Upmarket tonic maker Fever-Tree has revealed plans to raise prices as it continues to grapple with a surge in costs.

The company, which had previously warned of a big squeeze on its profit margins, made the announcement as it reported a drop in earnings for its last financial year.

One of the major drags has been a leap in the cost of glass bottles, though it hoped to offset some of that through a rise in US mixer production in the coming months.

The bottle woes are a consequence of higher energy and commodity prices that have lifted manufacturing and packaging costs.

Fever-Tree’s range, priced at the top end of the market, is understood to have already been raised in cost due to the pressures – adding more to consumer bills amid the wider cost of living crisis.

The company, which opened its first bar last year, reported a full year pre-tax profit of £31m for 2022, down from £55.6m in 2021.

Revenue was 11% above the previous year’s levels at £344.3m. Shares were up more than 6% as dividends rose 2%.

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Chris Daly, chief executive of the Chartered Institute of Marketing, said of the company’s performance: “Supply chain difficulties have given competitors an advantage in offering lower-priced alternatives, meaning Fever-Tree has struggled to retain customers seeking budget-friendly options.

“To regain its fizz, Fever-Tree must realign its marketing strategy to adapt to the unpredictable market conditions, while staying true to its identity.

“Now, the brand must remain vigilant in monitoring evolving consumer trends and expand its reach to a wider demographic to regain its competitive advantage.”

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