Fever-Tree began, as many great companies do, in a pub. Founders Tim Warrillow and Charles Rolls had been put in contact by a mutual acquaintance and though they were supposed to talk about gin, the subject that really got them both animated was tonic. Or, to be precise, the lack of it.
The sector was dominated by mid-market players and, though it seems obvious now that you might want a premium mixer with your premium spirit, at the time there was a gaping hole in the market, and so Tim and Charles set out to fill it.
Twelve years later and Fever-Tree has just become the most valuable soft drinks company in the UK after a sustained stock-market run, which has left it worth £1.8bn. The company doubled profits in 2016 and reported UK sales growth of 118%.
Their story is not without its fair share of luck – not least of which was an endorsement from one of the world’s most famous chefs, Ferran Adrià of El Bulli, who was introduced to the company by a journalist friend and went on to create a dish devoted to their tonic mixer (a granita composed of bitter orange peel, rose petals, and, of course, liquid nitrogen).
But that wasn’t the only factor in the company’s stratospheric rise.
For starters, Charles and Tim did their homework. The success of Fever-Tree and its premium mixers was not only through identifying a hole in the market but also through creating demand rather than waiting for it to materialise. They didn’t just make the UK’s first premium mixer – they planted the idea in the consumer’s mind that a premium mixer is something they wanted.
The wellness trend has seen consumers focus on quality over quantity for their evening drink, and has spurred a proliferation of luxury alcohol brands, from Opihr and Half Hitch gin to Chase vodka. But as Charles knew from his time turning around Plymouth Gin, the market was sorely missing a mixer that matched the quality of these new offerings. As Tim noted in an interview with the Telegraph, ‘All these carefully crafted artisan spirits kept appearing without a corresponding renaissance in artisan mixers’.
Creating one would not turn out to be easy however. Both Tim and Charles realised that essential to their success would be an absolute commitment to quality. Their target market was people who knew what good tasted like, and as with gin itself, no half measures could be taken.
Hence an 18-month trip around the world to source lemons from Sicily and bitter orange from Tanzania. It also meant locating a high-quality producer of quinine, the bitter ingredient that gives tonic both its distinctive flavour and the roots of its name. This led Tim to a plantation in eastern Congo, one of the last in the world to produce premium-grade quinine, extracted from the plant that locals nickname the fever tree.
And come 2006 the first batch of Fever-Tree tonic emerged. Then the next phase of their plan began. Fever-Tree did not at first look to stock in supermarkets – instead Tim and Charles made the drink initially available to bartenders in fashionable city bars.
This strategy paid dividends. Not only did it serve as free advertising, tying into the brand’s premium image while also receiving the tacit endorsement of the bars that sold it, but in addition it brought the supermarkets to Fever-Tree, rather than the other way around.
With growth came private equity investment. LDC backed the company to the tune of £48m in 2013, supporting the development of its product range and helping to expand its international presence – particularly in Belgium, Australia and Canada – so that by 2015 70% of its turnover was derived from exports. LDC subsequently took the company public in 2014, selling most of its stake.
Growth does present a challenge as well as an opportunity. As Bill Ronald said to me recently:
‘Staying fleet of foot and true to the entrepreneurial spirit of Tim and Charles’s original vision for Fever-Tree is a top priority for the business. With fewer than 50 staff, decision making is fast and our commitment to quality is unswerving.’ Bill Ronald, Chairman, Fever-Tree
Fever-Tree hasn’t just succeeded in building a business – it’s succeeded in building a category. Tim and Charles certainly benefitted from modern beverage trends that have moved consumers to the premium end of the market, but their ability to craft an offering that filled a space that people didn’t know existed has inspired a wave of competitors to enter the market.
In November 2016 Britvic established its own incubator, Wisehead Productions, which launched a range of premium mixers under the label London Essence Company, while Schweppes has introduced its own higher-end product range.
Ultimately, the challenger brand has become a challenged brand, a marker of how much Fever-Tree has transformed the industry over its relatively short lifetime.