Fever-Tree says global demand has boosted profits

Fever-Tree has said global demand for its premium mixer drinks has boosted profits in an “exceptional year” for the business.

Fever-Tree has said global demand for its premium mixer drinks has boosted profits in an exceptional year for the business.
Pre tax profits hit £16.8 million in the year ending 31 December 2015, up from £2.5 million. Revenue was up 71% to £59.3 million, up from £34.7 million in 2014.

Charles Rolls, the firm’s executive deputy chairman, said its success was due to their customers’ “desire to drink premium mixers to complement their premium spirits”.

Tim Warrillow, chief executive of Fever-Tree, added: “2015 was an exceptional first full year for Fever-Tree as a public company.”

The pair decided to become business partners after meeting for the first time in 2003 and launched the company in 2005.

The company is named after the colloquial term for the cinchona tree, from whose bark the natural anti-malarial drug and core tonic water ingredient, quinine, is produced.

About 65% of its sales come from overseas, with key markets in the US and Europe.

Fever-Tree has signed deals with Easyjet and British Airways, with Marks and Spencer also stocking its drinks.

It said its tonics continued to be its best-selling products and that it was benefiting from the popularity of premium gin products in western Europe and US.

Mr Rolls, 57, recalls their first meeting: “The conversation quickly turned from gin to tonic water, and the fact that while there had been a huge increase in the number of premium gins, when it came to the tonic water you added to them, you essentially only had two choices – the market leader Schweppes, or supermarket own brands.

“And these all contained artificial sweeteners. We decided there and then to launch a premium tonic water, with all natural ingredients.”

Mr Warrillow, 39, adds: “It was very apparent from our first few meetings that we seemed to understand each other.”

And so their business, Fever-Tree, was born.

But while it took Mr Rolls and Mr Warrillow just a few hours to decide to go into business together, it then took them 18 months to find a recipe they were happy with. As Mr Rolls had some money in the bank after selling his 25% share in Plymouth Gin, they were able to take their time.

In their efforts to formulate their recipe, they flew to the Democratic Republic of the Congo to source pharmaceutical grade quinine from a plantation, and hired plant hunters to help them find other flavourings, such as a bitter orange grown in Tanzania.

Mr Warrillow says: “The intention was to treat the launch like a premium spirit company would do – in the first instance try to get Fever-Tree stocked by the best hotel bars and restaurants.

With such venues quick to get on board, the company then got what it says was its most important break – upmarket UK supermarket group Waitrose phoned to say it would like to start selling Fever-Tree.

Mr Rolls says: “Tim thought this was a perfectly normal development, but I had to keep telling him that it is incredibly unusual for a supermarket group to chase you. It is almost always the other way round, and hard work.”

“Yet the buyer was incredibly enthusiastic, and just a few weeks after Waitrose starting selling us, she phoned to say we had a hit on our hands.”

With the UK’s other supermarkets quick to follow suit, exports then followed, and London-based Fever-Tree is now available in 50 different countries.

It has also introduced other products, such as a reduced calorie – but still all natural – tonic water, ginger beer, and lemonade. All are produced for it under contract by a company in the south west of England.

Fever-Tree now sells 65 million bottles per year across its range, and employs 70 people, but Mr Rolls says it still has substantial growth potential. He points out, for example, that it currently has only a “single digit percentage” of the UK tonic water market.

June 16, 2016  Tags: , , , ,   Posted in: Business Win, Exporting Businesses, Global Business, Growing Business, Growing Sales, Uncategorized

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