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Ocado and FeverTree among star brand shares suffering as shoppers cut back

The star brands suffering from affluent shoppers straining their wallets: FeverTree, Joules and Ocado are among those whose shares have sunk

  • Amid Covid-19 supply chain and Ukraine’s wartime legacy of rising energy prices and ‘greed’, even affluent consumers are slamming shutters
  • Nationwide’s latest consumer spending report found ‘every non-essential spending category’ fell month over month in June

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The thrill of the monthly delivery of a dark range from Hotel Chocolat, after the company entered the London AIM market in 2016, could not have been greater.

The price of the subscription may have been on the upscale side, but here was a biological successor to Cadbury, sourced from his own cocoa farm in St. Lucia, that filled an important need in my life.

Along with FeverTree, Joules, Cazoo and Ocado, Hotel Chocolat is one of the super cool brands and websites, loved by the privileged middle class, that have captured the imagination over the past decade.

Pressure: Hotel Chocolat boss Angus Thirlwell saw shares fall by 74 percent this year

Pressure: Hotel Chocolat boss Angus Thirlwell saw shares fall by 74 percent this year

A combination of brilliant merchandising, word of mouth and investor expediency caused the companies’ stock market value to climb into the stratosphere, allowing the founders to join the super-rich.

Now they are in a slump. Amid the Covid-19 supply chain and Ukraine’s wartime legacy of rising energy prices and “greed,” even wealthy consumers are slamming shutters. Nationwide’s latest consumer spending report found that “every non-essential spending category” fell month over month in June.

About £3 billion less was spent and there were 5 million fewer transactions. One of the first things to go is the subscriptions – like mine – for luxury confectionery. When Hotel Chocolat went public, the shares seemed an absolute winner.

As the company expanded, it seemed as if founder Angus Thirlwell – who confided to me that he had bought a new Porsche 911 – had discovered a new route into the hearts of the newly prosperous Britain.

A favorite of suburban women, hot mummies and their mates, Joules can be found on Britain's more elegant shopping streets, from St Ives to Oban

A favorite of suburban women, hot mummies and their mates, Joules can be found on Britain's more elegant shopping streets, from St Ives to Oban

A favorite of suburban women, hot mummies and their mates, Joules can be found on Britain’s more elegant shopping streets, from St Ives to Oban

He created a superior chocolatier that could meet the needs of those looking for something a little more classy. Some six years later, stocks are down 74 percent this year when the gloss came off the pack.

One of the upstarts entering a marketing space foolishly neglected by overseas-owned Schweppes is the mixer champion Fever-Tree. With a boom in designer gins, there wasn’t a respectable home in Britain without a case of the more expensive tonic.

As shares of Fever-Tree soared, questions remained as to why such a giant of the trendy beverage industry on the Axis affluent shoppers are tightening their wallets… junior AIM market rather than the main London Stock Exchange platform. Now we learn the answer.

1659727298 197 Ocado and FeverTree among star brand shares suffering as shoppers

1659727298 197 Ocado and FeverTree among star brand shares suffering as shoppers

Shares, which have plunged 60 percent this year, were held up by plenty of fizz. As an asset manager told me this week, they were what are known in the investment industry as “pump and dump” stocks.

As quickly as investors propped up the stock price in the bull market — buying the ingredient mythology — they fell out of portfolios as the gin bottle was removed by central bankers. A favorite of suburban women, hot mummies and their mates, Joules can be found on Britain’s more elegant shopping streets, from St Ives to Oban.

After three decades in the fashion game, it seemed niche enough to survive. Earlier this month, it engaged advisers to see what could be done with its mountain of debt. If the share price – down 78% so far this year – is to be believed, the omens are not good.

The largest of all emblematic middle-class companies is Ocado, the food delivery company founded by Goldman Sachs alumnus Tim Steiner. In every respectable, hair-raising residential area in the country, you’ll see the grocer’s brightly colored, box-like vans roaming the streets every hour of the day. Hailed as a great UK tech success story, as the robot warehouses and unique software have been rolled out around the world, the much vaunted promise has never been properly fulfilled.

As much as suburban shoppers love the careful food, prices at Tesco, Lidl and Aldi are more enchanting in the current circumstances. As a result, the company’s stock price has fallen by 45 percent. In better times, sales of the luxury mid-range brands held up strongly.

They were as much a lifestyle choice as anything else. With the old enemy of inflation creeping through the country, it’s getting more and more hip to rely on quirky, cheap private labels. Even the much-scorned Poundland may have a future.

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