Fever Tree: fizzing with distinctiveness
I'm back from an enlightening breakfast where I learnt more about the explosive growth of upmarket tonic water brand, Fever Tree. The company has recently reported first half sales up 61% vs. 2014 to £24m. And check out these vertiginous valuation growth figures:
March 13: LDC (private equity arm of Lloyd's bank) pay £12m for 25% of Fever Tree, valuing it at £48m, as reported here
November 2014: Fever Tree floats on the AIM market with a share price of 134p per share, valuing it at £154.4m, as reported here.
Today/July 2015: Share price reaches, gulp, 350p, valuing the company at what I estimate is c. £400million!
That is 10x increase in value in just over two years.
So, what is the Viagra-like strategy that has delivered these results. I suggest the key is a brand fizzing with distinctiveness.
1. Spot a category opportunity
Back in the mid 00's founders Charles Rolls and Tim Warrillow spotted an opportunity for a better quality tonic water, the key ingredient in that classic English drink, gin and tonic. There was a growth in premium gin brands, such as Hendrick's, Tanqueray 10 and Sipsmith. But there was no premium mixer to go with these.
I love how they picked what was a pretty un-sexy product category. Tonic is a "mixer" that is used to create a drink, not even a drink it its own right. But Charles and Tim felt there was space for a better quality, premium tonic, after discovering that most mixers on the market used preservatives like sodium benzoate or similar substances, cheap aromatics such as decanal and artificial sweeteners (such as saccharin).
2. Build on a product truth
Fever Tree is an example par excellence of a brand built on a distinctive product "sausage". The product was the result of 15 months of hard work, with the launch happening in 2005. "The highest quality quinine was sourced from the Rwanda Congo border and blended with spring water and eight botanical flavours, including rare ingredients such as marigold extracts and a bitter orange from Tanzania. Crucially, no artificial sweeteners, preservatives or flavourings were added, " according to this article.
The team also created a brilliant brand identity. The name was chosen due to fever tree being the colloquial name for the cinchona tree in which quinine, a key ingredient for tonic, is found. And what a great name: short and sweet, and building on a brand truth. And then there is the simple but striking visual device of the fever tree used on the packaging and in communication.
4. Use distribution strategically
Fever Tree built its brand not by what it said but rather by what it did. In particular, Tim and Charles pulled off a masterstroke in using distribution as a strategic brand building tool. They managed to get the brand listed in not one, not three,
not five but SEVEN of the world's top 10 restaurants. Check out the endorsement below from Ferran Adria, chef of what was the top restaurant in the word, El Bulli.
This, I would argue, is more effective at building a premium brand that all your Twittering, Instagraming and Facebooking added together.
5. Communicate the truth
Fever Tree don't do any emotional, sizzle-based, lifestyle advertising. Instead, they simply and impact fully communicate a compelling product story: "If 3/4 of your drink is the mixer, make sure you use the best." Supported by the truth of being in the world's top bars or restaurants.
6. Extend from the core
Over time Fever Tree have extended their core by offering other premium drinks such as ginger beer. They have also recently used format extension, launching mini cans as an ideal way of enjoying your Fever Tree by the pool or on a picnic.
In conclusion, the Fever Tree story restored some of my faith in branding and marketing today. In a world where hype about social media and profit-free digital start-ups gets most of the headlines, its nice to see a good, old-fashioned example of branding based on substance, not spin.
If only I'd bought some shares when the company listed on the AIM….