Fever-Tree has pioneered the boom in premium mixers that has followed the craft spirits movement of recent decades.
In this episode of the Drinks Adventures podcast, we’re joined by Fever-Tree founder Tim Warrillow.
An entrepreneur with a background in advertising, Tim co-founded the company with drinks industry veteran Charles Rolls in 2004.
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They travelled to the ends of the earth to source the finest ingredients, including quinine from the Democratic Republic of the Congo, ginger from the Ivory Coast, India and Nigeria, and lemons from the slopes of Mount Etna, Sicily.
Fever-Tree is now the world’s leading supplier of premium carbonated mixers for alcoholic spirits by retail sales value.
With its mixers now sold in over 75 countries globally, the company is listed on the London Stock Exchange with a market cap of 2.46 billion pounds.
Tim shares with us the story of Fever-Tree’s journey from start-up phase with just a single tonic water to something of a global phenomenon.
Fever-Tree founder Tim Warrillow interview: Full transcript
JAMES ATKINSON: Fever-Tree was founded in 2014 by drinks industry veteran Charles Rolls, together with Tim Warrillow, an entrepreneur with a background in advertising.
TIM WARRILLOW: Charles had been very successful in turning around the fortunes of Plymouth Gin and had recently sold it to one of the big spirit companies. And the few people I spoke to in the trade, when I was doing my research, thought that we might get on. So I called Charles up completely out of the blue and we met for a cup of coffee. And over the first cup of coffee, the conversation quickly turned actually from gin to tonic. As coincidentally we had both been thinking and looking, and researching the tonic category. Albeit from different perspectives, but what was apparent is that we clearly shared the same view. And that really, in summary was that you know, we were both very aware of the fact that the interest in premium spirits was growing and growing. You know, spirit producers were producing ever better quality spirits. Tax laws were changing, so new and exciting high quality craft spirits were starting to come to the market. And you know, bartenders, mixologists… you know, as they were known. They were talking about spirits and making spirits and cocktails exciting and sexy. You know, almost as hadn’t been seen for you know, quite some time. So all of this interest and noise you know, was going on around the world of spirits. Yet in stark contrast you know, the mixer category had become a long forgotten… you know, really kind of overlooked category dominated by large conglomerate brands and own label products. Who you know, who ultimately ended up focusing more on manufacturing efficiency than they had on quality or flavour. And so ingredients such as you know, artificial sweeteners such as saccharin had started to become common place and finding themselves you know, across the whole category. And you know, this struck us as extraordinary. That here were people prepared to pay ever more money for high quality spirits, that yet had no choice but really to drown them with these increasingly artificial mixers. And so, interestingly not quite at that first cup of coffee, but not long afterwards you know, we were saying to each other if you actually stop and think about it, you know. If three quarters of that gin and tonic is tonic. It is surely the quality of the tonic should be as important in people’s mind as the quality of the gin. And so really you know, that was the idea. And we reasoned, we hoped, we believed that you know, if you could produce a far higher quality product to make that drink taste better, then surely you know, we could get people interested and sort of be prepared to pay for it.
Fever-Tree investor scepticism
JAMES ATKINSON: Like a lot of the greatest ideas, it seems so obvious when you look back. I mean, why do you think that none of those big major soft drink companies that you mentioned, with all of their innovation teams and all of that sort of stuff. Why do you think they hadn’t done it?
TIM WARRILLOW: Look, it is a very good question and you’re right, it seems obvious now. But because you know, excitingly and fortunately this premium mixer category has really taken hold. But I tell you at the time, you know when we were out. As I mentioned, we met in 2003 but the first product didn’t come off the line until 2005 and that’s because we spent for one, an awful lot of time researching and developing the product. But we also spent quite a bit of time you know, raising some funds and talking to people in the industry. And I think you know, what was interesting is that everywhere we turned, so-called industry experts, investors you know, just didn’t believe in the opportunity. You know, they thought that you know, there were a couple of big players who dominated it and they questioned you know, whether we could get people’s interest. So you know, I think really that was the circumstance at the time, which now fortunately is certainly no longer the case.
JAMES ATKINSON: Is that about investment types just not understanding the market?
