-single-digit growth rate in Europe. Clearly, H1 was impacted by some one-offs there. What's your expectation of the midterm growth profile in the European business as well? Thank you.
Yeah, in terms of that first part on the UK, yeah, we have had some good summer trading, particularly in the off-trade. We've seen an improvement in that UK position. If you look at last year, we had a -6% as well in H1, but we ended the year circa -3%. We think that's probably a reasonable shape for how this year will play out in the UK. An improvement in H2, and we've certainly seen that over summer, but still over the full year being sort of low single-digit decline.
I think you're asking about into 2026. Look, we are confident of returning to growth because the tonic category, as I just mentioned, is predicted to stabilize, and the wider portfolio continues to scale and will become even more meaningful as part of the sales mix. That's why we are confident of returning to the growth that consensus has.
I think in terms of Europe this year as well, we anticipate if you look at that 2% underlying depletion growth, phasing starts to catch up with that, and then also recognizing that as an FX tailwind in the second half. You should see an improvement, if you like, an acceleration in reported revenue growth in the second half. 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 within it, some fantastic momentum in really quite significant markets, not least France as well, which is a significant growth driver.
They're the factors that underpin our ability that there's still, you know, good growth opportunities ahead for us across Europe.
Great, thank you.
Thank you. We currently have no further questions, and therefore this concludes today's call. Thank you for joining. You may now disconnect your lines.