Fevertree Says Make Drinks With Tonics, Not Quack Virus Cures

(Bloomberg) -- British drink-mixer maker Fevertree Drinks Plc says that its products should be used for making cocktails, not as a potential remedy for the novel coronavirus that has infected millions of people around the world.

Customers have been asking whether there’s a similarity between the quinine ingredient used in Fevertree’s high end tonics and anti-malarial drug hydroxychloroquine, touted by some -- including U.S. President Donald Trump -- as a possible treatment. “There is no proven scientific evidence that quinine or hydroxychloroquine can protect against or treat Covid-19,” Fevertree said on its website. “We would not advise using our tonic water for anything other than making a tasty drink to keep your spirits up during this difficult time.”

The quinine that’s used in Fevertree’s tonic is naturally derived from the bark of the Cinchona tree, while hydroxychloroquine is a synthetically manufactured drug used to treat malaria, the company said in a new section on its website that was created to answer questions it has been getting. Quinine was mixed with gin by British officers in India in the 1800s to ward off malaria, creating the ubiquitous gin and tonic cocktail.

“Hydroxychloroquine and quinine are completely unrelated,” said Redburn analyst Simon Baker. “I’ve seen zero data to suggest quinine would be effective or not against Covid-19.” As for hydroxychloroquine, the analyst said it is too early to determine its effectiveness. “The efficacy data so far have been mixed and there are certain side effects, mainly cardiovascular.” In a study of 150 hospitalized patients by doctors at 16 centers in China, hydroxychloroquine didn’t help patients clear the virus better than standard care.

Fevertree has benefited from the popularity of gin in recent years, becoming one of the most valuable companies on the London Stock Exchange’s AIM market. The shares have performed relatively well during the market rout spurred by the coronavirus, falling just 4.1% in March compared with a 20% decline for the FTSE AIM All Share Index and a 14% drop for the U.K.’s benchmark FTSE 100 Index.

The drinks maker is scheduled to release financial results on April 22 and analysts will be looking for commentary on how the outbreak has affected demand. The company -- which sells its tonics to individual customers as well as to bars and restaurants in countries including the U.K., the U.S. and Australia -- said last month it’s too early to quantify the impact, given the high level of uncertainty. Fevertree declined to comment on their current sales.

The closure of pubs and bars as countries attempt to stem the spread of the virus means Fevertree will lose sales as well as “months of valuable brand building time,” RBC Capital Markets analyst Emma Letheren wrote in a note. On-trade sales make up 45% of Fevertree’s revenues and Covid-19 will have a “material impact” on the company, she said.

There would need to be a “fairly major uplift” in sales through supermarkets to compensate for the lost sales resulting from the closure of drinking establishments, according to Numis Securities analyst Damian McNeela.

“Anecdotally, people do seem to be consuming more alcohol at home than usual,” McNeela said in an email. That probably has more to do with alcohol being seen as “the only thing” to look forward to, rather than tonic water being a cure or preventative for Covid-19, he said.

In a similar trend, craft spirit maker Tito’s Handmade Vodka said last month that its products should not be used to make hand sanitizer at home, citing guidelines from the Centers for Disease Control and Prevention which stated that hand sanitizer needs to contain at least 60% alcohol.

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