TIM WARRILLOW: I think so, but as I… certainly that was our view. But there also were people in the industry and so it wasn’t just the investment community who were sceptical. It was people in the industry and I think this is because not only was it sort of dominated by a couple of big you know, goliaths. But actually, what is now hard to remember is quite how overlooked and forgotten, and how uninterested the trade were in this category. And I think it was sort of best summarised, you know, we did one focus group right at the outset of the business and I’ll always remember it because it was dominated by this rather sort of big character. This lady. And she at one point sort of slammed her fist on the desk almost and said look you don’t understand you know, the mixer category is so boring. You know, what are mixers? What is tonic water? Is there anything in it? I mean, so it had got to this point where there was so little sort of engagement and interest from consumers, but also the trade you know. These were retailers as well. They’d done very little to their sets over the years because there had been so little sort of interest and innovation. So I think you know, that is the point. It had just fallen out of people’s sort of consciousness.
JAMES ATKINSON: What were the biggest headaches that you faced in getting it off the ground?
TIM WARRILLOW: Well I suppose you know, I look back on it now. Is it took us a long time to develop our first product and you know, I had given everything up at that point and had very little funds in savings. So that was quite painful. That was certainly a headache. Sort of 18 months or so before there was any sign of any money coming in. And that is because we went about the way developed our products, we went really rather differently from the way the kind of soft drink trade and certainly the mixer trade had done it previously. And that involved spending a lot of time going back into the history books, to go and research mixers, tonic water particularly at that point. And then actually rather uniquely, having decided what we needed to do was we needed to go and find the best quality ingredients. The most authentic and the best quality. That was going to be the route that we were pursuing. And you know, not only having sort of researched it, we wanted actually to go out and find them. Go and meet the producers, talk to the producers. You know, go and understand them. Go and understand you know, what makes something better and worse as an ingredient. So, that then sparked an enormous amount of time travelling around, going and finding ingredients. And I have to say it still does. I mean, it’s one of the great sort of joys of the job now. But that as a result meant our product development time was much longer than was typical and so that was certainly a challenge. But you know, I’m glad we took that route because it has really paid off.
JAMES ATKINSON: Yeah that first product I believe was the Indian Tonic, is that correct?
TIM WARRILLOW: Yes that’s right, exactly.
JAMES ATKINSON: And what was sort of the moment when you felt like you were starting to get some traction?
TIM WARRILLOW: We launched as I say back in 2005 and then it was a typical spirits launch if you like, you know. This was the other way that we approached it very differently from soft drinks, you know we took much more of a spirits approach, deciding we really wanted to focus on the hotel/bar restaurant trade. We really wanted to get those opinion formers on board, you know. The bartending community, the chefs. And so you know, it was a case of you know, going around door to door. Getting that crowd to do the taste tests to see the difference in terms of the product quality. Do you know, once they tasted the difference and you know, we told the tale of the ingredients that were in it and the lengths we’d gone to. You know, it started to capture their imagination and it provoked a very small amount of column inches here in London. Which very fortuitously was read by the buyer of Waitrose. Waitrose is our sort of premium supermarket chain here. And very unexpectedly she called us up out of the blue, having read this one very small article. And that was you know, very fortuitous. It just seems how fortunate that was, because how rare it is for retail buyers to actually call you. But she was saying that actually we’ve been waiting for a product like this and so she got it on her supermarket shelves. And their, you know, they launch so many products. They have a pretty good idea of when something’s going to work and not, and so they also had this policy at the time in Waitrose where you couldn’t promote or market a new product on shelf. It had to sit there and sell off its own accord. So it had a lonely six weeks on the shelf with no sort of marketing support around it. But it started to sell and she said she’d seen enough to give us full distributions. So I suppose at that point you know, we started to get some confidence that it wasn’t just us that believed that there was an opportunity. The consumers were seeming to react to it.
Fever-Tree for sale? Not a chance!
JAMES ATKINSON: There must have been a point fairly early on where you attracted the attention of the majors and they came to try and seduce you to take Fever-Tree under their wing?
TIM WARRILLOW: Well, I mean the truth is that we haven’t been interested. I mean, there’s certainly been some interest over time. But yeah, as I still feel to this day is that you know, we’re still just getting started. The opportunity that is sort of unfolding ahead of us in this category is as exciting now as its always been. So you know, that really has been our focus. You know, to grow the business ourselves, rather than look towards someone else.
