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Tonic Maker Fevertree Faces Sharp Cost Increases From Ukraine Crisis

Tonic maker Fevertree said on Wednesday dramatic rises in commodity prices following Russia's invasion of Ukraine have led to uncertainty around costs for the British company and will hurt its 2022 profit.

Sanctions against Moscow for invading its neighbour have sent prices soaring amid uncertainties over commodity supplies from both nations and added to worries of inflation.

Fevertree and others in the industry were already facing logistical snags.

The London-listed company, which sells premium tonics and drink mixers, said it expects core profit of £63 million to £66 million ($82 million to $86 million) this year, lower than analysts' consensus of £71.7 million.

Fevertree reported a profit of £63 million for 2021 and had previously forecast 2022 profit in the range of £69 million and £72 million.

Shares Fall 

Its shares, which fell as much as 9% on Wednesday morning, reversed course to trade 1.5% higher by 1039 GMT.

The company did not specify which price rises were hurting it and did not immediately respond to a request for details.

Earlier in the day, commodities trader Glencore said markets must adapt to a lack of Russian and Ukrainian commodities.

Major Suppliers 

Russia, which has called its actions in Ukraine a 'special military operation,' is a key supplier of oil, natural gas, coal, aluminium and nickel, while Ukraine is a major grain producer and exporter.

"Whilst the tragic situation in Ukraine has resulted in significant uncertainty in relation to our input costs in the short term, the long-term global opportunity for Fever-Tree remains substantial," Tim Warrillow, chief executive officer said in a statement.

EToro analyst Mark Crouch said Fevertree's troubles were "probably far from over", with rising COVID-19 cases in several countries also posing a threat to restaurant and bar sales.

News by Reuters, edited by Donna Ahern, Checkout. For more drinks stories, click here. Click subscribe to sign up for the Checkout print edition.

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