JAMES ATKINSON: Looking at the portfolio now, its expanded to I think… you can correct me if I’m wrong here, but eight different tonics that I can see. Is there a risk of the portfolio becoming too complex? How do you sort of manage having that many different tonics, without confusing the consumer?
TIM WARRILLOW: Well look, I mean that was all part of the plan at the beginning. As I described the kind of lack of interest in the category. So we thought right okay, you know, how are we going to create interest? It’s not only go and produce the very best quality product we can. But also you know, one of our realisations at the outset was the fact that you know, there was so little kind of interest and engagement and you know, as in that… from that market research we did… someone said you sleepwalk your way down the mixer aisle, because there’s so little to engage you. Whereas you know, you turn a corner and you’re suddenly in the chocolate aisle or the coffee aisle or the spirits aisle and there’s all sorts of choice and varieties and flavours. So what we wanted to do was start to put the choice and interest and flavour, you know, back in. We went to develop different styles of tonics that went with the different styles of gins that were starting to come to the market. So you know, a more floral tonic to go with a more floral gin etc. So that is how we have developed out range. And actually, it has proved to be a great way of getting people interested in not just tonic water, but gin and tonic. You know, because off the back of it, we have developed gin and tonic menus across the hotel, bar, restaurant trade. You know, this was sort of unforeseen before we got going. And so you know, it has created this whole sort of drink movement by bringing this choice back into mixers, as well as into gin.
JAMES ATKINSON: It took you quite a long time to launch a Fever-Tree cola, which considering you know, how big cola is globally, is kind of surprising. Why did that take so long?
TIM WARRILLOW: Well because… primarily it’s because we’ve got a lot to do in terms of growing our existing range. Which is where I have to say, we are still most focused. And that existing range, as you point out, is our tonics. Focused very much on sort of gin and tonic and also our gingers, which are ginger ale and ginger beer. And that is where the majority of our focus is. But we developed a cola because there is a lot of request for it, from the trade. And you know, they were saying the same thing to us. Look, you know, can’t you do for cola what you’ve done for tonic and ginger? By putting fantastic ingredients in and also directing you know, this product more at the sort of adult audience. And so that was the rationale behind developing our cola. But you know, we’re building our plans on that front, to start to roll this out more widely. And so that’s just what we’re looking at, at the moment.
JAMES ATKINSON: Packaging in the small glass bottles has been a key element of the Fever-Tree brand proposition and you can maybe explain why that is. But obviously there are some challenges with that and some concerns from an environmental perspective. Have you looked at innovating with some new solution with bulk formats for the on trade?
TIM WARRILLOW: Well look we put it in glass very specifically because the trade was and still is awash with large plastic bottles. And glass remains you know, the best container to retain freshness, carbonation and fizz. And also of course, it has an elevation to it in terms of look, relative to big PET or plastic bottles. But we’ve always, right from the start, made sure that we’ve used as much recycled glass as the industry will allow. And it remains you know, just about the most recyclable format around the world. So you know, for all of those reasons I think it is a fantastic package. But we also have cans, which are growing and growing. And also of course, you know, highly recyclable. So you know, that’s our focus. But in terms of bulk. The problem is carbonation and you know, the old soda gun. Its great flaw is the fact it produces poorly carbonated product. And there is nothing that kills a great gin and tonic more than flat tonic. Carbonation is king you know, when it comes to tonic water. So you know, as a result it is a more inferior way of delivering a great gin and tonic.
What is so special about Fever-Tree tonic?
JAMES ATKINSON: What was involved with finding those ingredients to get started with your first products?
TIM WARRILLOW: Yeah well, as I say you know, we went into the library to go and research the most authentic, best ingredients and then actually went out in the field to go and find them. And you know, this has involved travels all round the world and its taken us to some pretty wonderful and interesting, and memorable places. I mean, I was last year or so, I was out in the Yucatan Province, where we find this sort of rare lime that we’ve put into quite a number of our products. Taken us to beautiful places like Sicily, where we’ve sourced this sort of wonderful lemon extract. But also some pretty dangerous places and in my case the most memorable of which was my trip out to go and source quinine.
Fever-Tree and quinine
TIM WARRILLOW: So quinine is the very essence of tonic water. And my research showed that the last remaining plantation of the highest quality quinine was unfortunately just about the most remote and enormous place, which was in the Eastern Democratic Republic of Congo. And just to get there, I had to fly from London to Nairobi. And from Nairobi to Gugali in Rwanda and then persuade a local taxi driver to drive me the eight hours across Rwanda just to get to the border. And then I realised quickly how lawless it was because just in those few miles it took to go from that border to the gates of the plantations, I got stopped with this local taxi driver three times, with three different sort of forms of armed road blocks. The first was someone who threw this plank of wood with these six inch nails out in front of the taxi, which is a very effective way of getting you to stop. The second one, he didn’t even go to the lengths of producing a bit of wood and nails. He just had a bit of string across the road, but he was so well armed that you stopped anyway. And the third one is the image that has remained with me ever since, which is just the sort of young kid – teenager – who had a rocket launcher slung over his should. And again, that was also a very good way of getting you to stop. So I mean, you know, that is tragically sort of how lawless this part of the world is. But what it is, is the most fertile place almost in the world. To this day, we still source all our quinine from them. And actually I went there not all that long ago, the end of last year and it was great to see you know, in this area. As our business has grown, that they’ve grown with us and the work and employment it’s bringing to the area as well. So that was… it’s been heartening that relationship and I have enormous respect for those people running that plantation in those conditions.
Fever-Tree Ginger Beer
JAMES ATKINSON: Sure. Now obviously gin is you know, the king of spirits at the moment in terms of growth. But I’m imagining you at Fever-Tree are really watching very carefully what’s happening in some emerging categories? Are there any other categories of spirits that you’re excited about at the moment in terms of the growth prospects?
TIM WARRILLOW: Internationally yes, you know there are lots of categories that are of interest to us. I mean, as a business obviously what we’re so excited about is you know, whilst the business has grown very well and very quickly over these last 15 years or so. I mean, still our business in a large part has been focused on gin. But you know, when you stop and think about it from a global perspective, gin only accounts for about 6% of global spirits sales. Whereas if you take dark spirits for instance, you know, it’s 10 times that size – the category. And so that is why we have been developing over the last few years, our range of mixers specifically to go with dark spirits. And when I say dark spirits, I’m talking of course about whiskeys and rums. And so we’ve been developing our range of ginger ales and also ginger beers. But again, in just the same way we did with our tonic waters, we’ve been developing them with ingredients that are specifically developed and designed to help complement and enhance those dark spirits that they’re mixed with. So you know, we’re working very hard with the bourbon producers in America, which is a category which is growing very, very strongly. And many places around the world, I know Australia as well. And also the Irish whiskey producers and of course the Scotch whiskey producers. So you know, there’s that whole world of whiskey that is growing and growing, that we’re working with. So we’re very excited about that. But then also in North America, our business with tequila is growing very quickly. We’ve got a couple of wonderful products to mix with tequila and actually a recent launch of ours is a pink grapefruit, which makes this perfect Paloma drink. And that’s growing very quickly for us. And that’s not to mention the Vermouth’s and obviously vodka and all these other categories that we’re also sort of working hard with.
Where is Fever-Tree made?
JAMES ATKINSON: I know that Fever-Tree has sort of always outsourced its production. Has there ever been a point where you’ve considered building a soft drink production plant?
TIM WARRILLOW: There hasn’t been, for the simple reason that this model is working very well for us. And indeed, it seems to be working well for our production partners. So you know, the whole point of it was that we wanted to set up a business that allowed us agility, allowed us to focus on the things that we really wanted to focus on. Which is you know, developing the products and leave the expertise of production to other people. But also it meant that we could scale quickly and we wouldn’t be hindered by the management of our own production plants. So it’s really worked well for us. And as I say, also for our production partners who feel very much like they’re part of the Fever-Tree business I have to say. And it’s a model I think that will stand the test of time.
JAMES ATKINSON: Obviously Fever-Tree is really had the first mover advantage in this category, but since you launched in 2005 obviously the bigger companies have reacted one way or another. And then there’s been a lot of challenger brands. I don’t know how many new premium mixer brands there are in the UK, but are you seeing those as a threat at all? Have any of them taken a dent out of your market share?
TIM WARRILLOW: Well, look I mean at the last count, we counted over 100 sort of… I have to say we describe them as Me Too or copycat brands that have come into this premium mixer category. So there have been no shortage of people. And those are from the biggest companies to the smallest companies, you know, all of them have been having a go at the category. And in principle of course, having more people engaged in the category is a positive thing because it creates interest and engagement on a wider scale. But you know, selfishly I’m pleased to say that they haven’t taken out much of a dent of our share. I mean, I sit here in the UK and this is where the competition has been most intense. But we currently have you know, well over 35% or so of the category. And all those other premiums together account for 2-3%. So fortunately we’re still staying well ahead of them.
JAMES ATKINSON: Are there a lot of barriers to entry, to get into this category?
TIM WARRILLOW: There are more than you might think and particularly if you were going to do it well and properly. And of course, the ultimate barrier to entry is to make sure that you’re producing a great product. Which as I’ve described in our case, you know, took us 18 months to develop. But then the bigger barrier of course is finding people who will produce the product for you and then ultimately getting a consumer who is interested in your product. Which takes time. I mean you know, whilst we’ve been growing quickly, we’ve been going for 15 or 16 years and we’ve been developing that relationship with our customers as we’ve gone. And I think some people always think you can dive in and sort of create that quickly overnight, and that’s proved not to be the case.
JAMES ATKINSON: You’ve launched a new range of premium flavoured sodas and I think you mentioned that a bit earlier on. What’s the fundamental difference between a mixer and a soda?
TIM WARRILLOW: Well I mean there isn’t. We described the soda’s as part of our sort of mixer family. But in this case, a soda which you know historically has been a mixer that has been mixed with whiskey and vodka, has the salty… the bicarbonate, the soda in it. Which gives it that slight saltiness. And so that’s what if you like, in terms of an ingredient differentiates it from a tonic, which has got sort of quinine in for the bitterness. Soda’s got this bicarbonate in. But we have developed again, these different flavoured sodas specifically to go with vodka and Italian vermouths. And so we’ve developed this wonderful kind of Mexican lime and your yuzu soda to go with vodka. And this Italian blood orange soda to go and suit this wonderful spritz movement that is growing around the world. And we launched them three or four months ago in the UK and you know, sadly we were hoping with great fanfare across the hotel, bar and restaurant business but because of COVID that was closed. And so they went on supermarket shelves and fantastic and amazing really, is that you know, people have found them out. And they have grown very quickly for us and so you know, we’re getting some great reports and reviews on them. So it’s an exciting next leg for us to keep developing.
JAMES ATKINSON: I saw in your trading update from April that you said that sales in bars and restaurants, which make up 45% of the business had been severely affected by COVID obviously. So has that gap closed at all with the rise of the at home drinking occasion?
TIM WARRILLOW: Yes, it really has. I mean, of course COVID has thrown up all sorts of difficulties and challenges. None more so than as you say you know, sadly our friends in the hotel, bar, restaurant industry being closed or severely impacted. But I have to say you know, despite that and despite the fact that historically that has accounted for nearly half of our business, our business has performed better than we could have expected. And that is because as you say, people have been turning to gin and tonics and other mixed drinks at home, in greater numbers around the world than ever before. You know, I think its proved a much needed, affordable treats. You know, we’ve had some wonderful comments from people from all over the place, talking about thank you Fever-Tree. You’ve got no idea, you know. The only thing that’s kept me going through home schooling my children is the thought of that gin and tonic, you know, at the end of the day. And indeed we’ve heard the same thing from people working from home, saying its been the perfect thing to look forward to. Is making and mixing a good drink and I think that really has caught people’s interest and imagination. It’s right up there with the interest in home baking you know, starting to make good drinks at home. So I think as a result the industry, I’m not just speaking for us but the spirits industry as well is pretty optimistic that this is a trend that will only continue.
JAMES ATKINSON: Tim, I better let you go. Thanks so much for joining us on the Drinks Adventures podcast.
TIM WARRILLOW: Well James, thank you very much. It’s been a great pleasure and I’m sorry to have to head off.